Content of the material
- Types of Stigmatized Properties
- Murder or Suicide Stigma
- Debt Stigma
- Criminal Stigma
- Phenomena Stigma
- Public Stigma
- What is Stigmatized Real Estate?
- Three Ways to Sell Stigmatized Property
- Only Disclose What You Must
- Frame It as Opportunity
- A Quick Refresh
- Need to sell a stigmatized property?
- 4. Bid at a surplus auction
- 1. Murders
- Vacant and Abandoned Properties
- 3. Paranormal perceptions
- Stigmatized Properties Guidelines
- Final Thoughts About Stigmatized Properties
Types of Stigmatized Properties
Murder or Suicide Stigma
This is one of the most common types of stigmatized properties. If a violent death took place in a house, that can scare off many buyers. Some may think that there are intangible traces of the act that are still present in the house, while others simply don’t want to be associated with the notoriety or bad publicity of a crime scene.
However, you may have already been in one of these murder scene homes and not have known it. You might even live in one. That’s because stigmatized property disclosure laws vary from state to state. For example, in Florida, the agent and seller don’t have to tell buyers anything if there was a murder or suicide on the property.
On the other end of the spectrum, California requires sellers and agents to disclose a murder or suicide if it happened in the previous three years. Most states fall in the middle, though. In North Carolina, sellers and agents don’t have to proactively disclose anything stigma-related, but they are legally required to truthfully answer any questions on the subject. That puts the onus on the buyer to do adequate research beforehand.
If the previous owner still owes significant debts, debt collectors could come to the house or call repeatedly to try and recover their money. This could be a massive inconvenience for a new owner. Requirements to disclose a debt stigma vary from state to state.
This describes a property that was previously used as the site of an ongoing commission of a crime. For example, if illegal drugs were sold out of a house or it was used as a brothel. Most states require this type of history to be disclosed to buyers.
This is sometimes called the haunted house stigma. Most states require sellers or their agents to disclose any paranormal activity that’s been observed there. Even if you don’t believe in ghosts, the fact that this phenomenon has been observed there could attract ghost hunters and other strangers to the property, which can be as disruptive as an actual ghost, if not more so.
This describes a property that’s so well-known that it attracts the general public. For example, any home that’s recognizable from a popular movie is likely to be a tourist destination. If there are busloads of tourists driving by a property at all hours of the day and night, this has to be disclosed to buyers.
What is Stigmatized Real Estate?
What is a stigmatized property? Stigmatized properties are also known as psychologically impacted real estate. This means that the property history may be impacted by a history that includes murder or suicide, public intrigue, crime, or debt.
The decision to sell a stigmatized property may be obvious to the seller who experienced a tragedy or unfortunate incident. In some situations, the stigma may relate to a normal life occurrence, like an elderly parent passing away at home on hospice care or having an unexpected heart attack that ends in death. In other situations, the experience may be more extreme.
Three Ways to Sell Stigmatized Property
Only Disclose What You Must
There are three main approaches to selling a stigmatized property. The first one is to simply keep quiet. If your state doesn’t require you to disclose the property’s specific type of stigma, then simply follow the law and don’t disclose it.
However, if a prospective buyer asks you a direct question about the event in question, it’s always best to answer honestly, even if your state doesn’t technically require you to. Being dishonest could come back to haunt you if the buyer discovers the truth halfway through the sale process and pulls out.
Frame It as Opportunity
The second approach to selling a stigmatized property is to embrace the stigma. If you’re selling a haunted house, for example, you could market it as such.
In New Orleans, the notorious LaLaurie Mansion was the site of a depraved aristocrat’s torture chamber back in the 19th century and is believed by some people to still be haunted. A businessman moved into the mansion recently and reported that it was a spectacular home with no apparent paranormal activity. He did, however, report that the ghost tours that showed up every night and stood below his windows talking and taking pictures were “annoying with a capital ‘A.’”
Of course, a more entrepreneurial person might have looked at the nightly ghost tours and seen an opportunity. If you’re trying to sell a home that’s widely known as stigmatized, framing it as a business opportunity might be your best chance to counteract public perception.
A Quick Refresh
A third way to sell a stigmatized property for a profit is to refresh it. An exhaustive renovation or, as in the above example involving Nicole Simpson’s home, a simple address change, could make the property more appealing.
Patience is also key: though the Simpson home sold unprofitably two years after the crime, after a few more years passed, it resold for a handsome profit. No matter how vivid the stigma, people will forget after a while.
Need to sell a stigmatized property? A Clever Partner Agent will market and sell your home for top dollar.
If you’re in the market for a discounted stigmatized property, or trying to sell one without losing money, your best bet is to partner up with an experienced real estate agent. A great local agent knows their market inside and out and will be able to find whatever kind of property you’re looking for.
Clever Partner Agents are top performers in their respective markets and come from top brands and brokerages. If you’re selling a stigmatized property, they’ll be able to advise you on what exactly you do and don’t have to disclose, and if you’re looking to buy one, they’ll be able to find the most discounted properties and negotiate the best possible price.
4. Bid at a surplus auction
In some cases, the government, whether federal, state, or local, will offer surplus land for sale at auction. The U.S. General Services Administration allows you to browse real estate and auctions and maybe find a deal — like this Presidio, Texas, home with a starting bid of $10,000.
