What does a seller’s rep have to disclose to me as a buyer about a house?

Last week we explored what a seller’s representative is required to disclose to a buyer about a property with respect to latent and patent defects. This week, we’re still talking disclosure, but we’re going to focus on a path that’s less black and white. The topic? Psychological stigmas in real estate.

A psychological stigma is a non-physical attribute of a property that may trigger a negative emotional response by the potential buyer, and in Ontario, there is no requirement to disclose the existence of stigmas to buyers. There could be a number of reasons that a property might be considered stigmatized. Was it the site of a murder or suicide? Did a notorious criminal once reside in the home? A former meth lab or marijuana grow-op that has since been remediated and is safe to live in can also be considered stigmatized.

While events that could be considered stigmatizing occurred in or near the property for sale, they do not necessarily have any bearing on the function or appearance of it.

However, some may shudder at the very thought of their future home having a criminal past, for example. Some may even be upset if their home has a reputation for being haunted.

What is considered a stigma varies from person to person; it’s based on individual histories, sensitivities, cultures, and beliefs.

While sellers aren’t required to disclose potential psychological stigmas to buyers, you can take measures to try to avoid purchasing a property that you would consider stigmatized. The first step is to have an open and frank conversation with your real estate representative. While they should have a written list of your “wants,” they should also be armed with a list of what you absolutely do not want. Don’t assume your representative will know what you consider to be an off-limits attribute. Explicitly tell your representative what you want to avoid in your future home.  And if that includes paranormal entities, say that too – no matter how silly it might feel.

Your representative can then review property listings with informed scrutiny. If they don’t see any mention of issues that reflect what you would consider to be stigmas, then they must go one step further and make a formal inquiry to the listing representative.

Sellers are within their rights to sell a property for as much as they can. That said, a seller may not want a stigma known to prospective buyers as it could affect the purchase price or reduce the number of prospective buyers. In this case, they may instruct their representative to not disclose a stigma. The seller’s representative can’t lie if asked a direct question, but they can decline to answer the question and suggest that the buyer’s representative conduct their own research.

If this happens to you, there are a couple ways you can research a property you’re interested in buying. First, try an internet search of the address and street name. Second, speak with some of the neighbours about the house, street, and neighbourhood.

Remember, as a buyer, you are ultimately responsible for determining whether a property will suit your needs. Conducting a bit of research and having a thorough conversation with your representative about your criteria are key first steps in finding your dream home.

Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.

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