There’s going to be a new home renovation show that focuses on murder houses. How crazy is that? It’ll be called Murder House Flip and it’s going to air in 2020. I can already imagine adding shiplap to the walls to erase a heinous history… Anyway, here are some things on my mind.
1) Not the home’s fault: Often when talking about notorious homes we hear things like, “It’s not the home’s fault” or “It’s unfair to penalize the house.” I get that, but let’s remember buyers aren’t just purchasing the home. They’re inheriting all the stories and history too. Anyone who has ever owned a home knows this is true because neighbors will definitely tell you about the previous owners and especially anything big that happened at the property. While a home is technically innocent, it doesn’t mean buyers aren’t discerning or making judgement calls about value.
2) Stigma fades: A property with a crime in its past can certainly have a diminished value, but the loss in value may not last forever. What I mean is right after a gnarly situation buyers might react quite negatively, but over time the tendency is to care less, forget, move on, or not even know what happened decades ago. It would be like saying, “A man was murdered here yesterday” compared to “A man was murdered here in 1917.” Would there be a difference in your mind? Maybe so. But for something really notorious the question becomes how long stigma can last. This is why I’m watching the John Wayne Gacy property. The original home was actually demolished, but can stigma remain with the site despite the new home?
3) No one-size-fits-all adjustment: How much does a murder affect value? There’s no one answer to satisfy all situations. It likely depends on when the murder occurred, the nature of what happened, and whether it took place inside or outside. It could also depend on the price range or location as some sub-markets are more sensitive than others. My experience locally is buyers at lower price points tend to be more forgiving about certain issues compared to higher price points (generally speaking).
4) One buyer vs the market: It’s possible a particular buyer might not care about a property’s history, but market value isn’t just about one buyer. What would most buyers pay? Last year I ran a poll about the alleged Golden State Killer’s house and asked people to consider if there would be any price impact if this home came to the market. It was a fascinating conversation with many layers, but one thing that kept coming up was the idea that one buyer might not even care. That’s true. But again, market value isn’t just about what one buyer would do. It’s like this. Imagine lining up 100 qualified and interested buyers. What would be reasonable for them to pay? That’s sort of what market value looks like.
5) Crunching numbers: I appraised a murder house recently and interviewed about ten local real estate agents who sold a murder property in the past. Here’s a blurred view of my data collection. Some agents said there wasn’t any impact to price and others would say stuff like, “It probably sold $25,000 lower.” In short, the answer wasn’t always the same, which meant I had to consider which data points were relevant for my situation. This is huge because it’s easy to find one murder house and call it a day because now we have data. But what happened with one home under $200,000 may not mean anything at the $800,000 price point. Thus some data toward the lower end of the market ended up being less relevant during my appraisal.
An episode of Murder House Flip in Sacramento: There’s going to be an episode set in Sacramento to focus on the Dorothea Puente property. If you didn’t know, she was an older woman who ran a “boarding” house in the early 80s, but instead of giving clients respite she drugged them, buried them in the backyard, and collected their social security checks. This property has sold four times in the past twenty years as seen below.
By the way, there was a documentary made about this house and the owner has even given tours. This goes to show another aspect of a famous home is monetization. In this case though the owner donated tour proceeds toward organizations working with the homeless.
Keep in mind entire books are written about this stuff and I’m only scraping the surface here. I hope it was interesting or helpful though.
Questions: Are you going to watch this new show? What stands out to you above? Any other thoughts?
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What’s the soundtrack going to be? Beethoven’s 9th? Singing in the Rain?*
No thanks.
*A Clockwork Orange is more my speed.
Now that’s a movie that will probably never be re-made…
Puente House may not be a perfect owner occupant purchase, but it could be a great themed AirBnB!
I imagine it could do very well. Good call Jeff.
Great stuff as always Ryan. I love that you even have a graph for murder homes. I’m thinking that based on your recent research, you might have special agents camped outside your home for a while.
Thanks Gary. Well, I hope not. 🙂 I have some other graphs too. I may have to share in future posts.
And I was concerned with a simple suicide lately. I checked the obits, the guy barely showed up and had only a cousin as a relative. Hardly cult status. I will be watching the mls to see how the listing is posted. Anyone want to wager is does not show up. A good topic for dias de los Muertos!
Yeah, it seems these issues aren’t often disclosed in MLS itself. Hopefully the disclosure is happening in the contract though, and that’s likely prudent for disclosure rules. It does make it challenging to find data sometimes though because it’s not so easy to find comps. Even in the case of a murder an agent might say “crime” or “ask agent about property history”… I find most of my data has come from asking real estate agents for help through social media (thank you everyone).
On a side note, there are definitely situations where something happens at a property that is not disclosed unfortunately, but a lack of disclosure is only temporary because neighbors end up disclosing after escrow closes. That’s a hard thing for new buyers and it’s likely a lawsuit for the seller.
