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Stigma

The Golden State Killer’s house (poll results)

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We recently talked about the Golden State Killer’s house and I put together a poll. If this house came to the market, what sort of price reduction would you expect if any? Let’s look at the results and talk through some ideas.

POLL RESULTS: There were about 400 votes. Thank you everyone for voting. I’ll actually leave the poll open for a couple more weeks and you can vote HERE.

KEY POLL TAKEAWAYS:

  • 37.6% said the impact would be 0-10%.
  • 41% said the price discount would be 10-40%.
  • 21% said there would be a discount above 30%.
  • Most respondents hovered between 0-30%.
  • Votes declined as price discounts increased. 

THOUGHTS ABOUT THE GOLDEN STATE KILLER HOUSE:

Minimal impact & marketing: Close to 1 out of 3 people said this property would sell with a price discount of 0-10%. Thus there are a good number of folks who think either there could be no impact to value at all (or a minimal impact). I wish I had narrowed the poll down to 0-5% and 5-10%, but I can’t go back now. This result doesn’t surprise me at all because many real estate professionals and the public have said, “It’s probably not a big deal.” Yet to be objective, let’s not forget this home has a potential marketing issue because it has a smaller pool of buyers even willing to consider purchasing it. I’m not trying to sway opinions, but only saying let’s think about how a more limited pool of buyers might impact value before we claim there is no value issue.

No bodies or crime: One of the big conversation pieces over the past two weeks was that no crime actually occurred at the home, so there really couldn’t be any damage to value. I understand that sentiment, but let me play devil’s advocate. Why not? Close to 2 out of 3 people on my poll said there would be a diminished value despite no crime taking place on site. Also, many locals have said they would not purchase the home at all. So it begs the question, do we need bodies or a crime for there to be a stigma? This poll is nothing scientific, but a lack of bodies clearly didn’t matter to some respondents. I find it’s easy in real estate to make sweeping value generalizations, but I guess this reminds us to be cautious about that.

Selling at a premium: A number of conversations have suggested this property could actually sell for a premium. I completely agree there are buyers out there who would pay more for whatever reason. Yet to be fair (and technical), do these buyers represent the market? Would the market as a whole pay more for this property? That’s the big question to ask when it comes to thinking through value.

Market value: If we lined up 100 qualified buyers to purchase this home, and they were informed that a notorious rapist and murderer owned the home, would it matter for value? There might be individuals willing to pay a premium, or some who wouldn’t care, but what about the market as a whole? That’s the big issue, and it’s frankly challenging to answer a question like this. In fact, there are entire books written about detrimental property conditions, so I won’t pretend this is an easy issue to dissect. Let’s remember banks lend on market value too instead of one individual buyer’s perception of value, which underscores the importance in thinking in terms of the market.

Housing shortage isn’t the trump card: We have a sincere housing shortage right now, so I’ve heard things like, “Because there is a lack of inventory, this isn’t going to be a big deal for buyers.” I think there is something to that because when inventory is low, buyers tend to overlook some negative issues. Likewise, when there are too many homes on the market, negative issues stand out like a sore thumb. So there’s some truth here. Yet my observation is that a housing shortage has not been the ultimate trump card for other homes with negative issues in today’s market. What I mean is buyers have exhibited sensitivity toward overpriced homes and properties with adverse locations or issues. Again, I’m not saying there is a price reduction for this property, but only that a housing shortage has not seemed to erase negative issues for other properties in the market. Yes, buyers are desperate to get into contract, but at the same time my sense is they’re not so desperate that they’re overlooking negative things either.

I know I sound like an advocate that there is a price reduction, but if you read carefully I haven’t actually said that. I’m only bringing up ideas to help us think critically. I welcome your take in the comments. And let’s hope we do get to see this property sell so we can see who answered correctly in the poll.  🙂 

I hope this was interesting or helpful.

CLASS I’M TEACHING: Next week I’m doing my favorite class at SAR called “How to think like an appraiser“. It’s from 9-12pm on June 1st. We’ll talk about comps, adjustments, value, etc… It’ll be fun. You’re invited.

NOTE: This is not a scientific poll. Take it for what its worth. Let’s think critically about value and have conversation. That’s the goal.

Questions: What do you think of the poll results? Would you buy this house? I’d love to hear your take.

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That place where fame & real estate meet

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How does fame impact a home? Does it matter for value if a famous person lived there? What if something notorious happened at the property? Let’s talk about this and consider a few examples. Please note there are entire books written on this subject, so don’t expect an exhaustive dissertation here. Any thoughts? I’d love to hear your take in the comments.

Here are a few examples:

Breaking Bad: The house where the TV series Breaking Bad was filmed was all over the news last month because the owner is building a 6′ front yard fence to keep people out of her yard. According to Albuquerque KOB4 there is a constant stream of visitors and fans have even thrown pizzas on the roof to reenact the main character Walter White doing so in an episode. The owner is clearly not thrilled, and I can’t imagine neighbors are either unless they can somehow monetize the situation.

Kurt Cobain’s Baby House: Brandon Turner at Bigger Pockets is an investor and he accidentally bought a home where Kurt Cobain lived as a baby. The duplex was purchased as an investment without any knowledge of the lead singer of Nirvana’s connection to the property. But tenants began complaining about photos being taken of the front of the house, and that’s how the connection was discovered.

