Here Is What You Need To Know Before You Buy A Former Weed Growing House
Amid the coronavirus pandemic, legal weed sales have spiked, with industry leaders pushing for a federal decriminalization as a means to aid the recovery of the currently shackled economy. Even U.S. Senator Elizabeth Warren (D-Mass.) called for the creation of a legal weed market in a tweet today, April 20, the “weed day” holiday for recreational marijuana use.
Aside from economic and criminal implications, the liberalization of marijuana laws across the U.S. is wielding an impact on both commercial and residential real estate. In states such as Colorado and California, dispensaries are often willing to pay top dollar for warehouses to anchor their growing operations. As marijuana cultivation morphs into a regulated, industrial pursuit, former weed growing houses in residential neighborhoods are shedding their once illicit purposes – and some of them are entering the resale market.
According to a February 2020 survey conducted by the National Association of Realtors, a quarter of residential agents in states where recreational weed use has been legal for more than three years had sold a grow house. Of those, one in four “had a hard time” during the transaction.
“The [NAR] members that we asked about that did say that if the house is used to grow marijuana, it can be difficult to get rid of the smell or moisture issues within the home,” says Jessica Lautz, vice president of demographics and behavioral insights at NAR.
Aside from structural problems, which can cost thousands of dollars to fix, houses that once accommodated weed growing activities may carry a stigma (and, sometimes, lower values).
“More times than not, people instantly get turned off,” says Shaunt Zakarian, senior estates director with real estate brokerage Compass, where he has experience with both commercial and residential real estate utilized for growing weed.
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Residential weed cultivation grows a slew of structural problems
In 2015, three years after Washington state legalized weed, Sally Herigstad, a personal finance writer and author of “Help! I Can’t Pay My Bills,” purchased a bank-owned fixer-upper for $175,000 near Seattle together with her husband. Holding a real estate license, Herigstad crafted an offer for the property, which her husband had envisioned as an office for his construction business.
“When we purchased it, we were not aware that marijuana had been grown on the property,” says Herigstad, who wrote about the experience for realtor.com. “It was just a very distressed property. There was a lot to look at.”
While several sheds had held the bulk of the grow enterprise, the abode’s electrical box had been tampered with to create an intricate web of wires to supply energy to the structures in the yard.
“That’s a pretty good first clue,” Herigstad said. “Nobody uses that much wiring to grow flowers.”
In grow houses, an unusual, below-code electrical system typically produces an abnormally high power usage to sustain plant cultivation in confined, often darkened spaces that require good artificial lighting.
“It’s probably the big indicator – energy usage,” says Nick Gromicko, founder of the International Association of Certified Home Inspectors. “High water usage is another one. If you can see the water bills and electric bills – that might give you some indication as to whether it has been used for growing.”
If the power wiring could hide in the walls, there are other plain signs that give away former weed growing houses. A lingering putrid smell often haunts the rooms. Some of it may stem from the weed plants that once lived indoors. Some of it might actually emanate from mold that thrives in the high-moisture, high-temperature conditions needed for indoor growing.
Such a setting, “can bring termites, it can bring mold, it can bring dry rot into the wood,” says Zakarian.
“That is why home inspections are so important when you buy a house,” says Herigstad. “It’s one thing to buy a house with a problem that you understand. It’s another thing to buy a house thinking it just needs a coat of paint and carpet and discover [otherwise when it is too late].”
The need for disclosure
According to the NAR survey, only 5% of real estate agents in states where both recreational and medical weed usage have been legal at least since 2016 were aware of special sections on local multiple listing services that direct them to divulge past marijuana growing.
While some states leave it to home shoppers to exercise due diligence in the purchase transaction, others require extensive disclosures from sellers. An example of the latter is California, where residents can now legally grow up to six weed plants (usually in specialized grow boxes that wreak no damage to homes). But if a seller fails to reveal a residential weed growing enterprise, they, along with their real estate agent, could face legal challenges.
While home buyers enjoy the protection of such measures, once they decide to sell, they would encounter the same disclosure standards. “You’re going to have to disclose to future buyers that the house was used for a weed operation or that the house had mold, and that you performed mold remediation,” says Gromicko.
In 2018, having spent three years in renovations that transformed the former weed house into a midcentury-style residence, Herigstad and her husband sold the property.
“We spent about as much fixing up the house as we did buying it,” she says. “It involved a new roof, new drywall, completely new kitchen, new bathrooms. If I were to do it over, I would not buy that house.”
According to a February 2020 survey conducted by the National Association of Realtors, one quarter of residential agents in states where recreational weed use has been legal for more than three years had sold a grow house.
I Accidentally Bought a Marijuana Grow House: Why Even Weed Lovers Should Be Very Afraid
We were so excited when we first saw it: a large, 1960s fixer-upper with plenty of parking, right on a main street in Puyallup, WA.
The bank-owned house had been vacant for some time, and, sure, a few things seemed odd about it. Water was dripping through the living room ceiling. One side of the crudely modified staircase led to a strange little room that hung over the kitchen.
The sprawling backyard was something of a mystery—a conglomeration of rubbish, creepy old sheds, and the blackberry vine jungle that inevitably takes over here in the Northwest. We wouldn’t be able to see much out there anytime soon.
But at $175,000, the price was right. For any house within an hour’s drive of Seattle, that was a steal in 2015. The houses on either side were being renovated, and a new senior center had just gone in across the street. The neighborhood was in an upswing.
