Should You Buy a Stigmatized Property?

When you decide to buy a home, you are usually thinking about all the memories you’ll make in your new home. There’s nothing wrong with doing that, but it may also be worth your while to research the property’s past as well. You can achieve this by doing a stigmatized property search, talking to neighbors, or asking a real estate agent.  Just doing these simple things can save you from purchasing a stigmatized property. Let’s define stigmatized property and discuss the different types.

1- What is Stigmatized Property
2- Types of Stigmatized Property
3- Buying the Property
4- Selling the Property
5- Should You Buy a Stigmatized Property

What is Stigmatized Property?

A stigmatized property is one where an unfortunate incident or tragedy has occurred, such as a murder or a suicide.  Knowledge of such events can hinder the sale of a house even if the property’s aesthetics are pleasing and it’s in great condition.

Most buyers don’t want to take on a property that was the site of criminal or violent activities, but some buyers won’t be deterred by it. You can often buy stigmatized properties at a great price because they are priced to sell.

Types of Stigmatized Property

The idea of having a stigma attached to a house can be as unique as the house is. Some people are excited by the idea that their house has a past. Unfortunately, if the history of the house is well known, you may experience frequent tourists or visitors who come to the property as a type of pilgrimage to take pictures to share with friends and family or to share on their social media feed.

1) Haunted Stigma

While most people might not be bothered by temperature fluctuations, involuntary furniture movement, or unexplained noises, others might be scared off. The fact is that paranormal activity, or a haunted stigma, does not count as a material fact that must be disclosed when listing stigmatized homes for sale. The best option is to ask the previous owners via their real estate agent whether the house has had any supernatural events occur and hope they will be transparent if it has.

2) Illegal Activity Stigma

Criminal activities will likely negatively impact a property sale as well. A house that has been known to be a hot spot for prostitution, drug deals, or other illegal activity will probably not be high on anyone’s buy list. From a financial perspective, a criminally stigmatized property might fetch a good deal.

However, it comes with issues that might negate the benefits of saving money. For instance, if the house is notorious for being part of a major crime, there is a chance that unsavory characters will still come to the house because they’re unaware that the property is under new ownership. It may be difficult getting the neighbors to warm up to you as well.

3) Death Stigma

Natural deaths in a house do not create a stigma, but the house may be infamous and become a stigmatized property if the death was a suicide or murder. Of course, if you aren’t bothered by that, the fact that it happened won’t negatively impact your view of the property.

4) Debt Stigma

This is another common stigma attached to properties. If the prior owners had heavy debts, it might become a nuisance if you continue getting correspondence from collectors about late bill payments. It may prove helpful to research the previous owners’ property taxes. If you discover the owner moved without paying their property taxes, it should raise concerns for you, and you should discuss this issue with the owner.

Buying a Stigmatized Property

It is less likely that your real estate agent will give you information about a property’s stigma without you ever having to ask. Ask your agent outright if a house is a stigmatized property. That way you know upfront what the stigma is and determine whether or not it bothers you.  This will also give you a chance to think through it. Whether the stigma attached to the property will make it challenging for you to sell it in the future. The fact is that some stigmas like debts or death evaporate over time. But stigmas like paranormal or illegal activity may last for the house’s lifetime.

The main advantage of considering a stigmatized property is that you might get a better deal from the previous owners. The downside, however, is that you may have to deal with the fallout or residual effects of the stigma. Additionally, it may be tough to sell the house when the time comes.

Selling a Stigmatized Property

Sometimes a buyer may not find out about a stigmatized property until after they’ve bought it. If and when they’re ready to sell the stigmatized property. The best way to go at it is to be upfront with your real estate agent about the stigma. Once they know this potential hurdle, they can help you position the house to sell. Also, do whatever you can to help mitigate issues for the new owners. So that it’s not an issue if they become interested in buying the property.

Sometimes, the stigmatized property attracts people looking for a unique value-add. Such as a haunted house, or potential buyers who will look to make a good deal. The downside is that you might have to sell the property for less than market value because of the stigma.

Should You Buy a Stigmatized Property?

Even though stigma is attached to a property. It is usually good to buy a stigmatized property from a financial perspective. Stigmatized homes for sale generally won’t sell for market value. You can make improvements or renovate its interior or exterior and flip a stigmatized house for a profit. As stigmas evaporate with time. The time you spend renovating the house might change the public’s perception and the value may go back up.

Having said all that, don’t just consider a house price since some stigmas may become burdensome for you. It largely comes down to which stigma bothers you and how tolerant you are about it.