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Was Your Home Involved In A Crime? What Are Your Sales Options And Obligations?

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In some cases, the notoriety behind a home in which a death or crime took place can lead to endless marketing options -- from the asking price of nearly $5 million for the home in which the unsolved Black Dahlia murder took place to the comparably more modest $850,000 asking price for the house behind the Amityville murders, legendary crimes can carry hefty price tags. However, there are many homes in which much less marketable deaths and criminal activities can make sale difficult. Read on to learn more about selling a "crime house," as well as your disclosure obligations when selling a home in which certain criminal activities have occurred. 

What are you required to disclose when selling a crime house?

There are a number of required disclosures that can vary from state to state -- from requiring sellers to disclose any repaired termite damage or interior water damage to disclosure that the property was used to manufacture methamphetamine or harbored illegal pets. It's best to contact a real estate agent in your area or research your state's real estate laws on your own (your state legislature's website is a good place to start) to ensure you're prepared to disclose all you're required to by law.

Properties in which a violent death or suicide has taken place, as well as those that harbored other criminal activities like pedophilia or drug manufacturing, are unfortunately common enough to be referred to by real estate agents as "stigmatized properties" or those that cause psychological impact on its residents or guests. These properties can sometimes be expected to sell for only half to two thirds of the market value, with only 15 percent of buyers saying they would pay full market value for a psychologically impacting home. 

However, there are very few states that have actually codified psychological impact in their real estate disclosure statutes, which means that in most cases, disclosure of violent deaths or other criminal activities that have taken place in the past is not required. There are a few exceptions, most notably those dealing with drug manufacturing or other activities in which there is a known environmental impact or potential health hazard for future occupants in addition to any perceived psychological impact. 

What sales options will get you the highest price? 

If the circumstances of the violent death or other criminal activity in your home aren't widely known, it's best to keep them this way -- doing so will provide you the greatest chance of getting full market value for your home, unless there's the off chance that you can sell to the perfect private buyer without risking a lawsuit on behalf of any victims of the crime that happened in your home. In other cases, you may be able to auction your home for sale on an online auction website; this is a better option if you owe relatively little on your mortgage and are willing to settle for a lower price in exchange for a quick sale. Online auctions can also expose your property to a wider variety of potential buyers, including those who aren't aware of your home's potentially sordid past.

Depending upon the notoriety of the crime that took place in your home, your culpability in the criminal conduct, and the likelihood of vandalism if the home is known to be vacant, you may be able to sell the home to your city for the same market value used for eminent domain proceedings. The city may demolish the home after purchase to prevent others from attempting to profit off the crime or staving off vandalism or graffiti.