Content area
Full text
Abstract
Recently, the use of artificial stucco (formally known as Exterior Insulation and Finish Systems, or EIFS) on residential real estate properties has been a topic of much debate. This article discusses the issues surrounding EIFS use. Hypotheses are developed and tested regarding the impact of EIFS on property value and marketing time. The results indicate that the market is not discounting EIFS clad homes, but that the presence of EIFS significantly extends a property's marketing time. These findings are consistent with the theoretical framework and are compatible with inefficient local real estate markets.
Introduction
In recent years, a new problem has emerged for many homeowners and the real estate brokers with whom they work. The problem is synthetic stucco, formally known as Exterior Insulation and Finish Systems or EIFS. EIFS is an exterior home finish commonly used as an alternative to the more traditional exterior wall finishes such as brick, wood or siding. The product proved popular because of its superior insulating properties and ease of maintenance. However, over time, owners of EIFS homes have reported significant problems. Because this product is impermeable to water, should moisture penetrate behind the exterior finish, it becomes trapped, which then causes deterioration of framing and supporting structures. There is also a growing body of evidence that suggests the use of EIFS is associated with termite damage.
Numerous class action suits have been filed on behalf of EIFS homeowners against EIFS manufacturers and installers. Not surprisingly, manufacturers blame installers for the problems, while contractors say the manufacturers have produced a defective product. North Carolina has recently banned the use of EIFS in residential buildings and Georgia may soon implement similar restrictions. Equally disturbing for homeowners is that many insurance companies will not cover damages due to EIFS systems.
Real estate brokers and salespeople are not immune to this situation. Not only do real estate professionals need to worry about being included in EIFS related litigation, they have to decide what information, if any, regarding EIFS problems should be related to potential home buyers and sellers. In order to protect themselves, consumers as well as real estate professionals must know the scope and nature of the EIFS problem. That is, what has been the market's response to...