We weren’t naive investors, either. My husband, Gary, a construction manager, had planned to fix up the house for him and his business partners to use as an office. I was a real estate broker, and wrote up the offer and called the listing agent, who informed us the house was still available. We couldn’t be believe our luck!
Next thing you know, we were standing in a dark, cavernous living room, holding the keys to our next little project. We wouldn’t be that excited again for a long, long time.
‘Nobody uses that many wires to grow flowers’
The first indication that this house was more than just run-down came when Gary and his friends started on the backyard. They attacked it with chain saws and hedge trimmers, and took mountains of refuse to the dump. With some enthusiasm, they pulled over the creepy sheds. That’s when they encountered something in the rubble that made them watch their step more carefully: hypodermic needles.
Apparently, either the tenants or their visitors were not averse to using illegal drugs.
As my husband and friends continued to clear the yard and fix up the house, they found more signs of suspicious activity.
The house was riddled with an unusual amount of wiring—far more than a house built in the 1960s would normally have. Aluminum foil scraps were stuck on the walls of the two sheds, as well as inside a closet and the garage of the house. With some research, we learned that this was not some new design trend, but a way to reflect expensive light to keep plants growing.
You don’t want to see wiring like this.
At first, we gave the home’s former owners and tenants the benefit of the doubt. Perhaps they really loved flowers and wanted to grow them year-round. But as Gary found bigger electrical conduits and more wiring going out to the second shed in the back, he said, “Nobody uses that many wires to grow flowers.”
To top it off, the former tenants had left behind some lights and fans. Someone had spent serious money on this equipment, and they no doubt expected a cash crop in return.
Why marijuana grow houses are a risky real estate purchase
My first reaction to realizing that our home had been used as a marijuana grow house was “so what?” Medical marijuana use was legal in Washington state at the time, so it didn’t seem like a big deal (although growing marijuana for recreational purposes without a license is still illegal). Any smell that could come from the plants, or smoking their buds, was long gone. And since the house had been empty at least a year, no old customers were coming around. Our neighbor stopped by and regaled us with stories about loud fights between tenants at all hours. All that’s in the past, I thought.
But I soon discovered the most important reason you should never buy property that has been used as a marijuana grow house: wiring problems.
Plants require a lot of light, so illegal marijuana growers install massive amounts of grow lights to keep their plants alive while indoors and out of sight. This means rewiring the house, almost certainly by someone who is not a licensed electrician and is not getting the proper permits. The result is an incomprehensible mass of wires, never seen by any county electrical inspector. If that doesn’t scare you, it should.
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As we removed enough rubbish to see the walls of the house, we found that someone had run a surface-mounted electrical conduit along the wall in the garage to the makeshift shed/greenhouse in the back, with all kinds of switches, receptacles, fans, and light fixtures. We also unearthed a badly botched electrical panel. It wasn’t grounded properly, or up to code, and it was definitely not safe. At the initial inspection, the electrical inspector said, “You’re going to have to replace this panel.” We spent $5,000 on electrical work just for that.
It could have been worse: We never saw any evidence of any other drug production. Meth manufacturing and other drug activity can leave behind dangerous chemicals, some of which can leach into the walls or the soil. We were also lucky that the growing appeared to be confined to the sheds, garage, and one closet. Houses that are used entirely for growing marijuana can have serious problems with mold, due to humidity from extra light, heat, and constant watering indoors. Residential buildings were never intended to be used as grow houses.
Classic fixer-upper problems
Some of our problems, though, were typical of any renovation project. The first changes were dramatic and even fun, like tearing out the strange room dangling over the kitchen, and letting it crash down. Roofers and drywallers came and went. Yet our excitement dwindled once my husband’s construction partners decided they didn’t really need an office after all, and the project dragged on with all cash outgo and no income for three years. People started to feel sorry for us and our albatross investment. The local pastor (who also happened to be a real estate investor) even brought a group over to help us clean the backyard and lend moral support.
But when we bought the house, we had budgeted a substantial amount of money for projects like a new roof, flooring, siding, and water damage repair. We hadn’t planned on the wiring problems. By the time we paid a licensed electrician to straighten out the mess—and come back when we found more problems later—we were way over budget. After spending over $120,000 to fix up the house, our $175,000 purchase price didn’t seem like such a bargain.
By the time we sold the house in 2018, nothing remained of its shady past. It had been reborn as a classy (in my opinion), midcentury home. Even though we made a profit in the end, the time, frustration, and added expense made this one project we would never, ever take on again.
How to spot a marijuana grow house
Houses that have been used to grow marijuana or for other illegal purposes are more common than you might think. Now, when we look at houses in the lower price range, the first telltale signs we know to look for are scraps of aluminum foil on the wall. We know someone who bought a small house that had several rooms lined with aluminum.
When touring a house, keep an eye out for excess or added wiring; extension cords and wires stapled to the wall are a good giveaway. You can also ask to see the home’s electrical bills for the past couple of years, as the lighting and equipment necessary for a grow operation suck up a lot more electricity than a normal household should. The more serious the grow operation, the higher the electric bill.
Remember, the wiring you see is just the tip of the iceberg. More problems are likely lurking out of sight, including electrical circuits throughout the house that could be overloading existing breakers or fuses. This, in turn, could potentially cause fire and safety hazards.
All houses have defects. But some defects are more serious than others. Problems resulting from use as a marijuana grow operation are just not worth the risk.
We bought a house that seemed like a great deal, but soon found out why: It was once a marijuana grow house.