What is your background?
My name is Orell Anderson and I am a valuer and forensic consultant with extensive experience in real property valuation, diminution-in-value studies, and litigation support. I have been retained as an expert witness and have additionally worked on and researched numerous high-profile diminution-in-value cases in which public perception – and, sometimes, superstition – contribute to the alleged property value effects. My expertise has led to work throughout the United States and around the world.
In 2017, I was retained as an expert witness, via ExpertsDirect, in Australia following the discovery of environmental contamination in residential communities surrounding civilian and military airfields in Oakey, Williamtown, and Katherine. I have also worked on real estate valuation cases that emerged from the September 11, 2001 terrorist attacks – both at the site of the collapsed World Trade Center towers in New York City and at the Flight 93 crash site in Pennsylvania.
I have researched and worked on several cases involving the impact of highly publicized homicides on the value of residential properties. These include the home of the 1970s serial killer Jeffrey Dahmer in a Chicago suburb and the Colorado home in which Chris Watts in 2018 strangled his pregnant wife prior to murdering his two daughters. Both cases are now the subjects of Netflix series and generated intense media coverage at the time. Two other related, but distinct, cases include the Bundy condo in which OJ Simpson was accused of murdering his ex-wife Nicole Brown Simpson and her friend Ron Goldman and OJ Simpson’s residence in the Rockingham neighborhood of Brentwood. One was a crime scene, while the other was simply associated with a crime – yet both properties were sold at discounts.
Explain stigma when it comes to property value?
In the context of real estate valuation, stigma refers to a specific type of risk that can cause property value diminution. Stigma refers to the residual impact of a detrimental condition on the price and marketability of a property after that detrimental condition has been repaired or remediated. Stigma is often used to refer to risk impacts due to crime and environmental contamination, but the concept may be applied to other detrimental conditions, such as geotechnical failures, fires, and flooding. Though the term stigma is commonly used, the preferred term used by real estate valuers is market resistance, since any impacts on property value are due to the ongoing resistance or reluctance among buyers to purchase a property with a detrimental condition in its history. It is through this potential effect on market demand that stigma may put downward pressure on market value. When measuring value effects due to stigma, it is crucial to know the status of the property in what valuers call the remediation lifecycle, which is comprised of three stages: before repair, during repair, and after repair. Properly applied, the term stigma refers to risk due to adverse public perception in the after repair, or ongoing, stage. A common error is to call risk “stigma” during the “repair” or “before repair” stages. For example, risk impacts during the “before repair” stage – also called the “assessment stage” — may be due to incomplete characterization of the detrimental condition rather than stigma.
Tell us about some valuations which you’ve conducted that have been negatively impacted stigma and how much was the value of the price affected by what happened?
Early in my career, I worked on several high-profile cases in which a house was appraised that had been the scene of a murder or other tragedy. In the case of homes that were the scenes of grisly homicides, the homes may be discounted up to 10% to 15%. The most highly publicized of cases could garner even steeper discounts, ranging between 15% to 50%.
As in the case of Melissa Caddick’s disappearance, it is sometimes the case that a property sells at a discount simply for its association with a certain crime, tragedy, or person. Similar cases include the Rockingham estate of OJ Simpson, the home of Derek Chauvin, and the home of the Sandy Hook mass shooter Adam Lanza. In the 1990s, I worked on the appraisal of the OJ Simpson home in the Rockingham neighborhood of Brentwood, California. This was a particularly interesting case because the house was not itself the scene of a murder. Instead, it was the home of the man many believed to be guilty of murder. Simply for this association, the home sold at a significant discount. Many years later, a similar phenomenon occurred at the home of Derek Chauvin, the Minneapolis police officer charged with the murder of George Floyd in May 2020. Chauvin’s residence in Oakdale, Minnesota, sold at 8.5% below the initial asking price of $279,000 and likely no more than 10% below market value. In both the OJ Simpson case and the Derek Chauvin case, buyers appeared willing to purchase the homes only if the sellers were financially penalized.
Given the surroundings of Melissa Caddick’s disappearance, how much % do you expect the value of the property to be affected?
These previous cases may be used to bracket the estimate of diminution in the Melissa Caddick disappearance case. Such bracketing is common in real estate valuation. The idea is to identify comparable properties with conditions that are both more severe and less severe than the property in question. Once the property has been located somewhere in this range, the valuer then tightens the range as much as possible using market data as support. In this case, because there’s no murder in the house, the most similar cases would be those such as the OJ Simpson mansion – not the Bundy condo where his ex-wife and her friend were found dead – and the Derek Chauvin house. Because the property was apparently not itself a crime scene, the Caddick property would be on the lower end of the range for discounts due to murder and crime. However, the high level of publicity would likely put some downward pressure on price. My estimate is that the Caddick property would sell for not less than 10% below market value given the facts available. Given the current downturn in the Australian residential real estate market and the significant increases in interest rates the valuer would have to be careful in the selection of comparables and in the application of market adjustments to separate any discount from the influence of market conditions on prices.
What is virtually unheard of in this case is the $10,000 refundable fee to inspect the property. Even in the most high-profile murder cases, I have not seen this kind of barrier to entry. I have only seen a similar fee in cases of fraud – and even that I have only seen once in my career.
What can be done to reduce the impact of price diminution?
In cases of murder, mass shootings, terrorism, and other tragedies, there are often measures taken by sellers and their agents to mitigate the effects of property value diminution. These measures, though they may sometimes seem on their face banal and simple, can be effective since stigma is a question ultimately of public perception, which can be influenced by subtle changes. Thus, repainting the exterior, adding or removing vegetation, and other minor interior and exterior renovations can sometimes help disassociate the property from the community’s collective memory of the crime or tragedy, which is often tied to the property’s appearance in media images and crime scene photos. In the case of the Bundy condo where OJ Simpson’s ex-wife Nicole Brown Simpson and Ron Goldman were found dead, one mitigation measure was as simple as changing the condo’s street address.