Selling Your House With a Sex
Offender Next Door
Real Estate
Adviser
by Steve McLinden
• Bankrate.com
[Question]: Dear Real Estate Adviser, How do you deal with the
presence of a registered sex offender living next door when you put your
home on the market?
-- C.B.
[Answer]: Dear
C.B.,
That's a good question and one that's been the subject of some debate in
recent years, particularly with the nationwide rollout over the last
decade of Megan's Law, which mandates that states must have a mechanism to
make personal information on released registered offenders available to
the general public.
You do have a dilemma on your hands,
as do the neighbors of an estimated half-million other registered sex
offenders across the U.S. You're torn between withholding such information
to protect your investment while potentially letting a family with kids or
other vulnerable people unwittingly buy your house. Disclosing the cold
fact of the offender's presence certainly could make your resale value and
potential-buyers pool shrink.
Ethics aside, here are a few facts. A growing number of states -- but not
a majority -- require disclosure of a known sex offender in the
neighborhood. However, home sellers in most states are now required by law
to alert buyers to the availability of law-enforcement database disclosing
the locations of registered sex offenders, which puts the onus squarely on
the buyer to do the research.
Your agent should be able to tell you what your state's laws are and how
to best handle a sale. But realize that laws don't protect sellers or
agents who make intentional misrepresentations. In other words, if you're
asked whether a sex offender lives anywhere in the neighborhood and you
say "no" when the answer is "yes," you're potentially
liable.
The National Association of Realtors' position is that local law
enforcement agencies, not real estate agents, should be the go-to sources
for sex-offender information, stating that Realtors, "should not bear
the responsibility of notifying home buyers when such offenders live in a
neighborhood." But some state laws supersede that sentiment.
Additionally, many local government and developers have moved to keep such
offenders out of their neighborhoods. A variety of lawsuits involving this
action and disclosure issues like yours have not established a clear legal
precedent.
As for the economic fallout of having a sex offender living in close
proximity to a home, estimates vary greatly. A 2002 study by Wright State
University professors James Larsen and Joseph Coleman found that homes
situated within one-tenth of a mile of a sex offender sold for an average
17.4 percent less than similar houses elsewhere. Homes between one-and
two-tenths of a mile away sold for 10.2 percent less, while those between
two- and three-tenths of a mile sold for 9.3 percent less. But a more
recent study by Columbia University's Leigh Linden and Jonah Rockoff
released in April 2006 showed homes within one-tenth of a mile of a sex
offender fell by only a 4 percent average (about $5,500) while homes
farther away showed no decline. I can offer no explanation for this wide
disparity.
Before you do anything, I would first check to make sure the information
on the next-door offender is current. Many offenders move and don't
register their new address or the offender Web sites are not updated as
frequently as they should be. In some areas, up to 20 percent of the
listings are inaccurate.
But there is no arguing that sex-offender information is out there and
readily available to all buyers as part of their due diligence. Some
school districts monitor offender registries and send out notices when
offenders move to the community. Interested residents can then log onto
the registry site to get the name and address of the newest offender. In
other words, offenders can no longer hide, and they're there for the
finding.
For concerned buyers, the Web site www.klaaskids.org has an extensive bank
of information on state-by-state registration requirements and community
notification laws. The National Sex Offender Public Registry,
www.nsopr.gov, has offender listings for 41 states.
C.B., you're in a tough spot. Look to a good adviser, either an
experienced Realtor or real estate attorney, to help guide you.
To ask a question of the Real Estate Adviser, go to the "Ask the
Experts" page and select "buying, selling a home" as the
topic.
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