Considering Stigmatized Property

Similar in some ways to how a person with mental health issues may feel the social stigma commonly associated with mental illness, homes and properties can also become stigmatized. In the real estate world these locations are usually known as “stigmatized property” or “psychologically impacted property.” A property with this kind of local or media interest may be difficult to sell. Homes that might become stigmatized include those where a murder or suicide occurred, the home of a pedophile, the location of a drug operation or a drive-by shooting, or the address of a brothel. The knowledge that something like this occurred in your home, even if it was at another time, can be very unsettling for potential buyers and result in difficulty selling the property.

That being said, a potential buyer’s own values, perceptions, beliefs, and priorities will also affect potential sales. Not everyone is concerned with a property’s history especially if the property has no physical defects. And this is one of the distinguishing features of stigmatized properties – the stigma has not affected the appearance or physical integrity of a property. What are known as “patent defects” are defects that are completely evident, such as a structural or physical problem. Latent defects on the other hand are invisible problems that may not come up during a home inspection. A haunted house – or one that has been rumoured to be haunted – is an interesting example of a stigmatized property that is not the scene of a crime but rather holds the kind of story that generates fear in some people, and intrigue or even comfort in others.

In British Columbia sellers are not required by common or judicial law to disclose information that a property may be considered stigmatized. In other places such as Quebec for example, or the United States where at least half of the states have laws in place requiring home owners to disclose such information, property owners must reveal any the stigma associated with their home. When it comes to violent crimes, Quebec is the only province to have a disclosure law requiring the seller to disclose this information.

In contrast to this, the sentiment of “buyer beware,” also termed “caveat emptor,” is alive and well in our province. Having an experienced realtor like Ron Neal and the real estate agents of The Neal Real Estate Team of RE/MAX Alliance Victoria who are familiar with Victoria real estate, know what to look for, and who will take the time to check for possible stigmatization of the property, provides potential buyers with an important source of protection both as a buyer and as a potential future seller of a property. Even if asked directly, neither the seller nor the seller’s agent is in fact required to answer questions from potential buyers pertaining to stigma. Potential sources of information about stigmatized properties include the local police station, online newspapers, and neighbours. If your real estate agent is aware of or suspects a stigmatizing issue with a property you are considering, he or she is required to disclose this information to you, the buyer. This is in accordance with the agent’s ethical disclosure requirements, which are set by the Real Estate Council and are ethical standards to which The Neal Estate Team of RE/MAX Alliance Victoria Realtors adhere. Asking the seller the right questions is an essential protective measure that you will want your agent’s help with.

If you are a seller struggling to part with a stigmatized property, your agent should advise you to answer any questions about the stigmatizing issue very carefully. Having the advise of a lawyer may also be something you want to consider. An argument can be made for simply “doing the right thing” by disclosing openly a home’s history. It is very likely that the buyer will find out anyways (for example from neighbours) and this can prove problematic in the future. Several court cases have been heard in BC where a buyer has become very upset with what they find out about their new property.

An American study by James Larsen and Joseph Coleman (2001) revealed that at least in the state of Ohio, stigmatized properties sold for 3% less than houses that were not considered stigmatized and that they stayed on the marked 45% longer. So in fact the time on the market rather than selling price may be the biggest consideration and concern for sellers of a stigmatized home. Talk with any of the agents on Ron Neal’s The Neal Estate Team of RE/MAX Alliance Victoria to determine if the potential problems of a stigmatized property are a concern for you.

Contact Ron Neal and The Neal Estate Team of RE/MAX ALLIANCE for no pressure professional assistance with buying or selling real estate in Greater Victoria:

ronneal@remax.net or call 250-386-8181

Reference

Larsen, J. & Coleman, J. (2001). Psychologically Impacted Houses: Broker Disclosure Behavior and Perceived Market Effects in an Unregulated Environment. Journal of Real Estate Practice and Education, 4(1), p. 1-16.