Chicago Tribune

Mary Umberger

BAD VIBES

FOR SALE: BEAUTIFUL HOME, NORTORIOUS HISTORY

by Mary Umberger
September 26, 1999
The Chicago Tribune

The house on Loomis Street in Naperville is a Victorian beauty, full of ornate woodwork and stained glass. The locals long have regarded it as one of the most distinctive homes in a neighborhood that's full of them.

It's also the place where three young children died in March, their deaths made all the more ghastly because their mother, Marilyn Lemak, is charged with drugging and suffocating them. When the five-bedroom trophy home went on the market in early August, a collective shudder went through many who knew the place.

"You couldn't give me that house," offered a long-time Naperville businessman who said he had heard a fair amount of casual speculation on the fate of the house, all of it tinged with revulsion. "I often take a different route home at night to avoid going by the place." In no time at all, the home seemed to have gone from showplace to pariah, in the eyes of many. But not all.

"That house won't be hard to sell," said Naperville real estate agent Tim Baker a few days after it was listed for $929,000. "It's in an absolute hotspot. It's hard to get property in that area. I think it'll sell right away."

It did.

The listing agent, Karen Marposen of Ory Realty in Naperville, refused to discuss the specifics of the sale.

"The only thing I would say is that it's a great home, a lovely home. I have a buyer who sees that," she explained.

Marposen also wouldn't discuss how her firm had set out to market what, in the business, is known as a "stigmatized property"--a house with a cloud lingering over it; a cloud that has nothing to do with structural soundness and everything to do with what, in another age, might have been described as bad vibes.

"We used a lot of discretion and made sure that only qualified buyers looked at the home," Marposen said before cutting off a brief interview.

But these days, there seems to be plenty to say about stigmatized properties in general, as real estate agents increasingly head for cover in the wake of lawsuits over just what exactly it is they are required to disclose to prospective buyers.

In Illinois, sellers must reveal whether they know of any of 22 kinds of defects -- most of them structural, such as leaky roofs, defective air conditioning, asbestos, etc. Illinois real estate licensing regulations protect agents from liability for failure to disclose a murder or suicide at a residence. In any case, however, questions have to be answered honestly.

But around the country, legislatures and courts are pushing sellers to 'fess up to a lot more, and the real estate industry is concerned about how far to go in revealing such things as semi-trucks that barrel down the street every day at 5 a.m., how close the house might be to a landfill, and whether anyone has died on the premises, even of natural causes.

Some might have to grapple with revealing that a pedophile lives across the street, or that ghosts seem to bump around upstairs at night.

Where such requirements aren't spelled out, real estate trade groups are advising their members that it's in everyone's best interest to find a way to let prospective buyers know about any existing conditions -- or even potential ones -- that might return to haunt an agent in court when the buyer says, "You should have told me."

"It's coming up more and more," says Randall Bell, a California appraiser who specializes in stigmatized properties. "There are a lot of situations where nothing physical happens (to the structure), but there's a measurable impact on property values. Those kinds of laws are getting challenged more and more."

In the course of his work, Bell, who has picked up the perversely marketable appellation "Master of Disaster," has been called upon to appraise such infamous residences as Nicole Brown Simpson's condominium, the house in which actress Sharon Tate and others were murdered by members of the Charles Manson "family" in 1969 and the home in Rancho Santa Fe, Calif., where 39 members of the Heaven's Gate cult committed suicide in 1997, among numerous other notorious properties.

Bell says that such infamous homes constitute a small amount of his practice, and that most of his appraisal work is related to natural disasters or environmental contamination.

"I just got back from Chernobyl and I am going to the Marshall Islands to assess damage from nuclear testing," he said in a telephone interview from Hawaii. "I'm working on two environmental cases here. That area has gone ballistic in interest."

Bell isn't just talking about environmental stigma on a Chernobyl level: He says it's making a daily impact on local real estate values. "Science has pretty much shown that the contaminants that we have taken for granted are harmful. People are taking this very seriously."

Even so, Chicago-area real estate agents say that prospective buyers ask remarkably few questions about such taints -- environmental or otherwise -- that aren't provided for on mandatory disclosure forms.

"Except when buyers come out of the East," suggests Honore Frumentino, a Koenig & Strey agent in Deerfield. "It's huge when people are transferred from there. People there are concerned with (environmental) things that we haven't had to deal with."

Frumentino has had a few brushes with stigmatized properties: "I once sold a house that had come on the market and quickly went off. It was back on the market in a month" with no explanation, even word-of-mouth.

"After my buyers had signed off and bought the home, we got a call. `We need to disclose that there was a suicide in the house,' " she recalls them saying. "I took a deep breath and called my buyers. I told them there was something they should know," that a resident had taken his life in the master bedroom.

The buyers took it in stride, she recalls.

"One of them said to me, `Well, I guess it's about time that somebody makes this house smile.' They purchased the house, redid it, and they enjoyed living there for many years. I guess you need to find the buyer who has that attitude.

