If there is a tragic death in the property, there's a good chance the value of your property will trade at a discount. If there is a death by natural causes, the property will likely trade at market price or a slight discount. Depending on where you live, the seller may not have to disclose death on a property after a certain time period has passed.
This post comes up with a guideline on how much a property is worth after a death in the residence. For reference, I've been investing in property since 2003. Currently, real estate makes up about 40% of my net worth and generates about $150,000 in semi-passive income so my wife and I can live free.
If you are OK with someone dying in a house you want to buy, you can potentially get it at a discount. If you then own the property long enough, you might not have to disclose the death under the prior owner, and then sell the property at full market value.
Discovering A Nice House, But With A Death Inside
On one of my winter open house rounds I stumbled upon a beautifully renovated Edwardian with three bedrooms and two bathrooms on the top floor, a full bathroom on the first floor, and a bonus room on the bottom floor. It looked a lot like my rental house I sold this summer, but brand new.
At 2,500 sqft, I thought the house would list for ~$1.8M and sell for closer to $2M. But instead, it was listed for $1.49M and had been on the market for several months already. I immediately wanted to buy the place given the ~$500,000 pricing discount.
Upon further investigation, however, I learned from the new listing agent there was a terrible fire back in September 2013, hence the gut remodel. That's fine so long as the new construction is done to code with permits.
But then the listing agent went on to tell me there was not one, but three deaths as the result of the fire: a 33-year old father, his one year old daughter, and her grandfather.
As a new father, my heart sank to the deepest depths of the ocean. I could not imagine losing my son so early. My only wish for the Grim Reaper is that my son and daughter both outlive his mom and me, 25+ years from now.
Value Of A Property After There's A Death Inside
Even with a 20%+ discount to fair market value, I would never buy a home that experienced such tragedy. Call it superstition, but I would always wonder whether their ghosts would haunt us because we had taken over their home. Maybe the house is cursed and would consume all of us in the future as well with a new fire.
When the firefighters got there at 1:30am, they said all the fire alarms were blaring. I'd like to think that if I smelled fire and heard the alarms, I would have the calmness to wake up my wife, pick up my baby, and walk 20 feet out the door.
Even if a fire was blocking my way, I'd walk through the flames protecting my little one knowing that short-term burns would be better than death. But such disasters often happen too quickly to react.
Death In A Rental Property Is More Acceptable To Renters And Investors
The only way I would ever consider buying a property with such a tragedy, even at a steep discount is if it was for a rental or a real estate crowdfunding investment.
In San Francisco, you have to disclose if there has been a death on the property within the past three years. The owners waited until the fourth year to list, which may or may not have been on purpose. But as a landlord, you don't have to disclose, but you probably should just in case.
As a buyer, you most go through the seller's disclosure statements thoroughly. Ask questions and know what to look for. A death in the house should be part of the disclosure package.
In the end, I decided even if the property was free I wouldn't be willing to own the home. It would be like owning a dog that mauled to death three children. The constant association with such a tragedy would be too difficult to bear.
Other Types Of Deaths In A Property
Now that we know the value of a property declines if there's a death on the premises, the next analysis is to see where there's a difference between the types of deaths and its negative affect on a property's value.
Based on my research, it seems like the average discount to market for a tragic death on the property is somewhere between 15% – 25% in America. Tragic deaths include: homicide, suicide, death by fire, death by electrocution, death by falling.
For nontragic deaths, the discount is anywhere from 0% – 10%. Nontragic death is considered death by a natural cause e.g. old age, organ failure, disease.
If you are a home buyer, let me offer up a guide to how much of a discount you should argue for during negotiations if you are OK with buying a property that experienced a death. It's always good to anchor low in the beginning and move towards the middle.
The key factors after death that will affect the discount to market are time, whether the property will be purchased as a primary residence or rental, and the way in which the property is bought.
Finally, perhaps there's an arbitrage opportunity for buying new construction homes in places that are extremely superstitious about home deaths or areas with a much older demographic.
Related: How Does A Death Or Suicide Affect A Property's Price
One Positive Death Scenario To Consider When Buying
There is one positive death scenario to consider that may increase the value of the house. If an owner dies of a natural, peaceful death at a very late age, a buyer may see the house as having a wonderful spirit.
For example, let's say the owner died in the house at age 105. Given the median life expectancy is only about 80 in America, a house that allowed someone to live 31% longer than the median life expectancy could be seen as having wonderful feng shui or life-giving powers.
