Stigmatized Properties

Quick Takeaways

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.

References

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

Do You Have to Disclose a Death in a House? (realtor.com®, Mar. 7, 2023)

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.

How to Avoid Unexpectedly Buying a Haunted House—Because It Could Happen to You (realtor.com®, Oct. 16, 2022)

“A haunted house falls under the category of a stigmatized property,” says Bull. A stigmatized property is a home that may be displeasing to buyers for other reasons besides its physical condition.

“In many states, it’s not mandatory to disclose a stigma like a murder, suicide, or crime—or paranormal activity. You can check with a real estate attorney in your state for the rules,” she says.

Buying and Selling Stigmatized Property: An In-Depth Guide (Clever Real Estate, Oct. 21, 2021)

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

Nearly 70% of Prospective Buyers Would Buy a Haunted House If It Checked All Their Boxes (Zillow, Oct. 24, 2023)

According to a survey conducted by Zillow, “More than two-thirds of prospective buyers (67%) say they could be convinced to buy a haunted house if it had appealing features, were in the right location, were more affordable or for another reason. These findings highlight the extreme compromises buyers are willing to make in order to land a home in today's housing market.”

Buying A Haunted House Wouldn’t Spook A Third Of Americans (Rocket, Jun. 1, 2023)

One-quarter of adults claim to have lived in a haunted house
1 in 3 Americans would be willing to purchase a house that is haunted
Only 21% would try to sell a house they purchased if they discovered it was haunted

Does a “Haunting” Reduce a Home’s Value? (Experian, Oct. 2, 2022)

“Some stigmatized properties associated with dark histories may be available for 10% to 25% less than typical market 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. 30, 2023)

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.

How to Buy Abandoned Property: A Step-by-Step Guide (Money Tips, Jan. 23, 2024)

This detailed article explains how to find abandoned properties for sale, provides guidance on the purchasing process, and lists the pros and cons of buying an abandoned house.

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

eBooks.realtor.org

Home Buyers' Checklist (eBook)

Homeowners' Legal Bible (eBook)

Investing in Fixer Uppers (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

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

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