Ryan, this is a fascinating post! Great job. Your post reminded me of something related. I know you’re the CA master, but I wasn’t sure if you were aware of the strange RE laws in Arizona. My sister-in-law is a renowned and celebrated Realtor in both Arizona and California enjoys sharing these two strange and seemingly conflicting laws with those outside of Arizona. Here they are: In Arizona it is illegal for Realtors to mention or disclose if a murder took place in/at a specific house/property. Their reasoning is that it would unduly influence values in the neighborhood. However, in Arizona it is a requirement for anyone to disclose if they believe a house is haunted or if their has been any presence of ghosts (something to that effect). How crazy is that!?!? On the one hand, you are prohibited from disclosing something that is a 100% known fact, something that happened, and something by the way that most buyers would like to know!! On the other hand, it is a mandated requirement that anyone disclose something that can’t be proven!! I’d love to just see posts from realtors across our crazy nation giving the most unique and mind boggling real estate laws. Lol.
Thanks so much. Wow, that is interesting. It makes me want to be a fly on the wall in the room when rules are thought up. On a side note I find the word “murder” will very likely not show up much in MLS. I get it because it can make people run. It’s not good marketing. I certainly wouldn’t want an agent I hire to say that about my property even though I would clearly want disclosure. I often see stuff like, “Call the agent for details” or in cases with a notorious home it will say something generic or maybe say “notorious history”. I recall one agent who had the Puente listing at one point simply directed people to a SacBee story about the house. I thought that was clear and smart. I just mention this because it’s fascinating to see disclosure happen in many ways. How strange though to not be able to disclose specifics. I would think buyers should be well-informed. Does this really protect consumers or just the seller? Relevant question. Yet I understand sensitivity to issues. I don’t know if it’s national, but I believe in California you cannot say if a person died of AIDS.
Interesting! I represented a buyer in the sale of a home on 55th in East Sac years ago in which the owner had been murdered by her gardener. My client was happy to take advantage of a fair price drop that came along with the disclosure explaining the spatter on the bedroom wall. The buyer ended up getting her license, coming to work in my brokerage and became a top producing agent.
Wow, thank you Edmond. That’s interesting to hear. I bet many people would be willing to take advantage of an opportunity like this – especially if there is a discount.
One thing I didn’t mention in my post is it’s important to consider what the market is doing at the time. A tight market with rapidly increasing values compared to a declining market can influence people’s decisions too.
Properties with so-called baggage may not be for everyone, but there are absolutely buyers willing to purchase.
Ryan, as always very interesting. Thanks for all you do.
Thanks so much Rick.
Great Halloween post! I posted about the Gacy home on my FB page. One family member posted that they would not live there, but would consider buying it and turning it into a short term rental and advertise the home’s past. I doubt it would work, but certainly a creative solution.
Thanks Ray. Yeah, I figured this was right in line with Halloween. I’d be curious to hear if a situation like this has worked out well for others. I know for me it wouldn’t appeal as a short-term rental, but the idea sounds fascinating. What is the highest and best use? That’s an intriguing question.
Many years ago, my dad bought a house we lived in for years. Just about the day we moved out, he told us the previous owner committed suicide in the house. My dad! He also serves me delicious food and then asks the ominous question, do you know what you just ate? Do I really want to know?
I’m surprised neighbors didn’t spill the beans. He sounds like quite the character.
May lead to misleading stats.
Here, you can take this to the bank:
E quakes
Murder/mahem
Fire
plane crashes into hse
catastrophic floods
within 12 (count’em) months ALL is forgotten and/or forgiven. Period. Buuuut it takes up to 12 mos. any stats PRIOR to 12mos could be off bad.
Interesting take. I hear what you are saying and I think you highlight what can be a real problem with data. We can of course use older data though too and consider how it may or may not apply to today’s market. I’m glad you brought that up. I do wonder about 12 months as you said. So there would be a diminished value prior to 12 months but then nothing afterward? Is this something you’ve observed over time with properties?
wanted to return to this, but quite busy. I listed/sold prop exclusively for 5yrs prior to appraising. gives interesting perspective: yr1 OMG; yr2 settle down, plans, prep, yr3 recovery on its way, yr4 forgotten. I’ve had rental hses in Sta Rosa, one was one of only two surviving homes in Coffey Park Sta Rosa. A prominent developer there reiterated my msg right after fire was over and simply started building. No stats but I’d bet the Park is on its way to new heights. Oops, until the next fire. In CA these fires ran 50yr cycles w/10yr smaller events within same. NOT NOW. GET SET. times are changing. Everyday I see more evidence of mini ice age approaching. If so, all bets are off. The winds generated off the East slope of Sierras will punish CA, and bad.,,,as to Murder Houses? If part of a media drumbeat, stay away!
Great article Ryan! Stigmas are interesting to study. I will watch the show just to observe market reaction to these homes. I like you point that there are a lot of layers to consider in these situations. Great read as always!
Thank you so much Jamie. I appreciate it.
I think I will definitely watch it. Since they are using homes that were stigmatized decades ago is that fact even relevant based on the assumption that the stigma may fade over time? Just a thought. Your graph is interesting because it does look like it sold at the low end after the murders but then was more reasonable which each subsequent sale.
Thanks Tom. Good eye regarding the graph. Yeah, I don’t quite know the premise of the show or whether they will delve into the value aspect. I do know some realty shows ask for before and after values from appraisers. I was contacted once from a show doing something in a nearby city, but they were going to pay so little for a before and after value that I said NO. I’ll be curious to see what they do in this case and how informed they are about value too. I’ll definitely be watching.