Stigmatized Properties: Selling a Haunted House

A few years ago, I was teaching a class of prospective real estate agents when I started a conversation about stigmatized properties. Occasionally, real estate agents represent buyers and sellers where a stigmatized property is involved. This is an area that every real estate agent should have some knowledge as part of their professional development.

As I explained to my class, stigmatized properties are properties where an event or events occurred or were rumored to occur that that might psychologically impact it without physically impacting the property. The National Association of REALTORS® defines a stigmatized property as “a property that has been psychologically impacted by an event which occurred, or was suspected to have occurred, on the property, such event being one that has no physical impact of any kind.”

These types of events include tragedies like a suicide or recent death, but they can also include stories of ‘haunted houses’ and ghosts on the property.

During our class, one of my students was very unconvinced about haunted houses. “Ghosts don’t exist,” she said, with her arms folded across her chest. I told my repertoire of haunted house stories, but she still thought I was pulling the class’s collective leg.

About a month later, she was back to take the cram exam for the state licensing test. Since our class, she had been following an agent in the field learning the real estate business firsthand. Once she saw me, she proceeded to tell me this story:

She and her real estate mentor had gone on a listing presentation regarding a four-year old home. Naturally, they asked the seller why he was selling. He replied that he couldn’t keep the upstairs doors closed. He said that every time he closed all the doors upstairs (including both bedrooms and bathrooms) in his two-story home, they would come open. They were of course skeptical, so he then demonstrated by taking them upstairs, closing all the doors and then going back downstairs. A couple of minutes later, they all went upstairs, and all the doors were open.

The seller had concluded that the house was haunted and that was why he wanted to sell. And, indeed, there seemed to be no other reason that the doors would swing open of their own accord. This ghost evidently liked newer property.

Do ghosts exist? When it comes to selling real estate, it doesn’t make any difference.

If your buyers believe in ghosts, then they will want to know about the “automatically opening” doors. If they don’t believe in ghosts, the opening doors probably won’t make any difference.

I have surveyed my classes over the years asking them this question: “If I told you the house was haunted, would you still buy it?” My informal survey revealed that about 50% of the population believes in ghosts and, therefore, would not buy the property, even at a discount!

According to another survey, the numbers are even worse — only about a third of Americans wouldn’t be spooked away from buying a haunted house, but about two-thirds would have some reservations.

From a listing agent’s standpoint, the question becomes whether to disclose the seller’s belief about the presence of ghosts to the showing agents and their clients. I call this type of question a “broker’s call.” Since there are no statutes (that I’m aware of) which mandate the disclosure of ghosts, it should be up to the broker who has the resulting liability to make that decision.

But before you decide, you should know that there are many lawsuits involving haunted houses, and plaintiffs can win when they are not told about well-known stories of ghosts. In a famous New York case, the New York Supreme Court ruled in favor of the plaintiff and decided that, yes, the seller should have told the buyer the house was haunted! According to the court, it was irrelevant whether the home was truly haunted; what mattered was that the home was widely believed and reported to be haunted, and that belief greatly affected the home’s value. According to the stories, a number of ghosts roamed the home dressed in Revolutionary War clothing and having dances all the time!

(There are also cases in which the buyer paid a premium for a “haunted” house, but when they moved in, the ghosts had moved out! The buyer sued and won—no ghosts!)

In my office, we disclose the ghosts and don’t guarantee that they are there or not, but only that this is what the seller told us. I love these haunted houses, especially if I can talk the ghost into holding open houses!

Real estate agents can learn more about buying and selling ‘haunted’ and other stigmatized real estate from WebCE’s online course, Why Risk It? Risk Management Strategies. This course provides a comprehensive overview of various risk management techniques, including for stigmatized property, that can be used to identify, manage, and ultimately reduce the common risks that you’ll face in your day-to-day practice as a real estate professional.

The course includes numerous case studies, examples, and tips with provide detailed information so you’ll have the tools necessary to minimize and control risk within your organization. To order Why Risk It? Risk Management Strategies and other affordable online real estate courses, use the button below to visit the WebCE Real Estate CE Catalog.

Real Estate CE Catalog