Sometimes, as an appraiser, you’ll run into interesting projects like ones that are stigmatized properties. A stigmatized property is a property that the buyers do not desire because of things unrelated to the physical condition of the property. There are 5 major types of stigmatized properties, which are:
1. Criminal — The property has been involved in illegal activities. The concern is that former visitors could return and try to reengage in prior activities.
2. Murder / Suicide — Each state has different laws dealing with the disclosure of this information, but in states that it must be reported this can stigmatize the property.
3. Debt — Sometimes debt collectors don’t know that a debtor has moved and will continue to pursue the property. This can result in annoyance and unnecessary trouble for the new owners.
4. Phenomena — Simply put: Ghosts and paranormal activity. Many areas require this to be disclosed, but normally this is on the local market only.
5. Minimal — This type is different because it means that there aren’t any issues with the property, but it still won’t sell. This can be due to neighborhood issues or odd plots.
It’s very important when doing an appraisal of these types of properties to be unbiased but still acknowledge these issues.