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Steve McLinden, the Bankrate.com Real Estate AdviserSelling your house with a sex offender next door

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.

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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.

Bankrate.com's corrections policy -- Posted: Sept. 23, 2006
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