In the last two years I have had two buyers walk away from $1.5 million dollar properties that they loved because they found out that a sex offender was living a few houses away. These properties in Santa Clara County, CA were pristine. But the buyers, who were more than ready to buy, pulled out after we researched the offenders in question.

In today's real estate market buyers are in the driver's seat. Because there are so many choices out there for buyers, there's time to wade through the mounds of information available about an area and really research your choice before you sign.

Look carefully at the inspections and disclosures. Use Google Earth to watch the kind of cars that are on the street. Investigate schools, location of power lines, swimming pools, parking, renters vs. owners in the area, crime rates and the general area both during daylight hours and at night. And always remember to find out if there are registered sex offenders in your area. If you have children the reasons are obvious. If you don't and don't plan to, it's still important that you add this research to your due diligence.

In California it's easy to find out whether there's a registered offender in your area. The Megan's Law Registry, found at http://www.megans-law.net, lists offenders by zip code, empowering you to find this vital information out before you get close to the final disclosure stage.

When my clients and I discovered that there were registered sex offenders in the area we worked out a plan to investigate further. On both occasions, I knocked on the door of the offender's homes and spoke with the person who answered the door. In both cases, it appeared I was not the first to knock on the door. The answers I got were short and less than informative.

It went something like this, “Hello, I am Holly Barr with Coldwell Banker. I have a buyer looking to buy down the street. We are looking for more information about Johnny Doe … What happened and when did it happen?”

The answers were defensive. "I cannot tell you anything about him." “That was a long time ago.” “I cannot even tell you if he lives here."

My social work background is well suited for asking questions on touchy subjects. It also taught me to be resourceful so I also knocked on neighbors' doors and left notes. This approach turned up a bit more information because most people like to talk (especially about something juicy like a sex offense).

In
my most recent offer on a home with a sex offender in the neighborhood, the selling agent knew about it and had actually lost a buyer before us for the same reason. When we backed out of the deal, the listing agent called me several times to see at what price my clients would buy the house. When I told her there was nothing she could do outside of getting the guy to move, she asked me at what price I thought she should list the house in order to overcome that obstacle. At this point she appears to have dropped the price approximately $300,000. That is a lot of money because of a neighbor.

And that's reason number two to be wary if you're considering buying a home in this situation. If you're not protecting your children, consider that you might still need to protect your pocketbook because it is very possible that your property values will suffer because of your neighbor's criminal record.

My buyers are still interested in that house and are hopeful that something can be done. Page 3 of California Proposition 83 puts a limit on where sex offenders can live. According to this proposition they cannot live within 2,000 feet of a park and his home (the one that he is renting) is right across the street from a huge park with a playground and an elementary school just beyond that. As I write this, I have several emails out to local law enforcement and to the people behind Megan’s law to learn more.

Some of my more creative clients have also suggested, half jokingly, that they would buy the house at $150K less and offer $100K to the guy to move away. While the ethics could get tricky and we couldn't be sure of who would move in once he is gone, it is creative.

I guess we could find someone we like and pay their rent for years with the other $50K. Again, ethics and logistics might get tricky. However, I love the out of the box thinking and welcome any comments.

For those of you in the position of selling selling a house with a sex offender nearby, there are three things you should know:
  1. You MUST disclose that information if you wish to remain out of litigation.
  2. It will likely affect your price. Perhaps not your listing price, but more likely the offer price or the negotiated price.
  3. Many buyers will walk away at any price. So, if you have a sex offender near your home and you have a buyer and you have disclosed the material fact, do all you can to work with that buyer.
Lastly, as a buyer, it is your responsibility to be diligent in researching all you can about a property you like. If you need more information, ask your licensed, full-time realtor to help!