It’s that time of year when the veil between worlds is at its thinnest—or so “they” say. Superstition is steeped in most everyone’s bones, but the daily hocus pocus of real estate investing can unearth oddities in homes, especially ones that were foreclosed or have been vacant for a long period of time. Sometimes you simply just don’t know what you are getting into until you are “six feet under.”

Have you ever come across, purchased or sold a stigmatized property? While there are many skeptics who don’t believe in the ghostly aspect of stigmatized properties, various states nevertheless have laws regarding disclosure of the spooky or scary things that have occurred within their walls.

What is a Stigmatized Property?

Stigmatized properties can take different forms. They include sites of “hauntings,” murders, suicides, cult activities, AIDS, misfortunes and even famous adulteries or any act that can harm the sale price of the property. Some of the laws involving murders and suicide have time limits. For instance, in California you must report these acts if they happened up to three years before the sale of the property. Many states require disclosure of criminal activity like drug dealing or meth labs.

Disclosing a Haunted Property

The answer might not be as clear-cut as it should be and could potentially come down to personal beliefs or ethics. It may prove difficult to tell a prospective buyer of a haunting if you personally do not believe in such things. Yet you may not want to be on the end of a lawsuit either, especially if the new buyer incurs any negative financial impact after moving into the home.

And we all know how neighborhood gossip can spread, so transparency is the key. Here are some questions to ask yourself if you are thinking about not disclosing a stigmatized property as such:

  • Will this affect the cost of the property?
  • Will this property be worth less to the homebuyer after the sale?

As an ethical real estate investor, you want to protect your own assets but don’t want others to suffer with a stigmatized property, either.

Disclosure laws vary from state to state. In Colorado, it is not required to disclose “physiological impacts” such as rumors of haunted properties or murders. You must, however, disclose what is considered a “material fact”—such as foundation issues, plumbing problems, etc. And in California, it is required that you and your real estate agent disclose whether the property was the site of a murder or suicide.

How to Sell a Stigmatized Property

So, how exactly do you market a supposedly haunted location? There are quite a few people out there who are looking for that special “something” in a home—just maybe not bats in the belfry. There’s a certain cachet to hotels, resorts and residential homes that are said to be haunted. Use descriptive words like “unique” or bolster the fascinating history of the home. This can help draw in people who are searching for something a bit … startling.

Sometimes the rumors of a haunting or murder have filtered through your target market or neighborhood. Bring those rumors out into the sunlight by holding an open house for brokers or buyers. The aim is to immediately dispel their worries about the property. This way they can ask questions and “feel” the energy of the home itself to make a more informed decision instead of listening to the rumor mill.  Tell the stories and indulge those who like the drama, yet be practical and honest. The right buyer surely will come along. No tricks, just treats.

Rehabbers, beware!

Professionals say remodeling a home can stir up paranormal activity. The same professionals also say if there was no activity prior to the remodel, it is quite possible that any unexplained goings-on will cease on their own once the remodeling is complete. Of course, this is the desired response when you are working on a fix-and-flip or even a buy-and-hold. Sometimes just sticking it out can diminish the mysterious occurrences.

If you cannot find the right buyer or people fear the property, you can always hire a specialist, aka a “ghostbuster.” Those who feel a perceived disturbance is harmful quite often seek out someone to expel whatever “it” is occupying the home. A simple Google search will identify people who are mediums, perform cleansings or who can “bless” the property.

On the other end of the spectrum are so-called “intelligent hauntings,” with a friendly, interactive and responsive energy occupying the home. Another type of haunting is residual energy, in which it is believed a spectral being is doing the same thing repeatedly without any type of interaction. Those “in the know” say both of those types are harmless, and a buyer may be able to live with this situation. Just don’t say Beetlejuice’s name three times!

If you have heard rumors or get weird feelings about a property, do more research. A good place to start is at the local library or courthouse. Even a local historian might have much to tell you. You should be able to dig up the appropriate information to help piece together your property puzzle.

Just Remember…

During Halloween, many people try for the haunted house effect to scare or attract children and adults. People attend fake haunted houses and watch scary movies and TV shows about hauntings. But if is to be believed, there are actual haunted houses you can buy—if you’re brave enough. Granted, these may not make the best investment properties due to price, but they would sure make for an interesting conversation! Who wouldn’t want to live in the house where the Black Dahlia murder happened? That house, which is included in the list, was even featured on Travel Channel’s show Ghost Adventures.

But when it comes to real estate investing make sure you do your due diligence as a prospective buyer. Double-check the laws in the area where the property is located to determine what information you must disclose.

See beyond the rumors, keep an open mind and visualize what the place can and will look like. No one wants a creepy investment that will come back to haunt them.

Have a hauntingly good story to tell us? Comment below! We would love to hear about your spooky investments!

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  • Heather Elwing

    Heather A. Elwing has a bachelor degree in public relations and journalism minoring is global sustainability. She is a licensed Realtor in Missouri working on her GREEN designation. She has passion for education within the real estate investing space, sustainable building and living.

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