PSYCHOLOGICALLY IMPACTED OR STIGMATIZED PROPERTIES
In recent years there has been an increasing amount of media interest into the role and responsibilities of vendors and their estate agents when they are offering for sale a property that may be psychologically impacted or stigmatized.
Such a property may be defined as one where there has been an act or occurrence which has had no effect on the physical structure of the property, but which as a consequence of such act or occurrence may be psychologically impacted or stigmatized, e.g. a property where there has been a suicide, homicide or felony. Currently there appear to be no regulations in Victoria requiring disclosure by the vendor and/or their agents of such acts or occurrences. In the current unregulated environment, professional and public opinions vary considerably on any duty of disclosure.
Some say that under privacy rules, the vendor (and therefore their selling agent) is not required and should not be required to disclose any such acts or occurrences. Others say that any history of a property which could have an emotional or negative impact on a purchaser's decision to make an offer on the property should be disclosed.
There is also an argument that disclosure should only be required upon receipt of a specific enquiry from a prospective purchaser and if the purchaser is discomforted by being advised of such information that they should have the choice of either proceeding or not with making an offer, or perhaps making a lower offer. There appears to be no evidence available in Australia as to whether full disclosure would affect the value of a property.
One study in America by Ohio's Wright State University found that psychologically impacted houses took 45% longer to sell than other properties and that they sold for only 3% less than average. Other anecdotal information from America suggests that a property impacted by a well publicized murder or murder/suicide could have its value initially lowered by between 15% and 35% and that it could take 5 to 7 years for the effect to fade.
Some states in America have enacted legislation requiring full disclosure, while other states do not require disclosure and have enacted legislation to protect vendors and agents from any non-disclosure.
In Australia the doctrine of caveat emptor (buyer beware) may provide protection to vendors or their agents who prefer or choose not to disclose.
At Keatings Real Estate it is, and has always been our policy, that if we are aware of any circumstances whatsoever that may psychologically impact or stigmatize a property we are engaged to sell, we will require the vendor to allow us to make a full and frank disclosure to prospective purchasers of such circumstances.
Discussion in respect to psychologically impacted and stigmatized properties can be very sensitive, delicate and emotionally traumatic, however, if a vendor is not comfortable or will not agree with our full disclosure policy we will decline to accept the listing.