The older one gets, the more one appreciates time. Owning a house that generates wonderful memories is a blessing. As a result, buyers from such cultures would be willing to pay a premium.
Let's embrace everyday as if it were our last.
Recommendation For Real Estate Investors
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Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. For example, cap rates are around 3% in San Francisco and New York City, but over 10% in the Midwest if you're looking for strictly investing income returns.
I'ver personally invested $954,000 in private real estate funds to diversify and invest in lower-cost areas of the country. The demographic shift to the Sunbelt is a long-term trend.
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Even later to the party than Matt, but here goes. I have two stories.
My BIL had a female friend from high school that he had always stayed in touch with. In fact, they golfed together regularly. On what turned out to be their last round of golf, she revealed that she was going to ask her husband for a divorce, now that their son was off to college. Sadly, the husband did not react well to the news. He shot her, then went into their garage, started both of their cars, and asphyxiated himself. Surprise, my BIL was the executor of her will. Determined to get as much as possible for their son, he set out to sell everything. He fully disclosed the house’s history and did find a buyer for slightly below market value. When he was selling off everything the son did not want, he offered us their cars. Um, hell no, thank you.
The second story is less grim. My tenant in a senior community called to talk about of end-of-life things, as he knew he had terminal cancer. He wondered if I would mind if he stayed in the home as long as possible. Would I mind if he died there, in fact. I loved this guy and no way would have turned him out. I told him that in a retirement community dying at home in your own bed was the Gold Standard. He was welcome to live there as long as he wanted. He died about a year later, at home, in his sleep. I have revealed this fact to every single prospective tenant ever since and have had no problems renting it out. in fact, I think my current tenant has the same plan in mind, which is fine with me. I just hope it’s not any time soon, as she’s quite a kick.
Late to the party but I bought a house out of a family trust that three people in that family had died in the house (father, mother, daughter) of old age. So far, (20 yrs) no bad vibes. Of course, the first 3 months I was awake at the drop of a pin expecting ghosts :).
That said, had the deaths been tragic as you described, I might have had second thoughts.
This is an unconscionable post. It is deeply offensive and offers no empathy towards families who wish to move on from painful histories. My daughter, my precious daughter, died in our home. The details are none of anyone’s business. When we get ready to move in a couple years to our dream spot in CA, we will sell this amazing, 5 bedroom home to a lovely family who, perhaps like us, will fill it with love and laughter and teenagers and fun gatherings.
Our home is not defined by a tragedy that has nothing to do with anyone else on this planet. And idiots who are “superstitious” about such stuff are just that…idiots.
We will sell our house for much more than we bought it for since the market where we live is red hot and it’s such a great area and street.
Shame on you for proposing such greed and heartlessness and ridiculous “discount” tables for homes that deserve a fair market value…ESPECIALLY since the family has already suffered enough.
I pray to God you’re never in any of our tragic shoes!!!
Sorry for your loss. I wish death on no one.
I hope you do find a buyer who is willing to pay full market price, and not care about a death. Just be aware of the disclosure laws regarding a death. Nobody will judge you for wanting to move on from painful histories. I would want to move on. There is a possibility though that some buyers may also not want to live in a house with painful histories.
Ultimately, the market will decide what a Home is worth. For homebuyers that may be stretched, the purchase price can make or break a family’s finances if they have to sell and they don’t realize the market’s demands.
Since you plan on buying your dream house, maybe one good solution is to find a house that has had a tragic death and buy that house for full market price. That way, you can pass the good karma along and help alleviate the pain of the family who is selling.
Again, I’m so sorry for your loss. May the heavens bless her.
Why are you selling given all the good memories? Just remember, If you do so, you can accept or reject whatever you want. The chart is just a guideline because most people who buy sell eight years later, they will have to face the same situation, all my from the other side.
Sorry for your loss.
I wouldn’t have any problem buying a property that had a death in it but I can see why some people would. Kind of crazy that you only have to disclose for 3 years after a death and not at all for a rental. Probably an opportunity as a landlord on these kind of properties.
There is nothing fucking wrong with “these properties” unless they’re found to be unsound or poorly rebuilt when appropriate.
Whenever there is a death due to a fire, you may never know for sure the cause of the death. Are you saying you’d be willing to pay full asking on a home that may have faulty electrical wiring or a leaky gas pipe?
