Stigmatized Properties Make a Tough Sell

In this Maryland home, in what's considered a nicer neighborhood

just outside Washington, D.C., a father and daughter were murdered

in 2002. The subsequent owner was shot and killed there in 2010.

Properties in which someone has been murdered or died in can cast a gray cloud over it, real estate professionals say. 

Most states don’t require real estate professionals to disclose such details of what can be considered a “stigmatized property” in potential buyers’ eyes. However, some home buyers become angry  if their real estate agent doesn’t say anything before about the home’s shady past. 

“In most states, a seller isn't required to voluntarily disclose nonstructural issues such as homicides on the property,” Holden Lewis, a real estate expert at Bankrate.com, told MSNBC.com.

Alaska and South Dakota are the only two states that mandate the seller’s agents disclose whether a homicide or suicide occurred in the listed home over the last 12 months, according to the National Association of REALTORS®.

In some other states — like in Connecticut, Delaware, New Hampshire, North Dakota, and Oklahoma — real estate agents are only required to answer the question truthfully if a buyer asks about deaths that have occurred on the property. 

Stigmatized properties have been found to linger longer on the market compared to similar properties. They also tend to sell for about 3 percent less, according to a 2000 study conducted by Wright State University professors of 102 “stigmatized” homes in Ohio. Researchers found that the “stigmatized” homes took 45 percent longer to sell, on average, than comparable homes.

But a homicide home’s value dip can be even steeper if it’s located in a rural area where violent crime is less common and neighborly gossip echoes for generations, contends Bennie Waller, a professor of finance and real estate at Longwood University in the central Virginia town of Farmville, population 8,200.

In 2009, four people – two parents, their daughter and the daughter’s friend – were bludgeoned to death in a home not far from Longwood’s campus. The 20-year-old murderer, an aspiring rapper who later pleaded guilty, knew the daughter. Before the crimes, the home was tax assessed at $240,000. Later, it was auctioned to an investor for $104,000 but it remains on the market, unoccupied, due to the emotional scars left by the homicides, Waller said.

At another house next to the school – “a fantastic property” with a swimming pool, Waller said, Robert Bruce shot and killed his wife in 1991. Locals still refer to the residence as “the Bruce house.” That place is tax assessed at $200,000 but was similarly sold at auction for about $90,000. It, too, remains empty.

Source: “3 Bedroom, Hot Tub, 3 Murders: How Homicide Homes Hold Their Secrets,” MSNBC.com