"If it's somebody who is very superstitious or has (a similar tragedy) in their past, they're not going to go for it. There is basically a buyer for everything."

Sometimes, apparently not. For instance, John Wayne Gacy's house in Norwood Park Township, arguably the most infamous house in Chicago, was razed several years after the discovery there of 29 bodies of boys and young men buried in its crawlspace. Later, a home was built on the site, with the benefit of a new house number to help throw off the gawkers.

Bell re-appraised the "Heaven's Gate" mansion just before it finally sold in mid-September, apparently to a local resident. Published reports pegged the sale price at $668,000, quoting county officials who called it "a bargain."

"I wouldn't call it a bargain," Bell said in an interview about a week ago. "It sold for what it's worth. It is a damaged house. It requires a tremendous amount of work" to undo the damage that resulted from the suicides.

"Once you do all that work, you're still left with a house that's stigmatized. I know people who wouldn't even go inside the house." Bell said he appraised it at about $700,000, and estimated that un-stigmatized, it would be worth about $1.4 million.

He speculated that the new owner might consider tearing it down and rebuilding, which was what was done with O.J. Simpson's house in California. Agents said that it sold quickly, for close to its $3.95 million asking price.

In what some might be deemed as a true triumph over stigma, the house in Fall River, Mass., where, in 1882, Lizzie Borden was accused (and eventually acquitted) of hacking to death her father and step-mother with an axe, was turned into a bed-and-breakfast inn a century later. Visitors pay $150 and up to spend a night in the room where, so it's said, she "gave her mother 40 whacks."

Bell says he suggests to his clients that if they can't sell their crime-stigmatized houses right away, they should consider renting them out: "It gives the house a sense of occupancy, that life goes on.

"One of the interesting things about (such properties) is that it's relatively easy to rent them out. A buyer would be putting down equity dollars, and it's a big financial commitment. A renter is not putting down any equity dollars. They're there on a temporary basis. If it's a big enough annoyance to live there, they'll move."

Bell has devised 10 categories of "diminution in value" that affect a property's appraised worth, and he generalizes that a well-publicized murder can lower a house's sale price by 15 to 35 percent, although the reduction may be steeper in upper-bracket homes, where buyers are known for being choosier, anyway.

Time will help heal that gap, he says.

How long does it take?

"There are a lot of variables," Bell says. "If you're talking about a single suicide in California, you might find that no time needs to go by. People don't react to that.

"If you have a murder that's particularly upsetting, it could take five to seven years (in many parts of the country). Typically, then things get back to normal. It's quicker in California. California is transient, so you have people moving in and out every three to five years, so you have new neighbors."

In some areas on the East Coast, however, it's more common to have several generations living in the same locale, so a stigma might be hard to shake, Bell says.

A few states, such as California, require that sellers disclose whether anyone has died on the premises within a given period.

"The (Illinois) Real Property Disclosure Act doesn't require this kind of disclosure, but there is this common-law concept of duty of disclosure," says Debra Stark, associate professor at the John Marshall Law School in Chicago, explaining that the ethical "oughts" are what drive disclosure disputes.

Stark, who specializes in teaching real estate law, says the key concept in such disputes is whether a property defect is deemed to be "material" -- that is, would it affect the amount of an offer or sale price?

"This is the key: The buyer could not discover (the defect) based on a reasonable inspection. It would have to be a defect that the seller is actually aware of," Stark said.

"But then there is the whole issue of what to volunteer. Let's say somebody is looking out the window and he says, `Oh, what a beautiful view,' and the agent knows that a big building is going to be built that will block that view. She probably should say that."

As agent Frumentino puts it, "After 22 years in the business, my rule is that you disclose, disclose, disclose, disclose and then when you're through, you disclose some more."

However, most agents interviewed for this story agreed that the potential buyer needn't be hit with it upon crossing the threshold for the first time.

"I think what you try to do is find a way to bring it up in the course of conversation," explains Wheaton agent Sue Fortson, echoing a point of view offered by a number of her colleagues.

The real estate industry appears to be encouraging its practitioners to be more forthcoming, even where laws don't require it. The National Association of Realtors has issued guidelines to help its membership distinguish the times when they should speak up from the times they may remain mum.

It has even offered suggested responses to such queries as whether anyone in the house has had AIDS: "It is the policy of our company not to answer inquiries of this nature . . . since this information is not material to the transaction. In addition, any type of response may be a violation of federal fair-housing laws. If you believe this information is relevant to your decision, you must pursue the investigation on your own."

The NAR lobbying stance on proposed laws that would affect stigmatized properties has been that the disclosure should relate to the home itself, not the people who live in it. That's real estate agent Tim Baker's point of view on the Lemak house: "It's a beautiful home. Its four walls and roof should stand on their own merit. The activity that occurred in the home was horrendous, but the home isn't horrendous.

"The important thing is putting a family in that house and returning laughter to it," Baker suggested.

"That's what that home needs now, some laughter."

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