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What if the walls are bleeding?

By
Property Manager 166201 & 49406

I admit it, I'm a Facebook junkie!   In my own defense though, a lot of great things have come from some of the hours I waste there.  A fellow broker and friend of mine here in Las Vegas (Dave) like to ask a random question every day and see where the discussion goes.  Today's question was:

Would you purchase a home that was said to be haunted?

 

This has always been a sensitive issue for me that began in 8th grade and intensified as I dug in deep to write my Nevada pre-licensing course.  In the Spring of 8th grade (back in the stone ages), the movie version of the Amityville Horror was all the rage, but I was too young to see it in the theatre.  Good thing too, because the movie sucked!!!  I don't remember where, but I got ahold of the book somehow.  I was hooked!  No one saw me for three days.  I couldn't put the book down.  I read 'till I fell asleep, took a bath so I could read in the tub, read in the hallways and even during class.  For three days, I read that book virtually non-stop.  I was facinated by the story!   

 

After finishing the book, I research the real story behind it and found that it was pretty interesting in and of itself.  In December 1975, George and Kathy Lutz and their three children moved into 112 Ocean Avenue, a large Dutch Colonial house situated in a suburban neighborhood in Amityville, on the south shore of Long Island. Thirteen months before the Lutzes moved in, Ronald DeFeo, Jr. shot and killed six members of his family at the house. After 28 days, the Lutzes left the house, claiming to have been terrorized by paranormal phenomena while living there. [Wikipedia]

 

Fast forward about 22 years and I am reserching the topic of stigmatized properties for my Nevada Pre-licensing course.  I had always been taught that all material facts about a property must be fully disclosed, even if you don't think it's a big deal.  That includes supersitions, Fung Shwai and even rumors, but in doing my research,  I learned that the State of Nevada decided to take the choice from Nevadans and decided that certain issues ARE NOT material, despite actually being material.  NRS 40.770  says that (paraphrasing) a history of death, crime, and/or violence is NOT material to a real estate transaction and therefore does not need to be disclosed to a buyer.  California, on the other hand says they are, but only if they/it happened in the past three years.        

 

I've always felt that the issue of what is a material fact is subjective and personal and that the state has no business determining what is and what is not material.  But they do, and they do it differently all over the place.  We've discussed Nevada and California already.  In Massachusetts, for example, the possibility of a property being “psychologically impacted” isn’t considered a “material fact required to be disclosed” to potential buyers. In Virginia, emotional defects like murders and ghost sightings only have to be disclosed if they physically affect the property.  [http://mentalfloss.com/article/29123] 

 

I've was taught about and agreed with the state of New York in Stambovsky v. Ackley (169 A.D.2d 254, 572 N.Y.S.2d 672, 1991 N.Y. App. Div.), where the appeals court decided that "A condition that impairs the value of property, known to the seller and left undisclosed to the buyer can constitute a basis for rescission of the contract (failure to disclose a material fact)."  The Plaintiff, Stambovsky, brought suit to rescind a contract to buy a house after he discovered the house was purported to be haunted, thus lowering its value. [Bloomberg Law Abstract]   The claim was that the seller had an obligation under New York law to disclose the issue, not because it was true, but because people believed it, making it material.

 

While the truth of the issue of haunting is also purely subjective, when you boil it down to money...or more specifically supply vs. demand, you see clearly how the subjectivity of the belief directly affects demand and therefore value.     If more than just a few people believe the rumor that a place is haunted and won't buy, the demand for that house is suppressed and therefore the value depressed.  Since most real estate issues are really about money and value, the rumor that a home is haunted, may be total crap, but since people believe it and act according to their beliefs, the "haunting" is a material fact. 

 

Boiled down, it's not much different than the issue of money itself.  Without the belief/perception of value, a hundred dollar bill is just a picture of Benjamin Franklin.  The value of our money is in our belief that it has value.  Therefore if your community believes that Fruma Sarah is haunting your 3 bedroom bungalow, then she is...even if she's not.  Another glowing example of perception becoming reality!!!   

Thanks to my muse, Dave Crete. 

Jay Rosen
Las Vegas, NV

BTW:   Fruma Sarah is the ex wife of Lazar Wolfe, who Golda pretended would haunt Tevya if he let his daughter marry Lazar. (Fiddler On The Roof.)  I always think of Fruma Sarah when I think about haunted houses.  

May 05, 2015 12:36 PM
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Best Hawaii Realtor!

Aloha Jay Rosen maybe one can say "Beauty is in the eyes of the beholder".  See my blog click here.

May 05, 2015 01:03 PM
Michele Connors
The Overton Group, LLC Pitt & Carteret County - Greenville, NC
Your Eastern North Carolina Realtor

I once sold a condo that a person committed suicide in. We were not told on disclosures or by agent... and we did not know until walk thru prior to closing ...the unit was empty and there was a large "Stain' on the carpet where the bed was every other time we had been there.. 

We did negotiate new carpet before closing.  Was a 1st for me.

 

May 06, 2015 08:14 AM