Another place to look is on the Department of Transportation website (both federal and state). And the cool thing about this is that you don’t necessarily need to wait for the house or property to be listed as an auction item. In Oklahoma, the process to evaluate excess land and potentially sell it starts when a customer requests that land be reviewed as Excess & Surplus based on reasons that include, but aren’t limited to:
- Purchasing vacant ODOT property that is adjacent to your property
- Purchasing a private utility easement
- Leasing property for your business or private use
- Purchasing access rights to access your property
- Investigating the ownership of interested property
Individual counties may even hold their own auctions, or might place their surplus land or property on an online auction site. Waukesha County in Wisconsin, for instance, often uses the Wisconsin Public Surplus auction site to list properties and accept bids.
The worst way to tarnish a house’s marketability is if a murder has taken place there. And if the slaying is nationally infamous, that home will be a tough sell unless the price is reduced quite a bit below what it would be worth as a murder-free home.
Aside from the chilling notion of living in a home where a murder took place, depending on its notoriety buyers would have to deal with strangers stopping by at all hours to point at it or take pictures (all legal as long as they stay off the property).
In fact, some properties are stigmatized for associations with a murder, even if no one died on the property. Best example: O.J. Simpson’s house in Brentwood, Calif., where the nationally televised Bronco chase in 1994 ended after he had been accused of murdering his ex-wife Nicole Simpson and a waiter named Ron Goldman. (The house was eventually razed, and a new one was constructed.)
The best way these stigmatized properties can bounce back and try to get close to market value is the passage of time, as fewer and fewer people remember the horrific details. Although on rare occasions, the horrific details represent a lure. The Lizzie Borden home in Fall River, Mass. – scene of a brutal 19th-century double murder – was sold in 2021 for around $2 million, more than six times the price of the average home there. Given its size, it shouldn’t have exceeded $300,000.
Vacant and Abandoned Properties
Abandoned Property for Sale: How to Buy an Abandoned Home (realtor.com®, Sep. 23, 2021)
Abandoned homes may offer significant bargains, although many need extensive repairs. Do your research to find out if a home has any liens or tax problems before placing a bid. Where the law allows it, an abandoned property could present an attractive opportunity to the right buyer.
Vacant Zombie Homes Dip in Q3 as Foreclosure Moratorium Ends in U.S. (World Property Journal, Sep. 9, 2021)
“According to ATTOM Data’s third-quarter 2021 Vacant Property and Zombie Foreclosure Report, 1,332,706 residential properties in the United States sit vacant. That represents 1.4 percent, or one in 74 homes, across the nation.”
How to Invest in a Boarded-Up House (Millionacres, May 9, 2021)
“In most cases, investing in vacant homes is a win-win for all parties. Distressed, unoccupied homes lower property values in the neighborhood and open the door to potential squatters, vandalism, or looters. By purchasing and improving vacant property, you’re adding value to the neighborhood and creating quality housing for tenants or homebuyer while improving public services to the area by paying property taxes. You as the investor are also taking a liability off of the property owner’s hands while hopefully earning a profit.”
How an Abandoned House in the Neighborhood Can Affect Your Property Values (RISMedia, Mar. 20, 2019)
“Abandoned houses can affect the property values of everyone else in the neighborhood. Talk to your neighbors about vacant properties and work together to identify ways to move the community in a positive direction.”
The Value of Reducing Vacancy (On Common Ground, Mar. 15, 2019)
“From Baltimore, Md., to Philadelphia, Pa., to Youngstown, Ohio, and beyond, public and private organizations are working to save abandoned properties from destruction and turning them into homes and neighborhoods where individuals and families want to live.”
3. Paranormal perceptions
To some people, haunted houses aren’t just the scary make-believe configurations created every Halloween. At the Winchester House in San Jose, Calif., both visitors and employees claim spectral sightings. Sellers of homes considered haunted may want to see if there’s a local ghost-removal company. Just like the problem with houses that have been the site of murders, looky-loos may appear at unexpected times at houses with a reputation for ghostly visits.
Stigmatized Properties Guidelines
If you decide to list or show a stigmatized property, here are a few general guidelines to follow:
- Check with your real estate commission to determine your state’s disclosure laws
- When statutory guidance does not exist, separate fact from fiction, and determine the impact disclosure will have on the buyer, seller, and price of the property
- Consider not taking or retaining a listing when the seller refuses to disclose stigmatized information and/or prohibits you from discussing it
- Always maintain trust with your buyers by disclosing facts. In instances where disclosure is not mandatory or prohibited, it’s usually wise to provide the information anyway.
Final Thoughts About Stigmatized Properties
- As a buyer, always ask whether a property is stigmatized. If it is, ask why
- As a seller, disclose everything that affects buyer willingness to purchase the home or changes the amount they are willing to pay
- As an agent, disclose everything you’re allowed to. Losing a potential sale is not worth losing your license over.
Note: HIV patients are identified as disabled according to the Americans with Disabilities Act and are now protected from discrimination under the Federal Housing Act. Disclosing a person has AIDS is breaking the law.
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