Selling a home where a serious crime has occurred or that has a reputation for paranormal activity can be extremely challenging. In general you should expect the property to sit on the market much longer than usual and sell at a discount to surrounding homes. Experts believe that a non-natural death in a home can drop its value by as much as 30%. Some estimate that over $2 billion is lost in the housing market each year due to the reduced value of a home where a suicide or homicide has occurred. Murder not only lowers the price of the affected property, but also impacts the surrounding homes. A study by the University of Technology in Sydney found that homes in neighborhoods where a murder has happened experience a 4.4 percent decline in value in the year following the crime. In addition to reducing their value, these properties usually stay on the market 45 percent longer than comparable houses, according to HGTV. Living near a funeral home or cemetery may also reduce a home’s value, according to Trulia. This effect varies by region, with the biggest value declines seen in the South and Midwest.
Properties with a dark past that are often shunned by buyers are known as stigmatized properties. There are several types of stigmatized properties, including:
- Properties where ongoing criminal activities occurred such as brothels or drug dens. Criminal stigma is attached to these homes because former customers may return to the property expecting to purchase sex or illegal drugs. Due to the potential for undesirable visitors, most jurisdictions require full disclosure to a potential buyer if a property was used as a drug den.
- Properties on the radar of debt collection agencies. A debt stigma can be attached to a property if debt collectors, unaware that the previous owner or tenant has moved out, continue to harass the new occupants.
- Properties where a murder, suicide or other unnatural death has occurred. Such properties have a murder/suicide stigma: Disclosure requirements regarding this type of stigma vary by state. In California, sellers are required to disclose if a murder or suicide took place at the house within the last three years. Florida has no disclosure requirements. In North Carolina and Massachusetts, disclosure is not required, but a direct question from a buyer must be answered truthfully.
- “Haunted” houses have a paranormal stigma: Many jurisdictions require that the seller disclose if the house has a reputation for being “haunted” or if it is a site known for paranormal activity such as the Amityville Horror
Since disclosure is not a requirement in every state, prospective buyers should be prepared to do their own research to find out if a property has a dark past. That enticing three-bedroom may be selling at a bargain price for a reason. The first step is to directly question the realtor or seller. Also talk to neighbors. In many cases, an Internet search of the address will reveal much about the home’s past. There are also web sites such as DiedinHouse.com that document when a death has occurred in a home although these sites usually charge a search fee.
If you decide to take a chance on flipping a stigmatized property, there are strategies that can improve your odds of a successful sale:
- Be upfront with potential buyers. Even if there is no disclosure requirement, it’s best to disclose the stigma upfront to buyers. Chances are that it’s common knowledge in the neighborhood that a murder has occurred or that a house is haunted. Neighbors are very likely to communicate those rumors to the new owner. This may result in delays in closing the sale or a lawsuit from an unhappy buyer.
- Put rumors to rest with an open house. If the house has a reputation for being haunted but you see no evidence of paranormal activity, you may put rumors to rest by hosting an open house. The best strategy is to address these rumors directly by showing visitors that the house is “normal”.
- Hire a medium to cleanse the house. Another way to address paranormal fears is to hire a professional medium to cleanse the house. Web sites such as HouseHealing.com advertise remote cleansing of unwanted energies from properties for a fee. Their services don’t come cheap, however. HouseHealing.com charges a minimum fee of $300 for a residential property of up to 3,000 square feet and another $100 per additional 1,000 square foot.
- Look for buyers who are attracted to the supernatural. Certain groups of buyers may consider ghostly and/or paranormal activity a selling point. These are usually individuals who have a special interest in the supernatural. Some hotels and inns have tapped into this niche market by advertising “haunted” rooms and have more business than they can handle. Directing your sales pitch to fans of the paranormal doesn’t mean that you should rule out ordinary buyers, however. According to Realtor.com, nearly two-thirds of buyers they surveyed would consider purchasing a haunted house.
- Reduce the asking price. Lowering the asking price can be an effective strategy for marketing a stigmatized house. According to Realtor.com, nearly one-third of buyers would expect discounts of up to 30% on a haunted property. Another strategy is to simply wait. The stigma attached to most properties fades over time. Neighborhoods change and within a few years no one will remembers the history of a particular property.
- Consider renting out the property. Renting out the property allows the owner of the stigmatized property to generate some income while waiting for memories of the stigmatizing event to fade. It is also much easier to sell a stigmatized home if it has been consistently occupied.
Change the home’s outward appearance. If the home has gotten lots of media attention, changing its outside appearance may help eliminate visual reminders of the stigmatizing event. Houses that look like they may be haunted can attract unwanted visitors so make sure that the property is well lit, properly secured and well maintained.