I’m about to share something with you that I learned many years ago in real estate appraisal school. When I first heard it, I thought my instructor was joking. But as she proceeded to explain, I realized it was very real.
The story has to do with how real estate values are affected by paranormal activity, ghosts, or stigmas of being haunted. I learned that if a seller knows of any of these activities going on in their home, they must disclose it! Sound too kooky to be true? That’s what I thought… but consider this scenario:
Mike and Ann are moving from New York to New Orleans. They found a charming old home in the Garden District, one with incredible architecture, rich history, and plenty of character. The home has been on the market for nearly a year. Mike and Ann submit a low offer, and much to their surprise, it’s accepted! They are very excited about their move.
After settling in, they quickly learn from neighbors and locals that the home has long been rumored to be haunted. Mike and Ann are now the rightful owners and become frightened by the news. There was nothing in the disclosures that stated anything out of the ordinary. They decide to list their home and after 2 years on the market, realize that they’re sitting on an illiquid asset. What happens here?
First and foremost, if something is material fact it must be disclosed. The fact that the home had “paranormal activity” of course cannot be proven. The stigma in the market area, however, is very real, and is a material fact. Court rulings have set precedent in these instances that would give Mike and Ann a case.
The lesson? If you’re in doubt about whether or not to disclose something, it’s always best to disclose it. Or, like my old appraisal instructor used to say… “Disclose, disclose, disclose!!”
Interesting articles that discuss haunted houses, superstitions, and paranormal activity as it relates to real estate:
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