Would You Want To Know? ~Jeff’s Jabb #12

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September 22, 2016 by Jeff Lowen

What would you do you found out a murder took place in your home before you moved in? What about a property you were planning to buy? Would you still purchase it? Would you ask for a discount? What if you found out your Realtor didn’t share this information with you?

In a story released by Inside Edition¹, the investigative news source found that there are countless stories of  homes for sale that have a dark past that Realtors are conveniently “forgetting” to mention.

Not necessarily coming to their defense, but many states have laws preventing such disclosure. Now that’s interesting. For example, in Kentucky, a realtor is not required to share information about past murders that took place in the home.

In the United States, the principle of caveat emptor (“let the buyer beware”) was held for many years to govern sales. As the idea of an implied warranty of habitability began to find purchase, however, issues like the stigma attached to a property based on acts, “haunting”, or criminal activity began to make their way into legal precedents.

In Stambovsky v. Ackley the New York Supreme Court, Appellate Division, affirmd19531f86f83ad7c7d0ade856643e6b0ed a narrow interpretation of the idea of stigmatized property. The court held that since the property in question was previously marketed by the seller as a “haunted house” he was estopped from claiming the contrary. The majority opinion specifically noted that the veracity of the claims of paranormal activities being outside the purview of the opinion. Notwithstanding these conclusions, the court affirmed the dismissal of the fraudulent misrepresentation action and stated that the Realtor was under no duty to disclose the haunting to potential buyers. Several states have created specific statutes in the US adding “stigmatized property” verbiage to their legal code.²

Yes, home buyers… Seems in this case you’re on your own.

Most states require home sellers to reveal major defects about a home to potential buyers, like a leaky roof, broken appliance or cracked foundation. These are considered “material facts” that must be disclosed to a buyer before the deal is closed. And in some states, those real estate disclosure laws go so far as to include a death in your home.

While many people wouldn’t be bothered about a death in a home, in some cultures it’s a deal breaker. Because it’s a major issue for some buyers, California, Alaska and South Dakota require home sellers to reveal that information to all potential buyers.³

Let me do the math here; am I to understand that only 6% of the states require that this information is disclosed? (Hmmm, 6% huh?) What’s even more interesting, is that many an attorney will tell you that by disclosing something about a home that is not required by law may get you sued.¹-¹ I once had a conversation with a Maryland attorney that advised me if a buyer’s home inspection report was disclosed to the sellers during the course of the transaction without their written consent, it could prove disastrous. In Virginia, agents don’t even think twice about sharing it.

I think we can all agree we live in a litigious world, right? So, what’s a weary would-be homeowner to do? There isn’t a perfect solution. There are countless home sales that go to settlement and beyond without incident, too. Many real estate agents do a fantastic job as I’m sure many satisfied homeowners will attest. However, even in the most successful of transactions, it is still a perceived value.

There are virtually no checks and balances in the industry until there are many transactions that indicate a problem, and by then you’re just a statistic. For example, how about the countless homeowners that lost their homes by virtue of lender or Realtor or appraiser to foreclosure just a few short years ago? After misconduct was decided by a lengthy trial, many of these prior homeowners who lost their homes got a check for a few hundred bucks from the settlement.

A few hundred bucks for your house. Yeah, that sounds like a great deal to me! Arrgh! 😦

As someone in the industry, I see sales fall apart and many when they do close, something is found out afterward due to a host of reasons. Lack of experience, failure to disclose something about the property, a Realtor working in unfamiliar territory (e.g. a residential agent attempting a commercial deal), failing to keep clients data safe, appraisers valuing a property in a location they know little about, and the list goes on.

There are many opinions on this, however with as much legal, contractual and procedural turmoil, where is the consumer left? In the dark? Is buying a home just a gamble, like buying fruit at the grocery store? Is this the reason the Millennial generation (ages 18-35) are turning away from homeownership? ²-¹ A lack of trust in the industry.

Now that we all know the problem and I’ve gone all Colin Kaepernick on you, let’s take the next step and do something about it.

I’ve been in real estate for years in various places around the country. I’ve shifted my focus to champion a cause such as this. All over the country, I’ve helped homeowners and home buyers locate and work with an agent that is reliable, professional and experienced enough to recognize the pitfalls we’ve discussed here; together with them. I also coach and mentor other agents, new and seasoned alike, in the hopes I can bring a seriousness of purpose to them and the industry itself.

I can tell you that too many agents jump in the business part-time while holding down other full-time employment and due to the complexity of contracts, need for resources, and legal challenges, they just can’t keep up with it all – and who suffers? The consumer. It’s become commonplace to practice on the consumer these days. Why? Because we in the industry allow it. Here’s an interesting fact:

  • It takes more education for someone to give you a $20 haircut than help you with a $1,000,000 home purchase.

In every brokerage house, there is a big push for numbers. Volume. Dollars. Although, I believe this is an important metric, the satisfaction of the consumer is completely disconnected from the process. Have you ever received a call from the owner of a Coldwell Banker, Century 21 or Keller Williams asking you about your experience? Me neither. It’s left up to the very agents that affected the experience in the first place. No matter the gravity of the positive or negative slant.

There truly needs to be something in the mix of a check and balance here. Perhaps my attempt at a solution is the first step. It appears to be working. For more information on how consulting can help, click here.

One last tidbit; in a recent lawsuit settled, it was determined that agents and brokers are free from the threat of patent lawsuits.³-¹ Will this be the catalyst to future immunity enjoyed by the real estate industry? One can only wonder.



  • ¹http://dailyheadlines.net/2016/09/couple-horrified-when-they-discover-dirty-secret-realtor-failed-to-mention
  • ²https://en.wikipedia.org/wiki/Stigmatized_property
  • ³https://www.redfin.com/resources/death-in-house-disclosure
  • ¹-¹I am by no means an attorney and am not intending to give legal advice.
  • ²-¹https://www.theguardian.com/money/us-money-blog/2016/may/27/housing-market-real-estate-millennials-living-at-home-with-parents
  • ³-¹http://www.inman.com/2016/09/20/agents-brokers-freed-threat-listing-alert-related-patent-lawsuits/



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