PROFESSIONAL SURVEY ON CONTAMINATED PROPERTIES
1. How often do potential purchasers simply refuse to purchase any contaminated property?
2. How frequently do potential buyers of a property demand that the seller pay
for (or adjust the selling price for) each of the following types of property surveys?
3. A preliminary environmental audit to determine the presence or extent of
4. A comprehensive engineering survey to diagnose the specific characteristics
of the environmental problem and to estimate the cost to cure or contain
5. How often do purchasers that are willing to buy a contaminated property do
each of the following when negotiating the purpose?
Demand that the contamination be removed prior to purchase as a condition of the
Agree to purchase the property as is, but at a price discount approximately
equal to the estimated cost to remove all contamination.
Agree to purchase the property as is, but at a price discount greater than the
estimated cost to remove all contamination from the structure.
6. How often do each of the following adverse effects on a property's income stream remain
even though all of the contamination has been removed from the structure?
Higher vacancy rates than comparable properties that never had contamination
Greater difficulty in obtaining the same quality of tenants than comparable
properties that never had contamination
Lower rental rates than comparable properties that never had contamination
Higher operating expenses than comparable properties that never had
Higher financing costs than comparable properties that never had been
7. Indicate how frequently loans made on properties with contamination have each
of the following additional costs, limitations, or requirement.
Lending a lesser amount (lower loan-to-value ratio) than similar properties
Charging a higher interest rate
Charging higher points or loan origination fees
Requiring indemnification guarantees
8. How often do lenders refuse to lend on contaminated properties?
9. How often do you and other real estate professionals make each of the
following adjustments to reflect the impact of contamination on the value of affected
Decrease the rental rate relative to comparable uncontaminated properties
Increase the vacancy rate
Increase the amount of rental concessions to tenants
Increase workletter/buildout allowances
Increase repair and maintenance expenses to reflect the need for contamination
maintenance and monitoring
Increase legal expenses
Increase insurance costs
Reduce the property value by the direct costs of mitigation (including preparing
for removal, physical removal, reconstruction of damaged areas, reinstallation of
substitute materials and disposing of contaminants)
Reduce the property value by the indirect costs of contamination removal (including the
loss of rental revenue because of the downtime necessary to remove the contamination and
the costs to move and temporarily relocate tenants while the contamination is being
Increase the capitalization rate
Increase the discount rate
17. For each of the following property types indicate the average percentage
reduction in the stated or quoted rental rate for a property with contamination compared
to a property without contamination?
High-rise office building
Low-rise office building
Free-standing retail store
Neighborhood shopping center
Regional shopping center
Light industrial building
Heavy industrial building
18. For each of the following property types, indicate the average percentage
increase in rental concessions, including workletter or buildout allowances for a property
with contamination compared to a property without contamination
19. For each of the following property types indicate the average increase in
operating expenses of a contaminated property compared to a property without
contamination? (Expenses include monitoring, increased maintenance, insurance, and legal
20. For each of the following property types how much higher, on average is the
vacancy rate of properties with asbestos relative to comparable properties without
21. For each of the following property types indicate the average decrease in
net operating income of contaminated properties relative to properties without
contamination, as a result of the effects of the presence of contamination on rental
income and operating expenses.?
22. What is your estimate of the average reduction in the loan-to-value ratio
for first mortgage loans originated on properties with contamination?
23. For each of the following property types, indicate the average percentage
reduction in the value of a property attributable to the expected direct costs of cleanup
(which include costs of preparation, physical removal costs, costs for reconstructing
building areas damaged by removal costs associated with reinstalling functional
substitutes and costs of proper disposal.?
24. For each of the following property types indicate the average percentage
reduction in the value of the property attributable to expected indirect costs of removal
(which include the loss of revenue during cleanup downtime and the cost to move and
temporarily relocate tenants during removal)?
Jeffrey D. Fisher, George H. Lentz, and K. S. Maurice Tse "Effects of
Asbestos on Commercial Real Estate: A Survey of MAI Appraisers"