Would you buy a house with a scary past? Not one that is deemed “historical” based on its lovely architectural features that peg a home to a particular time period, but rather one that has some kind of story behind it, which may not be all too pleasant.
Since I’m a huge crime buff, I thought I’d delve into some interesting points about buying a house with a back story (also known as “stigmatized property”).
Imagine finding out a house is for sale for 20% below the comps in surrounding areas: you’d think it’s a steal but in reality, there’s a reason for that lower price. Something sinister just happened in that house, perhaps some kind of unsavory crime, or catastrophe that has a psychological effect on people. Would you buy it? I personally don’t think I can stomach a house that is tainted in some fashion because I tend to be slightly superstitious about the vibes found in a house, so I’d pass. In effect, this is exactly what we did when we once faced this type of situation.
When we were shopping for a home in late 2001, we came across a well-framed, spacious house we thought that could work out for us, but as soon as we stepped foot in the foyer, I felt a chill up my spine. I couldn’t explain it except perhaps that the house seemed “dark” and “cold”. I clearly felt it (and so did one other friend who accompanied us in the tour), and it was later on that I was told that one of the owners had just passed away in his hospital bed. Well whatever it is, I sensed something! And despite the 10% price cut they gave us relative to other homes we were considering, we skipped on it.
Definitely no regrets! But here’s the epilogue:
Other house hunters saw the situation through a different lens and decided to buy that very house. They then proceeded to give the residence a cosmetic facelift and ended up selling it for 36% more than the original list price that was offered to us, after just a mere 3 years. Surely the hot market had something to do with it, but also the significantly improved ambiance, as the house looked like a totally different place after minor improvements were made.
Check out these Before and After photos of that house we almost bought. See how mood, appearance and atmosphere are changed significantly with simple paint jobs and a big yard clearing!
This is the bedroom when we first saw it. Notice how dark it is!
This is the bedroom after a “redo”. The home sold for a 36% profit in 3 years’ time.
Thick vegetation filled the yard.
A bright and airy yard all of a sudden!
This kitchen is way too dark and feels “old”.
A bright, amazing transformation with a refacing! No longer spooky.
So the moral of this tale is that there is opportunity in “stigmatized” properties, or real estate tainted by anything from scandal to crime, catastrophe or rumors of the supernatural. Stigma can mean anything to anyone though, and for some sensitive people like myself, even the recent natural passing of a previous owner may be enough to scare me away from buying a house. Faced with such a situation, how would you deal with such a property? Some thoughts on the subject:
How To Deal With “Stigmatized” Property
#1 Check disclosure laws of properties with questionable histories.
I’ve always assumed that the seller is liable for disclosing issues about a house. But from some of my readings it appears that not all states have this legal requirement. Find out the laws covering disclosure responsibilities and how far reaching they are. Also determine how these regulations play into laws that protect the privacy of the home sellers.
#2 There are realtors who specialize in this type of properties.
Believe it or not, there are real estate agents who deal with hard-to-sell properties day in and day out. If you’re in a bind, they’re the ones you want on your side.
#3 Don’t bring back the memories.
Tainted homes overcome their stigma at some point, but the black mark can return if something brings their story back in the limelight. Take for instance the house where the Jon Benet Ramsey murder took place. After 10 years, the house was finally overcoming its taint, until some guy named John Mark Karr confessed to the crime. Something like this will unfortunately impact a home’s value just as if the crime happened all over again.
#4 Stigmatized homes sell for less, but typically fetch 3% less than comps and around 45% longer to unload. But those with the most traumatizing events surrounding them can cut as much as 15% to 25% from its “regular” price.
#5 If you’re selling such a house, be patient.
Somebody looking for opportunity will eventually find your house and unfortunately, you may have to accept lower offers for it. If priced “right” (perhaps at a reasonable discount), the house should still move. Here’s an example of a house of horrors that sold at the right price: it was listed at $335,000 and sold at $261,000 for a 22% discount.
#6 Crime scene or other stigma lasts at least 2 years but can remain for as long as 5 to 7 years. Beyond that, our short memories forget all about what happened.
#7 Owners of stigmatized homes can market their home in one of two ways: play the stigma up or keep the story low key. If the stigma is played up, that’s because some people believe that they can sell a house due to its notoriety.
#8 Tainted homes are perfect as fixer uppers because a good rehab can completely change the psychological effect of such properties. If you change the look enough, you’ll feel like you’re in a whole different environment.
#9 Know the facts about a house before jumping to conclusions.
If you’re a home buyer, check out the facts of any story behind a home, especially one that has circulated in the media or has become sensationalized. Do some investigation and find out the accuracy of the information surrounding a stigma.
#10 The effect of stigma is supposedly difficult to measure, as compared to material or physical defects such as a cracked foundation, flooded basement or asbestos in the ceilings. Dealing with such a house can be tricky but can prove to be profitable if you get past the heeby jeebies and do a great job of “cleaning out” its past, say via a home improvement project, remodeling the home or asking a priest to come over and bless the house. Anyway, that’s what I would do.
Despite all that talk, I’ll tell you what I think is really scary. What can be more disconcerting than a house with “stigma”? Well how about living in a neighborhood where all the homes are in foreclosure, selling at auction and falling rapidly in price? I’d find that much more troubling.
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