If so, be my guest. I personally believe it is IRRESPONSIBLE to risk your family’s life by buying a home that had tragic deaths due to potential faulty construction, electrical, or plumbing.
With hundreds of listings on the market at any given time, you are a dream buyer in a competitive market. You’ve failed to see the other point of view.
That’s why Inspection isn’t supposed to be optional regardless of the market situation, more negotiation to take place after delivering the SPDS!
I’ve often wondered this as I still live in the house that my kids died in (20 years ago). Every once in a while I think about moving – would prefer a ranch with a full basement – but I’m not sure I could let go of all the good memories even though I had one very horrible day (and yes, it is truly any parents worst nightmare). (On top of that, I really don’t want another mortgage.)
I don’t believe in ghosts, but…… last year my wife and I were staying in a small cabin in a remote part of Arkansas mountain wilderness. It basically had one room stacked on top of another, a two story two room little cabin. One morning snug in the securely locked cabin we were still in bed but it was daylight and we were talking in the upstairs bedroom, only separated from the downstairs by thin floor boards with cracks between them you could see through. Suddenly, loudly and unmistakably very heavy footsteps walked across the downstairs flooring to the foot of the stairs. I rolled out of bed grabbing my handgun and ran to the top of the stairs where I shouted, “we are in here!” thinking the owner might have slipped in thinking we had checked out already. No response, in fact the doors were still locked and there was no one downstairs, no sign of a bear on the porch or any other explanation we could figure out. It was creepy, I’m not staying there again.
The table I wonder how time affects these. The table makes sense to me for the previous tenant, but looking back years or decades prior, most old houses will eventually have a sad moment in their history.
The more horrific the story, the longer it could last I suppose. A fire of this kind, whether a year or 10 years ago, is still a weight to think about as an owner.
I am not a religious or superstitions guy, but I do feel like Karma would frown upon profiting off of someone else’s misfortune. It just doesn’t feel right.
I….don’t think I could do it. Natural causes is one thing, violent death by any means is another.
I wanted to point out the fire alarm issue, too. I’m a contractor with the US Fire Administration, and several years ago there was a LOT of attention made to a study on children not waking up when the fire alarm went off. Here is a link to a more recent study that found the same. They did find that kids respond to lower tones and people’s voices, especially a parent, but the whole thing is very disturbing.
https://www.theguardian.com/technology/2017/feb/23/smoke-alarms-children-sleep-through-fire-investigator
Personally, I didn’t believe it was possible to sleep through a fire alarm until I actually did. I was on a cruise and the first night some drunk idiot pulled a fire alarm. I remember hearing it through my sleep but, you know, I was sleeping so well and it *just didn’t register* that there may be an emergency or that it had anything to do with me. And then the captain’s voice came over the shipwide intercom and I woke up. It was just so bizzare, but it happened to me exactly like it did the kids in the studies. So, parents be warned. :\
Good point, Jody. Another possible reason they didn’t get out in time could be smoke inhalation. We had a house fire, in which my daughters & I thankfully got out in time, and the smoke would have killed us way before the flames did. In fact, the fire fighters said another 5 minutes and it would have been a different outcome.
As far as tragic death affecting the price of a home, I just don’t see how it can’t. Reputation alone would devalue the property.
One of my best buddies owns a house built in 1804, it’s obviously seen lots of things. He and his wife swear there are ghosts, but I’m not so sure I believe in that. But I’ve also known him my whole life and know that he’s a smart & rational guy. So, who knows…..
I admit I’d feel a little weird living in a house like that. I’d rather not know anything about the story at all, ignorance would be bliss in this case.
The agent called me about this listing some time ago and the first thing he did was disclose the deaths. I asked several people I knew if they would consider buying this property and they all said no. With the Chinese population making up a large number of real estate buyers in San Francisco, this is going to be a tough sell no matter how large the discount. There are actually apps in Hong Kong where buyers can check whether an unnatural or unexplained death has occurred in the property. It is that big of a deal to potential buyers. The agent knows it and I think that is why he discloses it so readily. He works a lot with the Chinese community and it would not make him look good if other agents and buyers thought that he withheld the info even if he is not legally required to disclose. Besides when you google the address, the fire comes up in the first page of the search.
If I was the seller, I would have gone with an agent that has no clue why anyone would consider the deaths a big deal because he or she doesn’t either.
