This Mold House — What Is a Stigmatized Home?
When a California homeowner sold his 1,200-square-foot home for $210,000, it might have seemed reasonable to expect his next-door neighbor's house, with an identical floor plan and similar property, to fetch a similar price. However, when the second home hit the market only six weeks later, it was listed for significantly less. The reason? The house was stigmatized.
Despite showing signs of being well-maintained, the home had walls that harbored toxic mold, a consequence of previous water leakage. Alongside tasks like replacing carpet and linoleum, cleaning air vents, bleaching the walls, and repainting, the homeowner was advised to list the property well below market value. Their Realtor also recommended disclosing the house's history, flaws included.
Toxic mold is just one example of issues that can stigmatize a property, driving its value down compared to neighboring homes. Other potential stigmas include properties where suicides, murders, felonies, accidental deaths, or even the suspected presence of ghosts have occurred. Unusual circumstances can also deter buyers, as stigmatized houses often provoke psychological rather than physical concerns. Think of the house portrayed in the movie "Amityville Horror" – despite its Victorian elegance, few would eagerly bid for such a property.
Stigmatized houses typically aren't labeled as such in advertisements, nor are they marked with yellow police tape. Hence, for potential buyers, a low price may serve as an indicator of a stigmatized property.
If you find yourself wondering why a property is being offered at a bargain, it's prudent to inquire with the owner. Sometimes, the reduced price simply reflects a seller's desire for a swift transaction. However, if the issues are more complex, sellers may only be obligated to disclose them upon direct inquiry, depending on the disclosure laws of their state. For instance, in California, comprehensive disclosure is mandated, requiring sellers to inform buyers of issues even if not specifically asked. In contrast, Colorado sellers are only obliged to respond to direct questions.
State laws on this matter vary significantly, as stigmas involve real properties intertwined with personal values and perceptions – aspects challenging to legislate. Whether buying or selling, familiarizing oneself with the disclosure laws of the respective state is essential.