Buying a Stigmatized Property

[John Clark]

I am looking at buying a foreclosed property that is labeled as stigmatized.  There was a suicide in the house in 2016, and I'm torn on if I should buy it.  It's about 50% remodeled already and the rest of the work is just carpet and paint mostly.  The bank took the property back for $136k and is asking $194k.  Comps in the area are  around $250k.  I'm not sure what the disclosure laws in Arkansas are when it comes to this kind of situation.  Just wondering, anything other than the heebejeebees, would you all buy a property like this?  why/why not?  

[Dustin Davis]

@John Clark 

The State of Arkansas Code 17-10-101 states that, “psychologically impacted is not a material fact that must be disclosed”. It goes on to state that, “No cause of action shall arise against the appraiser or agent for not disclosing such information.”

http://law.justia.com/co...e-2/chapter-10/17-10-101

Arkansas Code Annotated 17-10-101, which is separate from the real estate license law:
(5) “Psychologically impacted” means without limitation that the real property was or was at any time suspected to have been the site of a homicide, suicide, or felony; and
(6) “Transferee” means and includes without limitation a buyer, purchaser, grantee, lessee, tenant, or one receiving any estate or interest in real property.
(b) The existence of any fact or circumstance or suspicion of the existence of any fact or circumstance that indicates a property might be or is psychologically impacted is not a material fact that must be disclosed in a real property transaction.
(c) No cause of action shall arise against an appraiser of real property, a licensee as agent of an owner, or a licensee as agent of a potential or actual transferee of real property for failure to inquire about, make a disclosure about, or release information about the existence of any fact or circumstance or suspicion of the existence of any fact or circumstance that indicates that the real property is psychologically 

All that being stated, I'd leverage the heck out of the situation in dealing with the bank... No way do they have $60K in cost/fee over what they bought it back for.  Hopefully they are local and will deal. 

Good luck!

D