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Dark secrets: What buyers must know about stigmatised properties
This Halloween, SPI delves into the concept of stigmatised property and what buyers need to know before making a purchase.
New listing: a charming three-bedroom, two-bathroom Victorian terrace with a sunny backyard – and a troubled past marked by an unexplained death and reports of a lingering presence that buyers should be aware of.
In real estate, a stigmatised property refers to a home with a disturbing, tragic, or otherwise undesirable event in its history that can influence a buyer’s decision.
Even if a property is physically flawless, past tragedies or notoriety, whether widely publicised or not, can create a lasting stigma that may deter some buyers and complicate the sale process.
What makes a property stigmatised varies, as it depends on how potential buyers perceive its past.
Factors can include violent crimes, murders, suicides, drug-related incidents, domestic violence, rumours of paranormal activity, or previous residents with a notorious reputation or financial troubles.
According to R&W Potts Point/Elizabeth Bay principal Greg McKinley, while some stigmatised properties make headlines, they aren’t as common and have to be sold like any other deceased estate, with full disclosure.
“There's no different trick to it. Yes, some properties have a more publicised thing to it, but it doesn't take away from the fact of exactly what it is: a deceased estate,” McKinley told SPI.
Disclosure rules vary across Australia, but under Federal Australian Consumer Law, vendors and agents must not engage in misleading or deceptive conduct. Buyers have a right to accurate information about any material facts that could influence their decision.
State laws in Victoria and NSW also require agents to disclose “material facts,” including disturbing events that could affect a buyer’s choice.
“You don’t have to advertise that this is a stigmatised property, but you do have to disclose it,” McKinley said.
Failure to disclose can lead to serious penalties for agents. In 2004, two NSW agents were fined for not informing buyers that a property had been the site of a triple murder, which the purchasers argued would have influenced their decision.
In contrast, a 2010 Victorian case involving a suicide on vacant land was dismissed because the court ruled the incident was not a “material fact” as the buyer proceeded with the contract after learning about it.
McKinley recalled selling a stigmatised property in Surry Hills that had attracted significant media attention. While the property’s history had to be disclosed, he noted that not all visitors were serious buyers—many were simply exploring.
“It isn’t necessary or practical to discuss past issues with every visitor; disclosure occurs for genuinely interested buyers, either in writing or in conversation,” he said.
He emphasised that buyers’ reactions depend on their beliefs.
“Some people, if it’s been a long time, have no concerns and proceed normally. Others care more—it just needs to be disclosed what the situation is.”
While agents must remain lawful, McKinley reminded buyers that many homes in Australia are over 200 years old and carry histories.
“If you look at terraces in Paddington, built between 1880 and 1900, all sorts of activities have passed through these properties over the last hundred to 150 years. It’s impossible to know the full history, but buyers should be made aware of any material facts,” he concluded.
