- Stigmatized properties have been psychologically impacted by events such as murder, suicide, alleged hauntings, or notorious previous owner.
- Violent crimes and abandoned properties both have significant effects on property values and the surrounding neighborhood.
- Some buyers are happy to overlook the stigma in exchange for an affordable price.
- Agents should be aware of their state disclosure laws around stigmatized properties.
The National Association of REALTORS® defines stigmatized property as: "a property that has been psychologically impacted by an event which occurred, or was suspected to have occurred, on the property, such event being one that has no physical impact of any kind."
Many circumstances can stigmatize a property—location, murder or suicide in the house, alleged hauntings, or a notorious previous owner. Stigmatized properties can be a hard sell for some buyers, while others may be eager to take advantage of a discounted price, especially in a tight market. Agents may have an obligation to disclose, depending on state laws and the nature of the stigma.
Violent crimes tend to have a strong negative impact on property values for both the crime site and sometimes neighboring homes. Even when stigmas have less of an impact on value, they may still reduce demand and increase the time on market. Affected property values gradually increase again with the passage of time.
Vacant and abandoned properties represent 1.4% of homes in the United States, according to recent reports. Abandoned homes have a negative impact on neighborhood property values. However, they can also present an affordable opportunity for investors and DIYers. Purchasing and improving an abandoned property has a positive impact on an entire neighborhood’s value and attractiveness to buyers.
See References for more information.
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.
Stigmatized Property Basics
Americans Are Willing to Get Ghoulish to Snag a Home in This Monsterish Market, According to Realtor.com® Survey (PR Newswire, Oct. 26, 2021)
"In today's ultra-competitive housing market, buyers are looking for a break," said Realtor.com® Deputy News Editor Clare Trapasso. "The majority are willing to consider homes that are rumored to be haunted, especially if they can get these properties at a discount. Nearly half of those surveyed would live in a haunted house if they can get a good discount, which to many buyers is more than half off of the market price."
Do You Have to Disclose a Death in a House? (realtor.com®, Oct. 11, 2021)
Death disclosure obligations vary from state-to-state and will differ depending on whether the death was peaceful or violent. Either way, agents should disclose a death if they are directly asked.
Buying A Haunted House Wouldn’t Spook A Third of Americans (Rocket Homes, Sep. 7, 2021)
Approximately one-third of Americans surveyed would be willing to purchase a haunted property. People who have experience living in a home with ghosts – 26.5% of respondents – are more likely to feel comfortable with haunted homes.
Buying and Selling Stigmatized Property: An In-Depth Guide (Clever Real Estate, Dec. 2, 2020)
There are different types of stigmatized properties, such as those connected to a death, crime, or paranormal activity. Buyers may find affordable deals in stigmatized properties. Sellers may want to renovate or wait until the stigma lessens with time.
Stigma and Property Value
House Isn’t Selling? Blame the Ghosts. (Vox, Oct. 26, 2021)
“Caring about ghosts in your home isn’t just for the superstitious, it’s for a market-conscious buyer as well. Even if just 10 percent of people would be uncomfortable buying a home where there are rumored to be ghosts, that reduces the value of the property, because it can reduce demand.”
Murder Brings Down Price of Some San Diego Homes (San Diego Reader, Aug. 18, 2021)
““The diminution in value is generally between fifteen and twenty percent, depending on various factors,” says Dr. Randall Bell, a real estate appraiser who has worked with a number of murder homes in the San Diego area. “I’ve seen murder properties sell at full value — generally smaller, less expensive homes — and I’ve seen properties where nobody will touch it, at least not for a considerable amount of time.””
The Externality of a Mortality Incident within an Apartment Building: Cases of Homicide, Suicide and Fire Deaths (Environmental Economics and Policy Studies, Jan. 2020) E
“By carefully considering detailed regional fixed effects, the estimation results reveal that an incident of homicide occurring in an apartment unit lowers the rents of nearby units in the same building by approximately 10% immediately after the incident, but the impact is ameliorated gradually over time and disappears after approximately 7-8 years.”
Social Stigma and Asset Value (Southern Economic Journal, Jan. 2019) E
“Recent attempts by economists to identify and quantify the effect of social stigma on asset value have often been stymied by confounding mechanisms. I use the unique circumstances surrounding the 1999 Columbine Shooting to estimate the effect of social stigma on asset value. Using a difference-in-differences model with property fixed effects, I find the immediate effect of stigma from the Columbine Shooting is 5.7% of a property's value after one year. This implies a $13 million loss from property sales in the year 2000 alone. The results are robust to numerous specifications and synthetic control placebo tests. This suggests that social stigma plays a role in consumer preferences.”
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.”
Books, eBooks & Other Resources
Home Buyers' Checklist (eBook)
Homeowners' Legal Bible (eBook)
Investing in Fixer Uppers (eBook)
Books, Videos, Research Reports & More
The resources below are available for loan through Member Support. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Member Support at 800-874-6500 for assistance.Death and Disclosure: Legal Strategies for Dealing with Stigmatized Properties (October Research Corporation, 2007) HD 1341 R22d
An Examination of Stigmatized Housing in Ohio (Columbus, OH: Ohio State University, 2000) HD 1341 L32
Information from NAR
State Issues Tracker—Click on State & Local Resources, then click on State Issues Tracker under the Resources heading. Sign in with your nar.realtor user name and password. Click on Seller’s Required Disclosures to find out which states require disclosures of psychologically impacted properties.
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