Get a Bargain on a Stigmatized Property

Stigmatized properties are those that were the scene of a gruesome crime or event, the home of a notorious criminal, or both. In highly publicized cases, like that of O.J. Simpson, the house is often purchased, razed, and a new home is built to try and shed the past. In others, such as the Modesto, California home of Lacy and Scott Peterson, market conditions have prevented a teardown.

A 2000 study from Wright State University found that on average, stigmas caused a sale price to drop just three percent. But stigmatized homes were also on the market 45 percent longer than comparable houses. “Over time, memories fade and the stigma usually fades away,” says Randall Bell of Bell, Anderson & Sanders LLC, a Laguna Beach, Calif. real estate consultancy. “But can you afford to wait it out is the question.”

“Buying a house is a business transaction, but it’s also emotional,” says Frank Harrison, a property appraiser based in Woodstock, IL. “You may find a home you like but then you’re told someone died there. If an old man dies in his sleep, you might not think that’s so awful. But if it was a child, or a suicide, that might cause you to reconsider.”

In gentrified urban areas, stigmas can take on other forms. “In cities going through redevelopment you might have a block of beautifully re-done homes and a local gang decides to tag the area as its territory,” says Harrison. “Until law enforcement gets involved and the graffiti stops for good, values in the entire neighborhood suffer.”

Another issue occurs when a home with a recent past as the area’s “crack joint” or meth factory is remodeled and put on the market. “It’s usually the last one on the street to sell,” says Harrison. “It may be beautiful now, but people worry about the drugs and chemicals used there and they also wonder, what if an old customer shows up at their door one night looking for merchandise?”

Shopping for stigmatized properties

Most states have laws requiring Realtors and/or owners to disclose stigmas to potential buyers, but the rules can be vague. “There are quite a few intricacies and exclusions,” says Bell. “If something is at all an issue for you, ask them directly.”

Interested in buying a stigmatized home? You’re not alone. “They’re bargains if you can accept their past,” says Harrison. One of his more memorable appraisals was for a couple who purchased a Chicago home that was the site of a brutal murder. It was bought by a soldier and his Japanese wife who were happy to get a nicer home than they thought they could buy and who didn’t mind the home’s lurid history. “The wife brought her father to live with them from Japan and they felt very comfortable putting him in the room where the crime occurred.”