Appraising Tragedy 

When a murder or suicide strikes, real estate values can drop by as much as 30 percent. How neighborhoods struggle to overcome "stigmatized property."

To be sure, real estate isn't exactly a top priority in the still-unfolding Harvey case. But eventually the house will present an unfortunate quandary that even the most seasoned real estate agents find difficult to negotiate: selling what's known in the industry as a "stigmatized property." Stigmatized homes also include properties where a suicide occurred or where there's a reputation of haunting or paranormal activity.

Real estate experts agree that finding a buyer for what would otherwise be a perfect home usually challenges the bounds of state law, real estate business practices, common sense, personal ethics and a community's need for healing.

Virginia is typical of many states where real estate transactions are largely governed by the common law principle of caveat emptor — buyer beware. Under Virginia law, sellers and their agents are not required to disclose deaths that occurred at a house, as long as the incident did not have a physical impact on the property.

In some states, such as California and Georgia, the law requires sellers or agents to disclose events like murder or suicide for a number of years after the event. Other states simply require the property owner to answer honestly and thoroughly if asked directly about crimes that have occurred inside the house.

"Generally speaking, it's the purchaser's duty to do their due diligence," to learn about a home's particular history with deaths or suicide, says A. Austin Wallace, a real estate attorney with the Shaheen and Shaheen law firm.

While state law protects a seller or an agent from having to disclose deaths in a home, the statute does not preclude sellers from meeting the issue head-on.

"It always comes out," says Chip Claytor, a Richmond Realtor. "You might as well disclose it. … Just for my reputation's sake and just for my conscience's sake, I feel like the buyer would have to know that [history] before they made a decision."

Claytor reflects on a well-kept Victorian house he handled in the Fan District in the early 1990s where the previous owner had been robbed and killed — his was throat cut — by an acquaintance.

Dealing with prospective buyers, Claytor says he volunteered the information readily, usually after the prospects had seen the property. That was enough to make most people walk away, he says, but eventually an out-of-town buyer was more swayed by the home's character than its history.

"She basically shrugged it off," he says of the buyer.

This, experts say, is more the exception than the rule, because highly publicized, violent crimes typically affect the salability of a home, either in how long it sits on the market, in the listing price of the home, or both.

Even though a violent crime doesn't physically affect most homes, the notoriety of events in a house and the psychological impact on prospective buyers usually results in a drop in value, a lower price tag. Local and national experts say discounts on a stigmatized home can vary from 10 percent to 30 percent of the normal market value.

Sam Nelson, a real estate appraiser and owner of Garrison Associates Inc., an appraisal firm, speculates that such a high-profile crime as the Woodland Heights murders could be included on an appraiser's report, which usually avoids judgments on intangible qualities of a home.

"If the appraiser's opinion is that a home is going to sell for less because of the crime," he says, "I guess you'd have to mention it."

For the time being, the Harveys' home still shows signs of being a focal point for the community. Though police tape and the conspicuous mobile crime unit are long gone, last week the yard still served both as a makeshift memorial and painful reminder. Candles and remembrances sat around the yard's border, and a decorative swath of fabric hung across a row of hedges and flapped in the breeze. Meanwhile, front windows on the second story were boarded by plywood panels.

Despite discussion and speculation among residents of the Woodland Heights neighborhood about the fate of the Harvey home, the property's fate is largely unknown.

A resident of the neighborhood who asks not to be identified says some neighbors had discussed a movement to purchase the home, raze it and install a memorial to honor the family, but that reactions to the idea are mixed.

"Many people feel that, despite the horrible things that happened in there, destroying an otherwise wonderful house will not help the neighborhood heal and return to normalcy," the resident writes in an e-mail to Style.

Randall Bell, a real estate economist who specializes in damaged properties at Bell, Anderson & Sanders in Laguna Hills, Calif., says the focus for both neighbors and those who sell the property should be to move beyond the event as quickly as possible.

Bell, who has consulted on real estate cases related to the Nicole Brown Simpson and JonBenet Ramsey murders and the Heaven's Gate cult suicides, says he'd recommend trying to rent, rather than sell, a home where a violent crime has occurred. "You want to get the house occupied," he says.

Anything that identifies the house as a crime scene or draws more undue attention to the property, Bell says, usually prolongs public curiosity and makes it more difficult for neighbors to heal and move forward.

Typically, he says, it takes two to seven years for a home's stigma to fade and for the home's market value to return to normal.

Cosmetic changes — new paint and new landscaping, for example — can help change the perceptions and memories associated with the house, as well, Bell says. Sometimes changing the address can help diffuse and overcome a home's reputation.

But, ultimately, the easiest way for the neighborhood to move through catharsis is for new neighbors to come along. "The longer it sits vacant," Bell says, "the worse." S

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