“I ain’t afraid of no ghosts” … or are you??? In the spirit of Halloween, let’s lurk into the subject of haunted houses and what you need to know when buying or selling a “stigmatized property”.
Have you ever walked into an open house and just felt something was a bit off? Maybe the listing price didn’t match your perceived value of the property? Or maybe you felt as if you weren’t the only one in the room when checking out the unfinished basement? Did you find it odd that the porcelain doll in the guest room was checked-off as “included” on the listing sheet?
Minus the potential of becoming roomies with Annabelle, I absolutely have had the feeling that things weren’t quite right during an open house. The most memorable example comes from viewing a property in Manhattan Beach, CA with my wife Meghan. We spent 20 minutes in the home speaking to the realtor about how nice the property was, but when we broke away from him we kept asking ourselves, “WHAT is wrong with this place???”
The property was on the market for over 90 days and, in our opinion, was probably listed $150k-$200k under market value. It also included an apartment above the garage that could be rented by the new owner for added income. Our eyes were wide open by the possibilities, especially because it is so hard to afford a home like this one in Southern California.
Meghan, who claims to have a sixth sense for the paranormal, flat out asks the realtor, “Did anyone die in this home?”. The realtor responds, “Yes. This is an estate sale. The owner actually shot himself in the bedroom over there.” Predictively, we wished him well and were on our way.
Buying or selling stigmatized properties (i.e. property that buyers or tenants may shun for reasons that are unrelated to its physical condition or features) can be very challenging. Whether it is a property that housed a death of an occupant, a murder or suicide, or even just a strong belief that a house is haunted, buyers may significantly discount the value of the home.
According to a survey conducted by Realtor.com, 49% of prospective homebuyers said they would not consider a house that was considered haunted regardless of price or bargain. Only 18% said it wouldn’t effect their home buying decision at all. In other words, there is an 82% chance that the seller is likely going to take a bath in the real estate transaction. Yikes!
What else do you need to know?
States regulate disclosures on stigmatized properties differently. In Massachusetts, for example, sellers are only obligated to disclose stigmas if the buyer asks. In California, sellers are obligated to disclose a death on property within three years of it occurring. So before submitting an offer on a house, it may be worth doing some morbidity research if paranormal activity, or knowing that there has been a death in the home is not your cup of tea.
Is it all bad for stigmatized sellers? No! Some kids actually like brussel sprouts… I’ll explain.
Some buyers are only in the market to buy stigmatized properties because they are actually into paranormal activity. Couple that with the fact that there aren’t many sellers out there that will disclose that their house is haunted and you have yourself a niche, but also a potentially profitable, spooky housing market. All depending on how notoriously supernatural your haunted house is, of course.
And if you are selling a haunted house that is missing notoriety, another report claims that millennials are more likely to purchase a haunted house if they can benefit financially in the deal. Buying at a discounted price, getting a larger kitchen, or getting more square footage are all perks that some young adults value over the occasional haunting if the price is right. Personally, I’d pay the premium, but to each their own.