Selling a Home in an Undesirable Area

homes in alley with graffiti on walls

Selling a home in an undesirable area can create many challenges for real estate agents. Apart from the difficulty of selling even the best home in a bad location, there may also be potential issues with showing the home and or safety for you and your team. 

Firstly, let’s look at why some homes are considered to be in an undesirable area. In some cases, it may be that the neighborhood isn’t good — somewhere where crime is high, or where pollution is an issue. It could be that a home is located near an industrial area, mining or fracking activity, or even a home located on a road where there is heavy and/or noisy traffic, making it an undesirable location.

Here are some tips to reduce your risks when selling homes in undesirable areas and get those properties moving…. 

Be Upfront About Property Challenges

Did you know that disclosure issues are one of the main reasons real estate professionals face lawsuits each year? 

Disclosure laws differ across states, and while many disclosures relate to material defects of the home itself, real estate agents need to be aware of their obligations to disclose any information which can materially affect the value of a property. This includes information relating to environmental factors and the neighborhood — if it will materially affect the value of the property. 

For example, the California Civil Code states that information pertaining to the property regarding potential flood hazard, high fire hazard, earthquake or seismic hazard must be disclosed. 

If the home is considered a “stigmatized property” where a murder or criminal activity has occurred, this is considered a psychological or emotional defect. Disclosure of these types of defects depends on your state. The California Civil Code says if a person has died in the home from other than natural causes in the last 3 years, this information must be disclosed. 

If these activities have occurred in the same street or suburb where the home is located, but not physically in the listed property, disclosures become somewhat of a gray area. Real estate agents have no obligation to proactively search for information about the neighborhood, such as recent crimes or other environmental factors. However, if you are aware of something which would materially affect the value of a property, this must be disclosed. 

It’s important for real estate agents to become familiar with all relevant laws in your state, and ensure that you never complete disclosure forms on behalf of clients. It’s imperative that all forms are filled in by the client to avoid any legal ramifications in the future. 

Give Directions Strategically 

When real estate professionals are trying to sell a property in an undesirable area, it makes sense to give prospects “desirable” directions to the home. That is, if the property is located close to the local waste depot, industrial area or crime-riddled street, work out a more desirable transport route that enhances the positives of the location rather than the negatives. 

In a world of smartphones and Google Maps, directions do still need to make sense.  Agents shouldn’t reroute a prospect so far away from the most direct route, that the client realizes it’s a blatant strategy to avoid something in the neighborhood. This could be seen has dishonesty, and you don’t want to be facing questions from a client about why you’ve deliberately avoided telling them something about the neighborhood. 

Encourage Buyers To Do Their Own Due Diligence

Real estate professionals should strongly encourage buyers to do their own due diligence when purchasing a home. It’s the buyers’ responsibility to familiarize themselves with the neighborhood, because the decision to purchase is ultimately their decision. 

If a prospect asks for information about the neighborhood, be very careful what you provide. Referrals to third-party sources of information are recommended, such as referring to the police for crime data and local government for other neighborhood information. This is suggested, rather than providing information directly, as it reduces your liability if something goes wrong. 

Keeping Your Team and Prospects Safe

As a real estate broker, the safety of your team and clients is the first and foremost concern. If one of your team is holding an open house in an undesirable location, safety needs to be top of mind.

An open house may not even be required, if the target market for the property is an investor or a property developer.  If the purchaser is planning to demolish the home anyway, there is little point in inspecting the home. 

For situations where an open house is appropriate, consider the timing of the open house for security and safety. For example, if the property is located in an isolated street among many vacant homes, an evening open house may not be appropriate. 

Consideration should also be given to how you’ll check-in on your agents’ safety. Some real estate offices have policies such as texting another team member when the agent has left the property safely, or even a telephone call to confirm that it’s actually the agent and not someone else texting. 

If dealing with rural properties, look into cell service.  If it’s in a black spot or secluded area, check in via cell phone may not be possible. and alternative arrangements need to be made.

Protecting Your Business

Ensuring you have adequate insurance coverage for your brokerage is essential. To make sure your business is protected against lawsuits, contact CRES for a real estate E&O insurance check-up. Our E&O policies include Team Coverage, which is ideal for brokers. 

With CRES E&O + ClaimPrevent®, you’ll also have access to professional legal assistance from experienced and qualified attorneys 7 days a week.

We can tailor an insurance package to cover a full range of needs for your real estate office — including Business Owner’s Policy, General Liability and Property coverage, Cybersecurity, Worker’s Comp and more.  
For more information, contact the CRES team on 800-880-2747 for a confidential discussion.

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published September 25, 2019

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