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Stigmatized Real Estate

The real estate market is currently struggling. This can be problematic for both sellers and buyers, but the savvy investor can find ways to turn this to her advantage. A mortgage loan is a very useful tool in this process. There are many reasons to purchase a new or second home. It may be time to downsize due to finances or retirement or both, or the investor may be seeking properties to resell down the road when market values rise. Finding a house with “added” features that lower its asking price can be a very useful tool in making the most of a mortgage loan. Everyone has heard of “fixer-uppers,” that are far more likely to be properties with significant physical defects in need of a fair deal of work. For the skilled craftsman with time to kill, this type of property is certainly worth taking out a mortgage loan to invest in, but not everyone has the kind of time and ability to make the initial outlay worthwhile.

There is another type of property that may sell for less than its appraised value, even taking into consideration that that appraisal is based on a depressed market. This is real estate that has been psychologically damaged, or “stigmatized.” As a rule this is due to a death on the grounds or a rumored haunting. Despite stereotypes, these properties are usually in good repair.

Because this information has to be disclosed to any potential buyer for a period of time after the stigmatizing event, a person who has decided they need a home with a lower mortgage payment can generally manage to finagle a reduced price. At a time when mortgage interest rates are dropping precipitously, this is the time to invest in a mortgage loan to acquire a retirement home or resale property.

The advantages of investing in such a property for resale value, is that most state regulations around a psychologically damaging event have time limits on how many years the property is legally stigmatized, which means that its value will increase somewhat disproportionately over time.

In the current market, there are more financing options open to someone looking to buy a house that has been on the market longer than the seller would like. Combine this with low interest rates and the potential for titillating marketing once a few years have passed if the event is notorious enough -- some people are frightened of buying a house that may be haunted, some are thrilled by the prospect -- or has some other historic value and the investment in a mortgage loan is well worth the time.