| Marposen also wouldn't discuss
how her firm had set out to market what, in the business, is known
as a "stigmatized property"--a house with a cloud lingering
over it; a cloud that has nothing to do with structural soundness
and everything to do with what, in another age, might have been
described as bad vibes.
"We used a lot of discretion and made sure that only qualified
buyers looked at the home," Marposen said before cutting off
a brief interview.
But these days, there seems to be plenty to say about stigmatized
properties in general, as real estate agents increasingly head for
cover in the wake of lawsuits over just what exactly it is they
are required to disclose to prospective buyers.
In Illinois, sellers must reveal whether they know of any of 22
kinds of defects -- most of them structural, such as leaky roofs,
defective air conditioning, asbestos, etc. Illinois real estate
licensing regulations protect agents from liability for failure
to disclose a murder or suicide at a residence. In any case, however,
questions have to be answered honestly.
But around the country, legislatures and courts are pushing sellers
to 'fess up to a lot more, and the real estate industry is concerned
about how far to go in revealing such things as semi-trucks that
barrel down the street every day at 5 a.m., how close the house
might be to a landfill, and whether anyone has died on the premises,
even of natural causes.
Some might have to grapple with revealing that a pedophile lives
across the street, or that ghosts seem to bump around upstairs at
night.
Where such requirements aren't spelled out, real estate trade groups
are advising their members that it's in everyone's best interest
to find a way to let prospective buyers know about any existing
conditions -- or even potential ones -- that might return to haunt
an agent in court when the buyer says, "You should have told
me."
"It's coming up more and more," says Randall Bell, a
California appraiser who specializes in stigmatized properties.
"There are a lot of situations where nothing physical happens
(to the structure), but there's a measurable impact on property
values. Those kinds of laws are getting challenged more and more."
In the course of his work, Bell, who has picked up the perversely
marketable appellation "Master of Disaster," has been
called upon to appraise such infamous residences as Nicole Brown
Simpson's condominium, the house in which actress Sharon Tate and
others were murdered by members of the Charles Manson "family"
in 1969 and the home in Rancho Santa Fe, Calif., where 39 members
of the Heaven's Gate cult committed suicide in 1997, among numerous
other notorious properties.
Bell says that such infamous homes constitute a small amount of
his practice, and that most of his appraisal work is related to
natural disasters or environmental contamination.
"I just got back from Chernobyl and I am going to the Marshall
Islands to assess damage from nuclear testing," he said in
a telephone interview from Hawaii. "I'm working on two environmental
cases here. That area has gone ballistic in interest."
Bell isn't just talking about environmental stigma on a Chernobyl
level: He says it's making a daily impact on local real estate values.
"Science has pretty much shown that the contaminants that we
have taken for granted are harmful. People are taking this very
seriously."
Even so, Chicago-area real estate agents say that prospective buyers
ask remarkably few questions about such taints -- environmental
or otherwise -- that aren't provided for on mandatory disclosure
forms.
"Except when buyers come out of the East," suggests Honore
Frumentino, a Koenig & Strey agent in Deerfield. "It's
huge when people are transferred from there. People there are concerned
with (environmental) things that we haven't had to deal with."
Frumentino has had a few brushes with stigmatized properties: "I
once sold a house that had come on the market and quickly went off.
It was back on the market in a month" with no explanation,
even word-of-mouth.
"After my buyers had signed off and bought the home, we got
a call. `We need to disclose that there was a suicide in the house,'
" she recalls them saying. "I took a deep breath and called
my buyers. I told them there was something they should know,"
that a resident had taken his life in the master bedroom.
The buyers took it in stride, she recalls.
"One of them said to me, `Well, I guess it's about time that
somebody makes this house smile.' They purchased the house, redid
it, and they enjoyed living there for many years. I guess you need
to find the buyer who has that attitude.
"If it's somebody who is very superstitious or has (a similar
tragedy) in their past, they're not going to go for it. There is
basically a buyer for everything."
Sometimes, apparently not. For instance, John Wayne Gacy's house
in Norwood Park Township, arguably the most infamous house in Chicago,
was razed several years after the discovery there of 29 bodies of
boys and young men buried in its crawlspace. Later, a home was built
on the site, with the benefit of a new house number to help throw
off the gawkers.
Bell re-appraised the "Heaven's Gate" mansion just before
it finally sold in mid-September, apparently to a local resident.
Published reports pegged the sale price at $668,000, quoting county
officials who called it "a bargain."
