What To Do When Selling A 'Stigmatised' Home

6 June 2017
Every home has a history, but some histories are more chequered than others. Crime scenes, murders, tragic accidents and other grisly happenings don’t just attract media attention: they can also put a potential buyer off.

Morbid it may be, but how would you feel if you knew someone had died in what was now your bedroom? Or would you view a property in a different light if you were informed it had been a notorious drug lab or drug den in an immediate past life? There is no definitive answer. Because we live in such a culturally diverse country, things that concern one group of people won’t affect another group.

In America, properties are labelled ‘stigmatised’ if an event on or near the property has affected it. Here in Australia, a ‘material fact’ is the way we refer to it.

If the walls could talk

A ‘material fact’ that could make a property “undesirable”, (for example, a murder or a suicide), should always be considered by prospective buyers or tenants, even though market forces really are an overriding factor.

We all have varying thresholds and different views on what we find disturbing. Beliefs and superstitions are very real in certain cultures. There are some people who don’t like buying properties where there has been a divorce. Some cultures don’t like particular house numbers, some hotels don’t have certain floors. And the list goes on.

Highly-publicised murders at known addresses are a particular turn-off for some and, realistically, can have an impact on the sale price. However, it seems to depend upon not only how recent the murder was, but what kind of a murder it was as well. It could be an incident that was particularly gruesome, involved multiple people, or children. Also crucial to the saleability or rentability of a property is the time frame of the murder or whatever horrifying act left a property stigmatised. The more recent, the more chance potential buyers will stay away.

Look at the big picture

Let’s face it: The older the home is, the more likely it is someone may have died there. In fact, in colonial times it was common for births and deaths to occur at home. So if you’re shopping for a colonial home and you’re easily creeped out, you might want to buy something newer.

But let’s look at the big picture. Sad to say, death is a part of life. So are marriages, children growing up, family reunions and all the other happy events that occur in homes every day. Some people have strong superstitions and won’t go near a house for sale if it’s known (or suspected) that someone died there, even if it was from natural causes. On the other hand, many accept a death in homes decades into the past and spend hundreds of dollars to stay at certain historic properties, lured by the chance they may have a ghostly encounter! A more recent or gruesome death is harder to deal with, it seems.

The market for murder houses

Common real estate knowledge decrees that when a bad event is fresh in someone’s mind, the effect on the home’s value is likely to be that of relocating it to a main road – thereby potentially slicing up to 10% off its value. This is not set in cement though. People forget pretty quickly and time heals the wounds of the past. Unlike a main road that will always be busy, over time and successive sales, the property in  question will shake off its past. New generations and interstate and overseas buyers are often unfazed by a property’s dark history.

People may be more forgiving of past real estate transgressions when the property market is hot. The type of buyer could make a difference as well. Developers may be less interested in the history of a property, while an owner-occupier is likely to be more concerned.

Your right to know

While some prospective buyers will not be swayed by a property’s background, it is certainly likely to make others question their interest in purchasing. That’s why the real estate industry now has a duty to disclose murders, suicides and other ‘material facts’ that may be off-putting to buyers.

While standards vary state to state as to what agents are required to reveal when selling a property, stigmatised properties can often fall under the requirements of Australian consumer law in place to prevent misleading conduct. This issue came to a head when part of the NSW Act was thrown into the spotlight by the Sef Gonzales case.

In 2004 the Sydney home in which Sef Gonzales murdered his family was sold to some (devout Buddhist) buyers who were unaware of its tragic past. Once they found out about the home’s history, they didn’t want to proceed with the purchase. This prompted a review of the NSW laws surrounding disclosure. The agent was ordered to refund their non-refundable deposit, and the home was later sold for less than the original price.

The law changed as a result of that review and real estate agents must now disclose any ‘material fact’ before they can sell a property. What actually constitutes a material fact isn’t always clear, although the Office of Fair Trading does give general guidelines.

To add to the complexity, the laws in all states differ. Victoria, for instance, has legislated that agents are required to warn buyers a murder has occurred at a home only if asked. This puts the burden on buyers to look into the grim chapters in a property’s history. Luckily most agents agree there’s an obligation to tell people what’s gone on and that it is in the seller’s best interest to tell buyers about a crime, to prevent later disputes.

While local residents might remember crimes, out-of-town buyers could be caught out so it’s always best to speak up and ask the real estate agent about a property’s previous history. It may matter to you, it may not, but you have a right to know.

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