How to sell a stigmatised property

How can you overcome your house’s dark past when you’re trying to sell?  Here are four ways to ensure that you don't lose big when selling.

How can you overcome your house’s dark past when you’re trying to sell?

Here on, we regularly tell the stories of some of Australia’s most stigmatised properties in our weekly Safe as Houses column. Hopefully, you haven’t seen your own address pop up. If you do live in a stigmatised property, there are some things you should keep in mind when it comes time to sell.

Be aware of events that can stigmatise a property

Your property doesn’t have to be the site of a murder to carry a stigma. A variety of factors can leave a stigma. A stigmatised property is defined as a property where any event has occurred that could cause religious, moral, emotional or psychological discomfort to the buyer.

This is obviously a pretty broad definition and could mean very different things to different people. A property could be stigmatised by a murder, a suicide, criminal activity or, in some cases, even death by natural causes. In some cultures, even events such as the divorce of the former occupants could stigmatise a property.

Buying a property and trying to avoid a murder house? Read our guide

Be honest

If your property has played host to tragic or unseemly events, it’s best to be up-front about it. Laws on disclosure vary from state to state, but there is a general duty to disclose any material facts about the property that might affect a buyer’s decision.

In New South Wales, this law was instituted following the Sef Gonzales case. Gonzales murdered his parents and sister in the family’s North Ryde home. The property was later sold to Ellen Lin and Derek Kwok, who were not made aware of the home’s history. The couple successfully recovered their deposit, and the agents who sold the house were fined $20,000.

6 collins street feature image

The Gonzales home. Source: Google Maps.

A similar case occurred in Victoria, when a developer unknowingly bought land on which a young man had committed suicide. A memorial to the young man had been set up. When the developer, who had plans to subdivide the land, discovered the property’s history, the vendor was taken to court. The Supreme Court of Victoria sided with the developer, saying that there was a duty to disclose whether a property was “psychologically stigmatised”.

The onus of disclosure is often on the agent rather than the vendor. However, agents can’t disclose what they don’t know. For this reason, many agents include vendor disclosure requirements in their agency agreements.

While the definition of a material fact may sound rather vague, it’s best to err on the side of caution when it comes to disclosure. If researching our Safe as Houses column has taught us anything, it’s that there’s an abundance of information on the history of various residential properties. Rest assured, if you don’t inform buyers about the history of your property, they will almost certainly find out. This doesn’t mean you have to go overboard in proactive disclosure. It does mean that you should answer any potential buyer’s questions completely honestly.

Manage your expectations

If you own a stigmatised property, its history could have a material impact on its value. Consumer advocate Neil Jenman, who helped Ellen Lin and Derek Kwok get out of the sale of the Gonzales home, said a stigmatised property may see its value reduced by up to 10%. Some estimates are even more dramatic. Property valuers in a Hong Kong study agreed that a home where a murder or suicide occurred could see its value fall by 25-30%.

In addition to impacting the sales price, a home where a traumatic event occurred could also take longer to sell. A US study found stigmatised homes took 50% longer to sell than comparable properties. Closer to home, even in a red hot market, the Sydney apartment where Simon Gittany murdered his fiancee, Lisa Harnum, was passed in at auction in 2015. It took two more months to sell by private treaty.

If you own a property with a dark history, you may have to adjust your price expectations, and you may have more luck selling by private treaty rather than auction. Although, in a hot market, buyers can be slightly more forgiving.

Look for the right buyer

Even if your property has a sordid past, take heart. There are buyers out there who aren’t put off by a property’s history. Certain types of buyers may be particularly unperturbed by stigmatised properties.

You might find that developers or investors are less vexed by your property’s history than owner occupiers. A good agent can talk you through the best way to market your stigmatised house and the best kind of buyers to pursue. So even if your home makes an appearance on Safe as Houses, you may still be safe as a seller.

Looking for more tips to sell your home for a higher price? Read our guide

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