Death House

When we buy a house, we ought to look for a house where someone has died recently.

No, I'm serious.

People, for some reason, seem to think that a death taking place in a house is a bad thing, something that would make the house less desirable to live in. I suppose if no one cleaned up after the death and all the gooey nastiness that happens when someone dies, that could leave a stain and a bad smell. Maybe if the person died from some sort of communicable disease I might consider that relevant. But aside from that, it's not like death is particularly contagious.

But the fact is that the market price of such a house drops dramatically. This seems to me to be completely irrational; what are these people afraid of, ghosts? Turns out, yes, that is part of the fear, although the stigma of being the situs of a deaht seems to be somewhat more complex than that. There is money to be made as a result of this sort of irrationality.

California Civil Code § 1710.2 states that a seller need not disclose a death in the house that took place more than three years prior to the intended date of sale. But does that imply that a death in the house within three years is material? It would seem so -- any fact that, if known, would lead to a change in the market price of the property, is material. Since a recent death is such a fact, it should be disclosed.

So, you buy a house where there has been a death within three years. As a result of that fact, you pay a sub-market price for the house. Hold on to the house for three years and, if no one else dies in the intervening time, you can then sell the house for its market price. The downside is that you will absorb a capital gain tax liability, but you can avoid that if you are lucky enough to buy a new, better death house that you buy for a sub-market price, and structure the sale as a 1031 exchange.

Alas, The Wife wants to buy a new house, it seems. There's another model home with a floor plan she really likes. So I guess that's what I want to buy, too, even though this bit of useful knowledge could get us in to a lot more house than we otherwise could afford.