"I wouldn't call it a bargain," Bell said in an interview
about a week ago. "It sold for what it's worth. It is a damaged
house. It requires a tremendous amount of work" to undo the
damage that resulted from the suicides.
"Once you do all that work, you're still left with a house
that's stigmatized. I know people who wouldn't even go inside the
house." Bell said he appraised it at about $700,000, and estimated
that un-stigmatized, it would be worth about $1.4 million.
He speculated that the new owner might consider tearing it down
and rebuilding, which was what was done with O.J. Simpson's house
in California. Agents said that it sold quickly, for close to its
$3.95 million asking price.
In what some might be deemed as a true triumph over stigma, the
house in Fall River, Mass., where, in 1882, Lizzie Borden was accused
(and eventually acquitted) of hacking to death her father and step-mother
with an axe, was turned into a bed-and-breakfast inn a century later.
Visitors pay $150 and up to spend a night in the room where, so
it's said, she "gave her mother 40 whacks."
Bell says he suggests to his clients that if they can't sell their
crime-stigmatized houses right away, they should consider renting
them out: "It gives the house a sense of occupancy, that life
goes on.
"One of the interesting things about (such properties) is
that it's relatively easy to rent them out. A buyer would be putting
down equity dollars, and it's a big financial commitment. A renter
is not putting down any equity dollars. They're there on a temporary
basis. If it's a big enough annoyance to live there, they'll move."
Bell has devised 10 categories of "diminution in value"
that affect a property's appraised worth, and he generalizes that
a well-publicized murder can lower a house's sale price by 15 to
35 percent, although the reduction may be steeper in upper-bracket
homes, where buyers are known for being choosier, anyway.
Time will help heal that gap, he says.
How long does it take?
"There are a lot of variables," Bell says. "If you're
talking about a single suicide in California, you might find that
no time needs to go by. People don't react to that.
"If you have a murder that's particularly upsetting, it could
take five to seven years (in many parts of the country). Typically,
then things get back to normal. It's quicker in California. California
is transient, so you have people moving in and out every three to
five years, so you have new neighbors."
In some areas on the East Coast, however, it's more common to have
several generations living in the same locale, so a stigma might
be hard to shake, Bell says.
A few states, such as California, require that sellers disclose
whether anyone has died on the premises within a given period.
"The (Illinois) Real Property Disclosure Act doesn't require
this kind of disclosure, but there is this common-law concept of
duty of disclosure," says Debra Stark, associate professor
at the John Marshall Law School in Chicago, explaining that the
ethical "oughts" are what drive disclosure disputes.
Stark, who specializes in teaching real estate law, says the key
concept in such disputes is whether a property defect is deemed
to be "material" -- that is, would it affect the amount
of an offer or sale price?
"This is the key: The buyer could not discover (the defect)
based on a reasonable inspection. It would have to be a defect that
the seller is actually aware of," Stark said.
"But then there is the whole issue of what to volunteer. Let's
say somebody is looking out the window and he says, `Oh, what a
beautiful view,' and the agent knows that a big building is going
to be built that will block that view. She probably should say that."
As agent Frumentino puts it, "After 22 years in the business,
my rule is that you disclose, disclose, disclose, disclose and then
when you're through, you disclose some more."
However, most agents interviewed for this story agreed that the
potential buyer needn't be hit with it upon crossing the threshold
for the first time.
"I think what you try to do is find a way to bring it up in
the course of conversation," explains Wheaton agent Sue Fortson,
echoing a point of view offered by a number of her colleagues.
The real estate industry appears to be encouraging its practitioners
to be more forthcoming, even where laws don't require it. The National
Association of Realtors has issued guidelines to help its membership
distinguish the times when they should speak up from the times they
may remain mum.
It has even offered suggested responses to such queries as whether
anyone in the house has had AIDS: "It is the policy of our
company not to answer inquiries of this nature . . . since this
information is not material to the transaction. In addition, any
type of response may be a violation of federal fair-housing laws.
If you believe this information is relevant to your decision, you
must pursue the investigation on your own."
The NAR lobbying stance on proposed laws that would affect stigmatized
properties has been that the disclosure should relate to the home
itself, not the people who live in it. That's real estate agent
Tim Baker's point of view on the Lemak house: "It's a beautiful
home. Its four walls and roof should stand on their own merit. The
activity that occurred in the home was horrendous, but the home
isn't horrendous.
"The important thing is putting a family in that house and
returning laughter to it," Baker suggested.
"That's what that home needs now, some laughter."
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