Homes with sordid pasts: Creepy, but great bargains (© Chris Butler)Click to enlarge picture

Chris Butler purchased serial killer Jeffrey Dahmer’s childhood home in Bath, Ohio, at a deeply discounted price. Dahmer committed his first murder there. // © Chris Butler

Chris Butler had a list of “musts” when he went house shopping in 2005 in Summit County, Ohio, near his hometown of Cleveland.

“I had a pretty strict list,” he says. “I play rock ’n’ roll and I was tired of having the neighbors yell at me.” The house needed to have:

● Plenty of space to accommodate his band mates.

● Distance from neighbors, so he could make music without getting angry phone calls.

● Ground-level living quarters, in case his aging mom needed to move in.

It was a tall order in this part of Ohio, outside Akron, where the style is Ralph Lauren and the real-estate market is replete with two-story colonials, Butler recalls.

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Imagine his happiness, then, when his agent showed him a stunning, 2,000-square foot split-level home atop a rocky hill on a two-acre lot deep in the woods near the town of Bath. The house was a stylish, well-built 1950s specimen, with a flat roof, wrap-around deck and expansive windows overlooking Cuyahoga Valley National Park. The price — $269,000 — seemed ridiculously low.

The other shoe dropped when Butler’s real-estate agent called. The seller’s agent had made an important disclosure: The house had been the childhood home of serial murderer Jeffrey Dahmer and it was there — in 1978, while Dahmer was in his late teens — that he had committed his first murder.

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Butler, a native of the region, knew that Dahmer had lived somewhere nearby. But the news that a homicide had happened in this house that he’d fallen in love with was a startling disappointment.

“My initial shock was, ‘I can’t do this,’” he says.

Then he looked at it differently: In a way — an offbeat way — the home’s bizarre and outcast persona resonated with his own. “After I got over it, it was like, ‘I can’t not do this.’ It fits my alternative lifestyle, my musician-artist nature,” he told himself.

He also understood a rule of thumb in the real-estate market: Homes that have a stigma are harder to sell. They spend more time on the market and, when they do sell, it’s usually at a discount. Some are never purchased and the owner must destroy them to recoup any of the value from the property.

The sellers of Dahmer’s childhood home were at a disadvantage, Butler sensed, so he offered even less than the low asking price and purchased the house for $245,000.

Murder just one of many real-estate stigmas
A murder scene is just one type of stigmatized real estate. “Literally hundreds of things” can affect a home’s marketability, says Randall Bell, a Los Angeles economist, real-estate appraiser and expert in “real-estate damage economics.” A few other things that hurt a home are airport noise, landslides, soil problems, environmental problems, lead-based paint or hurricane damage.

Real or perceived, a stigma creates a risk, or “market resistance,” in the minds of potential buyers, preventing them from paying full value. Bell has consulted on many famous real-estate cases, among them the scene of the Manson family murders, Bikini Atoll (a nuclear weapons test site), the Hollywood sinkhole and the World Trade Center in New York.

© Carson Ganci/agefotostock

Bing: Search & decide

There’s no formula for finding or avoiding stigmatized properties, so buyers should educate themselves and use their wits. “There is no central MLS for distressed properties per se,” Bell says. “It takes good ol’ detective work.”

The most important thing you can do is learn the law in your state. Only about half the states have laws specifying what must be disclosed in a real-estate transaction. (Read: “Disclosure: What sellers need to know.”)

California and New York have the most demanding disclosure laws. California requires sellers to reveal “anything material” that could affect value. Bell tells clients to disclose everything. “If it came to your radar screen to ask the question, the answer is, ‘Yes, disclose it.’ If you think it’s inconsequential, disclose it anyway. For example, in California, case law has established that you have to disclose if you have obnoxious neighbors. It’s very strict.”