We’ve all heard home-buying horror stories. Sellers backing out or financing falling through can quickly kill a deal. But these snags don’t hold a candle to buying a “stigmatized” home.
A home where paranormal activity, suicide, murder, cult activity or other misfortunes and crimes took place could be categorized as a stigmatized property.
In real estate terms, a stigma refers to an intangible attribute of a property that may prompt a psychological or emotional response on the part of a potential buyer. In addition to physical defects, a house may have unusual features or a history that negatively impacts its value.
Get to know your state’s disclosure laws
Here’s a scary fact: A listing agent may not be required to disclose a stigma to buyers.
Ever heard the phrase “caveat emptor” (let the buyer beware)? In the past, sellers were not required to disclose anything about homes they were selling. Over the years, most states have made changes to this rule and now require that buyers be made aware of certain issues.
The law urges buyers, sellers and their agents to engage in fair and honest dealing with all principals in the real estate transaction. However, the laws that regulate disclosure of sketchy events vary from state to state. Some state laws explicitly relieve the salesperson or broker of the obligation to disclose certain property stigmas.
For instance, what if a house is haunted? Massachusetts is particularly lax when it comes to stigmas. In the witch city of Salem, a seller’s agent does not necessarily need to volunteer information about paranormal activity or even a felony, suicide or homicide that has occurred in a home.
But if you or your agent asks a seller’s agent directly, they must answer truthfully. This differs from California’s stringent laws, which, in addition to other disclosures, mandate that buyers be informed of any deaths that occurred at a property in the last three years.
While it’s certainly ethical for sellers to be upfront about any defects that may impact the value of a property, it may not be a legal requirement.
Research before you fall in love
Since you’re unlikely to find the descriptors “haunted” or “former crime scene” in a property listing, how should you go about digging up some dirt?
- Check with a real estate attorney in your state to see what disclosures are required.
- Ask the seller’s representative if criminal or paranormal activity has been reported. Again, sellers and their agents are legally obligated to reveal problems they’re aware of when asked.
- Carefully review the seller’s disclosures, if one is included with the listing. In many states, property owners are forced to put their real estate disclosures in writing.
- Get the inside scoop from the neighbors.
- Always Google the address of your future home. You may uncover a headline that sways your decision.
You may learn that a former owner passed away in the house. In areas with older properties, this is likely going to be the case, though it may not be cause for concern. Someone peacefully passing away in the comfort of their home is a lot different from a situation that involved foul play.