Humber/Ontario Real Estate Course 3 Exam Practice

Which term best describes a $30,000 loss in property value due to a much-publicized crime occurring in the house?

1. Stigma

2. Detrimental condition

3. Market adjustment

4. Incidental loss

5. Neighborhood effect

6. Criminal depreciation

The correct answer is: Stigma

The term that best describes a $30,000 loss in property value due to a significant crime occurring in the house is stigma. Stigma refers to the negative impact on property value that arises when a property is associated with a highly publicized event, particularly something unfavorable such as a crime. This perception can linger in the minds of potential buyers and the community at large, leading to an overall decrease in desirability and value of the property. Stigma is not synonymous with tangible or physical deterioration of the property itself; rather, it reflects the psychological and social factors influencing buyers' perceptions based on the property's history. As a result, the property can suffer a loss in value even after the home may have been repaired or improved. This differentiation helps clarify why other terms do not fit as accurately. For example, detrimental condition suggests physical issues with the property that cause a loss in value, while neighborhood effect typically refers to broader influences from surrounding areas rather than a specific incident tied to a single property. Hence, stigma accurately captures the nuanced loss in value due to the association with an unfortunate event.