That’s a great question. I honestly don’t have an answer to the question. In the situation you encountered, I tragedy like a fire would scare me off more than a person passing because of natural causes. What caused the fire? How could you be certain it was repaired? I know there are disclosures, home inspections, and other checks/balances in the process of buying a home. But part of me would always be skeptical. Things like that would constantly roll through my mind. I know it would make my wife uneasy. Your piece of mind has a price that cannot be ignored.
This story did inspire me to purchase a few new smoke detectors and fire extinguishers to place throughout my house though. Ever since I have moved in, I have been slow to replace these items. You’re right, I should not mess around with this and it is a little irresponsible on my end. You never know what could happen. One of those fire extinguishers will be in our closet too for easy access if something were to happen.
Bert
If the sellers waited 4 years to sell so they were not obligated to disclose, why is the listing agent freely offering up this information? I presume the agent is telling everyone due to the steep price discount and lack of offers. Are the sellers just kind enough to disclose even though they would lose potentially $500k?
You should add a new twist to your discount list – how long it took for the body to be found. I had a tenant die of a heart attack in his unit. I was personally the one who found him approx. 3.5 weeks later (via letting the police in due to suspicion of death). The second I opened the door, two officers started puking in my lawn. I’ll spare the details, but I will say insurance treated it the same as a fire smoke loss due to smell permeating everything. Plus, body fluid soaking subfloors, structural beams, etc. I had 4 workers walk off the job once they found out there was a death after asking why there was a big hole in the floor.
I never thought of it as a resale or re-rent issue (assuming we’ll done rehab), but after this experience with construction workers and reading people’s opinions here, I change my mind and would want a steep discount if I ever bought a property with known death.
Side note: all you wannabe real estate investors out there who think there is easy money to be made and “passive income” to be had, be real with yourself on what you’re willing to deal with. If you’re a landlord long enough, you’ll deal with many hairy scenarios and it’s far from passive.
Dead is dead, Mike H.
Science also always rolls on. If there was Anything to hauntings and what-not it would be a part of science by now and well-documented. Such is not the case. And that goes to some raised-powered for All religions. I.E. they’re all treated equally bad by God, for surely if the “one true” religion were out there, its practitioners would be granted some great (godly!) attributes such as extreme happiness or, better yet, a quantifiable element such as an extended life. As such, all people, regardless or religious (or non-religious) belief face the same material life conditions as the rest of us. What we Do find is that it’s become the domain of con artists.
And as I understand, James Randi’s big reward of a million or so bucks is still out there for anyone to claim If they can conclusively prove, under scientific conditions, some supernatural gift. As has been shown over the years, many have talked the talk but few have walked the walk. Those that tried have failed, and some rather spectacularly. But at least they truly believed. It’s the big-mouth talkers and preachers who rake in the big bucks and exploit people who disgust me. America has become an increasingly paranoid country with conspiracy-minded (Right Wing) loons only feeding into it. I fear Religion displacing Science and reason in general. Movies and TV shows and novels which thrive on it don’t represent reality.
Alright, enough, I’m here to give my opinion not to get preachy myself!
If you can get a discount on a “death” property then by all means grab it.
If you see spooks then by all means put them on video! But I think you’ll be disappointed with that particular aspect of it, unless you allow connect-the-dots coincidence-driven chains of unfortunate events Haunt you.
The Dead can’t harm us. But our own Thoughts Can.
Great point of conversation on a topic not often tackled. Love to read Sam thoughts and enjoy the comment section equally as well.
We presently own 3 properties where people/tenants have died. 2 of natural causes and 1 of murder. I felt a moral obligation to disclose the fact to the next tenant. ( not required by Neb. law ). Her response I remember well, “I knew that SOB and he had it coming”. “It doesn’t bother me and I would love to live here”. She and her daughter have been there for 7 years now.
We are all marching to the same destination and millions upon millions have got there before us. It personal does not bother too much because as neighborhoods turn over and the players change, the recollection of events also wane.
Thanks for your efforts and providing great topics to consider.
After buying our current home, we found out that someone had hung themselves in the garage. It happened a couple decades ago and more important than that, I don’t believe in ghosts, so I couldn’t have cared less.
And shortly after, I noticed newspapers piling up at a neighbor’s home. A couple weeks later, workers were walking out of the home with hazmat suits and garbage bags. The owner had died in the bathtub a couple weeks earlier. Whether it was natural or suicide, we never did find out.
