One Persons Stigma Could Be Anothers Selling Point

Every so often a house comes on the market that is said to be stigmatized. Most of the time the stigma is in the mind of one or two buyers, but sometimes it will be a serious issue for multiple buyers and can affect the marketing of the property.

Common stigmas are created when a murder or a suicide occurred in the house; maybe even a serious fire. This is especially true if the tragedy was lurid or got a big play in the press. A prime example of a stigmatized house would be O. J. Simpson's Brentwood mansion which was torn down for lack of a buyer even though the Nicole Simpson and Ron Goldman murders occurred miles from the property.

Where a murder is involved the stigma seems to be less if the crime was solved but many people will not purchase a house if they know a death of any kind has happened within the walls. This gets a little silly when dealing with an older home within which any number of people may have taken their last breaths and the buyer will never know about most of them.

Some stigmas are unique to members of certain cultural, ethnic, or religious groups. A frequent example is a house with a direct view of a cemetery or those with street numbers that have dire connotations to certain buyers.

One type of stigma cuts two ways. A purported haunted house will drive away many buyers but others will scramble to purchase the bragging rights and stories about living with a spirit.

Even entire neighborhoods can be stigmatized under one sad scenario - if a convicted sex offender is living nearby. It is not unusual for the parents of small children to ask if that might be the case and they will refuse to house hunt anywhere near the offender's home.

There aren't a lot of laws regarding the sale of stigmatized houses. A few states require real estate agents to reveal such information to potential buyers but the parameters are all over the place and most don't specify a time line, i.e. a murder within the last five years? Ten? In 1840? At the other extreme, in the 1980's at least one state extended its fair housing laws to prohibit an agent from revealing that someone had lived with or died of Aids in the house, even in response to a direct question.

More likely it will be real estate firms, especially the major companies with a lot of attorneys sitting on the 12th floor, which will insist on restricting what their agents say about stigmatized properties. A big New England firm insisted that none of its agents disclose a murder or suicide except in response to a specific query and any direct question about registered sex offenders in the neighborhood was to be answered with a referral to the local police and their offender registry. The rationale in the first case was that agents were usually representing the seller and had no right to disclose information on non-housing related issues. In the second instance it was viewed as releasing private information. The sex offender issue stirred up a furious fight between the 12th floor and agents who tended to practice buyer agency and contended they had a fiduciary obligation to fully inform their clients of any hazards or defaults.

All in all, these situations present real difficulties for agents. Failing to reveal a ghastly crime to a buyer may not violate any rules but that may not protect against a costly lawsuit. Perhaps a long time customer with young children deserves to know that a pedophile lives two doors down but, on the other hand, hasn't he served his sentence?

It seems the key to this is the seller and the old rule that honesty is best.

If you have a house that has been compromised by unfortunate happenstance or is in a neighborhood that is, be straight out upfront about it. A pending sale to a young couple with the world's most precious child was saved when the sellers insisted on sitting down with the buyers, leveling about the rather notorious pedophile living down the street, and providing them a list of neighborhood parents who were willing to discuss the situation.

I'm not suggesting that you advertise the suicide of Uncle Clarence in the attic to all comers, but it might be wise to either advise your listing agent up front or make sure that any serious buyers are aware. Neighbors talk and the new buyers will find out and may react irrationally. On the other hand the fact that Lizzy Borden took an axe might have been a real deal killer 80 years ago doesn't mean that it wouldn't make a compelling sign for the front lawn today.