Stigmatized Properties - Do You Disclose?

Reblogger Barbara Hensley
Real Estate Agent with RE/MAX Properties
http://actvra.in/9gt

To Disclose.....or.....Not to Disclose, That Is The Questions!

Anita Clark presented an excellent post regarding disclosing things things as murder, suicide, sexual deviation......and the list goes on!

Due to recent discusssion I have heard recently regarding this issue i decided to re-blog.  Many Realtors are so fearful of losing a sale they do not want to disclose questionable things.

My thought...If In Doubt....You Must Disclose!   Good job, Anita!

Original content by Anita Clark anita@cbssk.com

What do murder, suicide, paranormal activity, sexual deviation, cult activity, famous adulteries and divorces, misfortune, violent crimes, and AIDS (see note), have in common?  

Stigmatized Property - Do You Disclose? - Courtesy of Homes for Sale in Warner Robins GA, Warner Robins Real Estate, Warner Robins Realtors, Robins AFB RealtorAll have the potential to ruin a real estate deal because of the public perception associated with being a stigmatized property.  According to the National Association of Realtors®, stigmatized properties "are homes where a real or rumored event occurred that didn't physically affect the property but could adversely impact its desirability". 

Since Caveat Emptor (let the buyer beware) has been the generally accepted property law doctrine for buying pre-existing homes in the U.S. (exceptions include seller hiding material defects or making misrepresentations), does the seller have to disclose the non-material stigma?  Is the agent/broker bound to disclose this information to prospective buyers?  The answer to both is murky clear...Maybe, based on the state you live in. 

Stigmatized Property - Do You Disclose? - Courtesy of Homes for Sale in Warner Robins GA, Warner Robins Real Estate, Warner Robins Realtors, Robins AFB RealtorCurrently, the majority of states have passed laws affecting stigmatized property disclosure but consensus has not been realized.  For instance, in Georgia, no disclosure is required unless the buyer (or buyers' agent) specifically asks for the information (Georgia Code 44-1-16).  Some states require phenomena get reported, others only require that murder be disclosed, some states call for other variations, while still others have no provisions at all.  The rules are often confusing with factors such as community ethics, consumer perception, and religious beliefs having an impact.  When in doubt, and authorized, it's usually best to disclose the information, even at the risk of losing the sale.         

If you decide to list or show a stigmatized property, here are a few general guidelines to follow:

  1. Check with your real estate commission to determine your state's disclosure laws
  2. 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
  3. Consider not taking or retaining a listing when the seller refuses to disclose stigmatized information and/or prohibits you from discussing it
  4. 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.

It's widely reported that stigmatized properties are often unsellable or sell for a fraction of their listed price, even several years after the incident and subsequent media attention.  While this is often true for highly publicized stigmatized listings, most properties only see a short-term reduction in purchase price.  According to a 2000 Wright State University study performed on over 100 stigmatized homes, the properties sold for only 3% less than comparable listings but stayed on the market 45% longer.  As the old adage goes, "time does heal all wounds".  

Lalaurie Mansion in New Orleans - Courtesy of Homes for Sale in Warner Robins GA, Warner Robins Real Estate, Warner Robins Realtors, Robins AFB RealtorFamous stigmatized properties include the home sensationalized in the movie The Amityville Horror (112 Ocean Ave), the Lalaurie Mansion in New Orleans (recently owned by actor Nicholas Cage), the Ackley house in Nyack NY, the LA property where Nicole Brown Simpson and Ronald Goldman were murdered, The Ramsey house (JonBenet), the CA compound where 39 Heaven's Gate cult members committed suicide, and even disgraced financier Bernie Madoff's houses.  

While most stigmatized homes are less appealing to potential buyers, a few do benefit from the notoriety.  For instance, The home of Heidi Fleiss (Hollywood Madame) sold for its asking price (appraised for more) and the Lizzie Borden residence in MA is now a successful Bed & Breakfast (with Lizzie Borden gift shop) that publicizes and allows guests to sleep in the rooms where the axe murders took place (Note: Lizzie was acquitted).  