The interesting thing is that I don’t think that the new owners were told about these circumstances. I’m still not sure that they know. I’d love to ask, but I don’t want to be that guy.
Not Worth It!
A purchase of a primary residence is an emotion based decision. No matter how many comps you look at, how rationed your decision seems, humans can’t help but to compare their perceived future success and prosperity to that of the previous occupant. This is why celebrity homes sell at a premium. The American single family home is the world’s penultimate status symbol. I think that prospective purchasers are more concerned about perceptions of why they had to purchase a stigmatized home vs the actual realities of living in a stigmatized home. We want to be perceived that we can afford not to be concerned with such distractions.
There is a famous property in my neighborhood that experienced an ambiguous suicide that many believe was actually a homicide. There are online forums dedicated to solving the “murder.” Conspiracy theorists plan retreats and visits to the property. Who would want to put up with that if you could afford otherwise?
There was a double murder in san jose in 2017, including a hostage situation, that occurred in a $2.5M dollar home. It is now on the market for 3 months with only a 100K price reduction. The more brutal the death, the worse the discount I would think. I pity the realtor trying to sell the home, its a tough sell. The new buyers have to be out of towners and the discount needs to be steep. A full or partial renovation would be helpful from my point of view.
With a death situation like that, the buyer should demand a significant discount because when he/she sells, the house will be still be stigmatized though at less of a discount. It is when the second buyer sells (assuming sufficient time) when the stigma goes away for good. As far as ghosts, if I were moving in, I would get a priest to bless the house. If there is a presence, he probably would feel it. These houses do regain value…it just takes time. At $1.5M, I think the pending change in tax law may be another whammy against its value.
Wow what a tragedy. And what a tough situation to be left to sell that house even after it was renovated. It’s unfortunate but I agree there’s going to be a market discount on properties that have had tragedies like that.
When I grew up there was a house a couple blocks away that changed owners many many times and it was rumored to be haunted from someone who had died in it. I don’t know what the actual back story was, but something wasn’t quite right about it.
Anyway, this post goes to show why it’s always worth reading the disclosure packet before buying a property and to do as much research as you can when it comes to real estate.
Yes. Read the disclosure package thoroughly folks! Do not just skim. And if you don’t read it, make sure your real estate agent spends hours reading everything. Look for previous damage, black mold, flood zone, fire zone risk, foundation issues, etc.
Continuing the audioversions – good for you!
With the popularity of crime tv series I’d almost expect an increase instead of this severe reduction after a homicide :)
Currently renting a room in a house that was built in 1782. If only these walls could talk and share the many things they’ve seen.
A couple was murdered in their home in our community about 15 years ago. The murderer forced their two children into a bedroom and then killed the mom and dad (it was a workplace issue – so not a random act). He didn’t physically harm the children. The house sold a few years later – at a much reduced rate. From what I heard, the new buyers were not from the area and enough time had passed that the low price was worth it to them. I remember the day it happened well (the kids were in our school.) There is no way I could have bought that house. I still get sad driving by it every few weeks. Maybe it’s easier if you are totally disconnected from the event…
I guarantee a few people who have written responses live in homes, unknowingly, where a death has occurred. I’m the superstitious type, but short of a recent murder/homicide, I think the concept of a discount for death is silly. People watch too much American Horror Story.
The country’s housing stock continues to age and rennovations are becoming more prevalent. People die and tragedy happens…
I’m sure you’re right. I’ve never watch the show. Is it any good? I think most people die on their way to the hospital or in the hospital no?
The whole first seaon was about the “murder house”. I find it entertaining. I would agree with the statement that most people die in or going to a hospital, but lots of people die in their sleep too, but a lot die at home too…article says a third of medicare recipients die at home.
https://www.google.com/amp/s/www.forbes.com/sites/howardgleckman/2013/02/06/more-people-are-dying-at-home-and-in-hospice-but-they-are-also-getting-more-intense-hospital-care/amp/
OHHH you’re psychic Sam. I was (for some morbid curious reason) looking at the Colorado home of John Ramsey (we all have heard of Jonbenet right?)
It was reduced to 40% of the value and for several years, it stayed on the market. The house was immaculate but the widely tragically of a murdered child is pretty horrific to turn off a lot of parents.
I think the level of tragedy matters and that’s on a personal level. For me I think I would go for a 20-40% discount.