Evaluation of stigmatized properties

Abstract

Stigmatized property is real estate burdened with an external negative effect. Individual cases are spread along a broad spectrum, along many dimensions that include the rational and the irrational, the acute and the chronic. Examples for the stigmatizing effect are a nearby airport, ground water contaminated by chemicals, presence of a high-voltage power line, and so on. Evaluation of these properties needs special methodology. Stigma can reduce the property’s market value through a particular, multi-layered filter. The author systematically examines the professional literature’s cases of evaluation of stigmatized properties. The research aims to organize and compare the cases in order to calculate the market value of stigmatized properties. Based on the analysis, six significant dimensions are identified. A focus group of 19 experts examined and individually evaluated the stigmatizing effects along these different dimensions. The author suggests that it is possible to estimate the stigma’s effect and compare different cases to one another effectively. The results allow the international methodology of valuation to be processed.

Keywords

• real estate valuation
• stigmatized property
• market value