The Almost Governor’s Mansion in California: The State of California built a Governor’s mansion in the 1970s in Carmichael, which is about 10 miles from Downtown Sacramento. This mansion began construction under Governor Ronald Reagan’s leadership, but it was not completed until Jerry Brown took office. Brown actually refused to live in this house, which he dubbed “The Taj Mahal”. This home sold for 4.1M in 2004 and has 8 bedrooms, 8 bathrooms and is 11,984 sq ft. The mansion is still there today, but some of the site has been subdivided for a few custom homes. This is literally one of a few residential homes EVER in Sacramento County that sold above $4M.

Reagan House in the Fab 40s Neighborhood: Governor Ronald Reagan and his family chose not to live in the old Governor’s mansion in Downtown Sacramento back in the 70s, so they moved to East Sacramento on 45th Street to lease a home in the “Fabulous 40s” neighborhood. The home boasted over 6,000 square feet with six bedrooms and four bathrooms (according to Tax Records). The home last recorded for $1,765,000 in May 2000. Not everyone can say, “The future President used to live here when he was Governor”. Do you think that matters for value?

Here’s a look at the price point of the Reagan house. What do you see?

Homicidal Handyman House: There is a property in Oak Park where a serial killer dubbed “The Homicidal Handyman” murdered someone in the later 80s. This property was purchased last year by an investor and I’m waiting to see if it comes on the market (it has a choice location). This murder occurred about 30 years ago though, and the reality is that stigma associated with gruesome crimes fades over time. In other words, it might be a big deal for value to buy a property right after a murder, but much less of an issue if the crime occurred 30 years ago. I observed a recent murder property in the Sacramento market and in this case there was a 5-10% hit on value, though it might not have been an issue at all had the murder taken place 30 years ago instead of recently. Architectural Digest actually did a great piece on stigma recently and I was pleased to see they interviewed Jonathan Miller.

Dorothea Puente Murder House: Seven bodies were discovered at a duplex on F St in Sacramento in the late 80s compliments of Dorothea Puente. She lured victims to her “boarding” home, drugged and buried them, and then cashed their social security checks. This Victorian duplex has some charm as you can see, but it definitely has a dark history too. There was a documentary made about this house in 2015 and the owner has even given tours through the years too. This just goes to show it may be possible to monetize a famous house. Though in this case the owner has donated tour proceeds toward organizations working to alleviate homelessness (way to go).

Here’s a sales history of the Puente duplex. What do you see?

Lady Bird House: A recent movie called Lady Bird is set in Sacramento and had some filming done in the city too. Here is the front of one of the home’s shown in the movie (located in Fab 40s). This was not the main character’s dwelling, so it may not attract much of a following, though it’ll be interesting to see if people snap selfies here. For reference, the San Francisco Chronicle shared Lady Bird filming locations so fans can visit. In this case the owner probably has some bragging rights to say, “My home was in Lady Bird”, and I’d imagine any future listing would mention this fact. But will the market as a whole pay more for a house like this because it had a minor role in a movie? I’ll give you my opinion in the comments if you give me yours.
 
And here’s my Lady Bird selfie.  🙂
 
Closing thoughts: It seems like fame can either be good or bad when it comes to real estate values. If a house is famous for something gruesome, it could easily harm value (duh). But part of it depends on how long ago a crime occurred. On the other hand if a home is historically important, it could be a huge bonus for value (duh again). Yet fame can come at a cost too by increasing foot traffic and looky-loos. Would an owner have to disclose the stream of unwanted visitors to potential buyers? Could this potentially limit marketability? Could it impact rental value if there were camera flashes happening at night? Would tenants get fed up over time? These are important questions to ask. Lastly, we would be wise to not overthink a property’s value that had “15 minutes of fame” so to speak. Thus just because a home had a cameo in a movie or was previously owned by someone famous does not mean at the end of the day the market is going to pay anything more for the property. It’s true certain fans might offer more for a particular home owned by a celebrity or athlete, but what would the market as a whole pay? That’s always the bigger question. 
 

Think Like an Appraiser Class (I’m teaching): By the way, I’m doing my favorite class on Dec 7 from 9am-12pm called How to Think Like an Appraiser. We’ll talk through comp selection, making adjustments, tips for talking about value, and what to do in various scenarios. Details here.

Questions: Would you buy a house that was famous in a movie or owned by someone famous? Why or why not? Have you seen any measurable impact to value for a celebrity property? I’d love to hear your take.

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Dorothea Puente’s duplex is still on the market. Any takers?

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Almost five months ago I wrote about Dorothea Puente’s duplex coming on the market. If you don’t know Puente’s history, she ran a “boarding house” in the 1980s out of her Sacramento Victorian duplex at 1426 F Street. She drugged and murdered  tenants to cash their social security checks. Eventually seven bodies were found buried in her backyard.

In case you were wondering, I wanted to give an update on MLS stats for this duplex that has been on the market for 148 days as of today. 

Date             Price
02/26/10   $309,800
03/23/10   $301,800
04/15/10   $292,800
05/10/10   $274,800
06/01/10   $263,800
06/23/10   $252,800
07/15/10   $237,800

It’ll be interesting to see what this property sells for in comparison to other duplex units nearby. Regardless of price, would you have any issue buying a property like this? How might a murder or other heinous circumstance impact real estate value?