The takeaway...

  1. As a buyer, always ask whether a property is stigmatized.  If it is, ask why
  2. As a seller, disclose everything that affects buyer willingness to purchase the home or changes the amount they are willing to pay
  3. 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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Anita Clark Realtor LLC
Your Warner Robins Realtor®
(478) 953-8595 (O)
(478) 960-8055 (C)
Email: anita@cbssk.com
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 All original text content is the exclusive property of Anita Clark Realtor LLC and may not be used without the expressed written permission of Homes for Sale in Warner Robins GA | Warner Robins Real Estate.  All information is believed to be accurate but is not guaranteed.  Copyright 2007-2011. Anita Clark, Realtor®, (478) 960-8055.

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Rainmaker
116,757
Myers Jackson
Auctioneer
Real Estate Auctions, Land Auctioneer

This depends a lot on the state laws, each state seems to have different rules on this matter

April 30, 2011 08:47 AM
Rainmaker
1,340,023
Anita Clark
Realtor - Homes for Sale in Warner Robins GA
ColdwellBanker SSK Realtors ~ 478.960.8055

Thanks for the re-blog Barbara.  It's a topic all Realtors have or will deal with at some time during their career.

April 30, 2011 08:48 AM
Rainmaker
200,365
Sally Dunbar
Fair Oaks Realtor - Fair Oaks Homes for Sale
Lyon Real Estate, Fair Oaks CA (Sacramento Area)

Thanks Barbara - I just left this comment at Anita's blog.....

Great question, but the answer isn't always obvious when you are faced with it as a listing agent.

I once listed a home where unknown to the seller, there had been a murder suicide there about 30 years ago.  I knew, because I had lived in the area then.  Do I disclose what has now become a total shock to my sellers???

I asked our attorneys (California) and they said that there are no case laws or statutes that require me to disclose a death older than 3 years.  Further, to do so would potentially bring harm to my sellers with no law requiring me to do so.

So the attorneys said to not disclose unless my sellers wanted me to.

Back to when I told my sellers.... they were shocked, but after thinking about it a few minutes, they said "We know where it happened!  Our daughter came to visit after we bought our home.  After spending the night, she refused to go into the XXX room again.  She said it gave her a creepy feeling!"  enter the woo-woo ghost music.....

April 30, 2011 09:16 AM
Rainer
210,498
James Loftis
Real Estate 911 Inc
Real Estate 911 Inc

Good advise, thanks for sharing.

April 30, 2011 09:18 AM
Rainmaker
647,233
Barbara Hensley
Homes for Sale in Rockwall County, Texas
RE/MAX Properties

Myers - I am sure you are correct - check your state laws!  Every area does differ.

Anita - this is something I have dealt with over the years.  One really high profile murder was committed in a listing that kept coming on and off the market, another was where a adopted teen girl killer her parents in the master bedroom. 

Sally - right that the path is not always clear.  You can bet that the day a new buyer moves into a home the neighbors will disclose something that happen.  Well, 30 years ago?  Not so sure on this one!

April 30, 2011 03:17 PM
Rainmaker
647,233
Barbara Hensley
Homes for Sale in Rockwall County, Texas
RE/MAX Properties

Hello James - thanks for stopping by with your comment.

April 30, 2011 03:19 PM
Ambassador
582,613
Mona Gersky
GRI,IMSD-Taking the mystery out of real estate.
MoonDancer Realty, Dillsboro,NC

Oh great Barbara...another thought provoking article.  ;-}

The right path to disclose physical defects is sooooo clear.  Ghosts, murders, suicides, house of ill-repute, gambling parties...a little murkier.  Maybe Residential Property Disclosures need to have another line printed on them to cover the various mayhem that might have happened.

April 30, 2011 06:09 PM
Rainmaker
647,233
Barbara Hensley
Homes for Sale in Rockwall County, Texas
RE/MAX Properties

Hello Mona - always something to think about, right?  Thanks for the comment.

April 30, 2011 07:49 PM
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Rainmaker
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Barbara Hensley

Homes for Sale in Rockwall County, Texas
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