This Mold House — What Is a Stigmatized Home?

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Real Estate

This Mold House — What Is a Stigmatized Home?

A California homeowner sold his 1,200-square-foot-home for $210,000, but when a neighbor’s home entered the market only six weeks later, it was listed for just $192,000. The reason? The house was stigmatized.

Although the home showed pride of ownership, its walls had toxic molds, a result of previous water leakage. In addition to making extensive repairs, the owner was advised to list the house far below market value, and to disclose the house’s history, warts and all.

Toxic mold is but one of many issues that can stigmatize a house. Other possible stigmas include homes that have been the setting of a suicide or murder, felony, accidental death, or even the suspected presence of ghosts. Other bizarre circumstances can also prejudice potential buyers, since stigmatized houses often represent psychological rather than physical prejudices.

Disclosure laws vary by state, so if you wonder why you are getting a steal, ask the owner. The seller may be required to tell you only if asked. In other states, full disclosure is required, and sellers need to inform buyers of problems even if they’re not specifically asked. Whether you are a buyer or seller, it is worth your time to learn your state’s laws for disclosure.