Is This House Haunted? Selling Stigmatized Properties

By
Real Estate Agent with RE/MAX four seasons realty limited

I once listed a house for sale in Collingwood where a suspected murder had taken place.  I consulted with two lawyers about disclosure requirements and got two answers:  one was to follow the instructions of my client and the second was more of a question:  would want or need to know this and, then make my decision from there.  I'll tell you what happened later.

In an interesting seminar that I attended earlier this year, the instructor neatly categorized property stigmas into three categories:

1.  Pure Stigma where a property has been psychologically impacted by a suspected or actual event such as haunted homes Haunted Houseor, properties where a murder, suicide or death occurred
2. Physical Stigma where a physical problem has affected the property such as UFFI, mold, asbestos, lead-based paint or oil tanks and,
3. Neighbourhood stigmas when the house is located in an area known for a high crime rate or in a neighbourhood where a suspected or known criminal resides.

REALTORS® have a duty to discover and disclose facts about a property that could affect a purchaser's decision to buy a property.  Our Standards of Practice lay-out our obligation to discover facts and to the avoid error, misrepresentation or concealment of those facts.  We can also not exaggerate or advise on matters outside the scope of our real estate license or, break rules of privacy and confidentiality.  It's a tricky area, especially in Ontario where rules of disclosure of stigmatized properties are not clearly spelled out in any legislation.

The question comes down to, what is a fact?  If a house contained lead-based paint and it was removed, it is a fact and there is no question it should be disclosed.  But is a haunted house a fact?

My own policy is to always disclose all known stigmas and to let the potential buyers decide if it matters to them or not.  For Sellers, I doubt they'd like to endure the pain and expense of a lawsuit where a judge can decide if it matters or not.  For buyers, it is important to ask the questions and, to deal with a local REALTOR® who knows about local issues, stigmas and their effect on property values. By discovering and factually disclosing pertinent stigmas, I sleep well at night knowing the right thing has been done.  My reputation relies on it and so do my clients.

About the house I mentioned.  We did disclose the stigma and the house sold.  Sadly, there were two suicides and a fire in the house in later years.  Maybe the house was cursed.  Maybe not.  No matter what, I have always been thankful that the buyers were fully informed.

Comments (8)

Jo-Anne Smith
Oakville, ON

hi Marg,

I've listed and sold haunted houses in which the buyers knew of the ghosts and actually there were battles over the houses BECAUSE they were haunted......

definitely better to disclose.

Jo

Apr 06, 2010 12:54 PM
Not In Real Estate Any Longer
Autaugaville, AL

I watched the hassles in the last brokerage I worked with when they were given a power of sale from a bank. The home for sale had a local stigma - it was said that it was a drug house.

To verify, my broker had to contact the police station to get a report. The report said it was not a drug house, but a visitor of the owners had been charged with trafficking.

Try to explain to the locals the difference...in their minds it was still a drug house and it was hard to squelch the rumours. In the bank's mind it was not a drug house and they wouldn't reduce the price.

It was a real hassle, but ultimately when it didn't sell after months had gone by, the bank finally gave in, reduced the price and the house sold.

Goes to show that no matter what the stigma, price still sells the house.

Apr 06, 2010 03:43 PM
Fred Carver Personal Real Estate Corporation
RE/MAX Camosun Victoria BC Real Estate - Victoria, BC
Accredited Real Estate Consultant

Hi Marg.....Disclose Disclose Disclose..unless your Seller says No..if the no means not disclosing a latent defect, then drop the Listing and Seller, if they say we do not want Buyers knowing our Personal Problem, then do not disclose, as for Ghosts, that's beyond my expertise and I suspect yours..I guess make light of it, unless your sellers says no.

Good Subject and certainly worth a feature on my Group

Apr 07, 2010 02:49 PM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Marg,

Very good post. The problem is that there is not very many legal cases on this issue. So, in many ways, it back to the basics.

Fred raises some good points.

Brian

Apr 08, 2010 12:52 AM
Marg Scheben
RE/MAX four seasons realty limited - Collingwood, ON
Edey - Collingwood, Ontario

I'm glad to hear you all agree about the importance of disclosure.  One that I struggle with is about a death in the home.  Many people today make the choice to die at home in a natural, non-violent way.  According to the lawyer who taught the seminar on stigmatized properties, this should be disclosed to potential buyers.  I'm not sure I agree with that.  What are all of your thoughts?

Pam, in the case of a rumour proven false, it is extra difficult but surely, not all potential buyers would have that concern nor does it need to be disclosed as there is nothing to disclose.  In fact, I'd be challenging a REALTOR who unfairly brings up the issue with a prospect as they are harming the seller for no valid reason.  Is it possible the house sold for less for other reasons?

Apr 08, 2010 10:04 AM
Sally Weatherley
EXIT STAGE RIGHT - Vancouver, BC
Vancouver Home Staging, Home Stager Vancouver, B.C

This is a hair-raising issue.  What I'd like to know is, did you have to sit in the house on your own during an Open House?  That would give me the willies, I think.  If it were a friendly ghost, it would maybe be a selling feature - if it were an angry, tormented, angst ridden ghost, perhaps not.  A home where someone has died of natural causes is an interesting dilemma.  You often hear of cancer patients who choose to die at home.  This is a natural cycle of life, so my gut feeling is you shouldn't have to disclose something like that, but I'm not a realtor - it just seems common sense.

Apr 10, 2010 03:31 AM
Marg Scheben
RE/MAX four seasons realty limited - Collingwood, ON
Edey - Collingwood, Ontario

Thankfully Sally, I didn't need to do an Open House on that one.  I agree it would have felt uncomfortable.

Apr 14, 2010 08:40 AM
Charlene Storozuk
Dezigner Digz - Burlington, ON
Home Stager - Burlington Ontario

This is a very interesting topic Marg. I think you did the right thing by disclosing the stigma. Good question from Sally. I'd be a bit nervous about doing an open house there too.

May 06, 2010 10:03 AM