Realtors are required to disclose material deficiencies in the house. Leaky roof, flood-prone basement, whatever. But are they required to disclose the home’s history if the history is a little…uh…shall we say, gruesome? What about homes where murders occurred – are Realtors obligated, by law or by ethics, to reveal that fact to the potential buyers?
Turns out, the answer to that question depends on where you live. Properties which have been “stigmatized” or psychologically impacted are not handled the same in every state.
In 15 Houses Where Murder Killed the Property Value, the author describes famous murders/deaths that resulted in the loss of property value, including the home of Nicole Simpson (OJ Simpson’s wife), Michael Jackson’s home, the Amityville Horror house, and the location of the Heaven’s Gate mass suicide. There can be little debate that a gruesome murder will reduce a property’s resale value, if the potential buyer is aware of it.
In most of the United States, there is no formal disclosure law, even for material defects in the property – they abide by caveat emptor, or let the buyer beware. Most of the states with disclosure laws require disclosure only of material defects. A few require disclosure of murder, suicide, or sex crime only if the buyer specifically asks. Of those that require disclosure of murder, suicide, or sex crimes, the law only applies if the crime occurred within the past 12 months. New Jersey is one of only a few states where complete disclosure is required, of material defects and psychological defects, within the past year and prior to that, whether a buyer specifically asks or not. According to New Jersey law, statute 11:5-6.4 "... the term "Psychological impairments" includes but is not limited to, a murder or suicide which occurred on the property or a property purportedly being haunted."
Some buyers consider stigmatized properties great investments. They know they can buy the property at a deep discount – 20-50% less than had the property not been stigmatized – and, if they can ride out the stigma, they’ll be able to make a great profit.
Other buyers deliberately seek out stigmatized properties and then market them as such. “Haunted” bed and breakfasts are popular for certain niche clients. It’s even possible to sell the soil on a particularly grisly murder scene on websites such as Serial Killer Ink.
But for the mainstream buyer, a stigmatized property isn’t worth the investment because, they reason, it will be too difficult to sell. There are too many great properties out there to buy one that won’t retain its value.
If you’re considering buying a property and aren’t confident that any psychological defects haven’t been disclosed, you can simply ask around. Neighbors may reveal what sellers won’t. Police records can be searched. Even Google searches may reveal crimes. The National Association of Realtors has a Field Guide to Dealing With Stigmatized Properties, which will let you know what an agent may or may not reveal in your state.
What if you wind up with a haunted house? Who ya gonna call?
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