Imagine you’ve finally found your dream home: a gorgeous three-story contemporary style house with a luscious green garden in the front yard, a perfect 18-by-36-foot pool in the backyard and a finished basement, all in the most perfect neighbourhood. This house is only a ten minute drive from downtown, is relatively close to yours and your partner’s work, and is within your budget. In fact, the house is priced very low for such a perfect home and has no other offers. Seems like fate, right? What if we told you this house has an unsettling history, would you still be interested? Would you still put an offer for this house knowing it was a former drug lab? Or if a murder had occurred there? 

What are stigmatized houses?

Stigmatized houses are often described as real estate properties that have had negative impacts on potential buyers due to the previous occurrences that have taken place at that home. Some examples include a house with paranormal activity, a house that has had a murder or suicide taken place in it or was once gang-affiliated. In most cases, you would not be able to tell that a house is a stigmatized house based on its appearances. Oftentimes, stigmatized houses are priced very low, as owners may be motivated to sell faster and price them lower as a way to entice buyers to purchase the home. It is also important to point out that although murders and suicides can make homes stigmatized, death from natural causes does not cause homes to be qualified as stigmatized. Moreover, not only can homes be considered stigmatized, neighbourgoods can also claim to be stigmatized. For example, if there is a known sex offender living in a certain neighbourhood, people would become wary about purchasing a home in that area, therefore making it stigmatized.

Are there rules about disclosing information while selling a stigmatized home in Canada?

Rules about disclosing information of stigmatized homes when selling them in Canada differ in different provinces. In Ontario, there are no current rules about sellers disclosing information, however, there are rules about hiding material defects or making misrepresentations about the home. Furthermore, real estate agents in Ontario are bound by ethics and rules stating that they must disclose information about how material facts can affect the market value of the property. In British Columbia, there are similarly no rules or ethics binding sellers to disclose information about stigmatized houses. In most provinces in Canada, the term “caveat emptor” is used, which directly translates to “buyer beware”. This means that the onus to conduct research and be thorough in their search for a home is on the buyer, not the seller or the realtor. It is crucial that the buyer should ask many questions about the history of the house and neighbourhood. 

Stigmatized houses can be 20% cheaper than a regular house in their neighbourhood and can take up to 45% longer to sell.

Should you buy a stigmatized home?

Stigmatized houses can be 20% cheaper than a regular house in their neighbourhood and can take up to 45% longer to sell. It is important to ask yourself if the stigma surrounding this house could affect you on a daily basis if you were to buy the property. If there was a previous murder in the home, would you feel safe living there? Lastly, if a house was rumoured to have paranormal activity, would you be okay sleeping there at night? It is crucial that you ask yourself these questions before you purchase a stigmatized home. Stigmatized homes are still valuable because the stigma will always be subjective. If the house is in the perfect location, you could always purchase the property and tear down the house and rebuild it to your liking.

That being said, it can be difficult to sell a stigmatized house and can be a long process. If you are a current buyer, it is important to ask about the history of the home and be thorough in your research on prospective houses. There are many Canadian websites that can tell you if a house has had any criminal history and can help you with your research. You can check out HonestDoor.com to view houses in the same neighbourhood and their sales history to help with your research. It is also important to ask your real estate agent the right questions, including ones about the neighbourhood! 

Yours truly,
HonestDoor
Your real estate starting point