Buyer Beware: Is Your Future House Haunted?

We’ve all heard home buying horror stories. A number of unpleasant transactional pitfalls can turn closing on your dream home into a nightmare. Sellers backing out or financing falling through can quickly kill a deal. But these snags may not hold a candle to the truly frightening moment when you discover that you bought a stigmatized home.

A home where paranormal activity, suicide, murder, cult activity, famous adulteries or other misfortunes and crimes took place could be categorized as a “stigmatized property.”

With Halloween around the corner, you may have haunted houses (and costumes, and pumpkin spice and candy corn and …) on your mind. But unless you’re open to buying a spooky abode, you’ll want to scratch homes with scary stigmas off your list.

As an active real estate agent in Salem, Massachusetts — the country’s Halloween capital — this topic hits close to home. So I’ve decided to outline steps you can take to protect yourself from buying a property with a dark past (… cue Draculian laughter.)

What is a stigma?

In real estate terms, a stigma refers to an intangible attribute of a property that may prompt a psychological or emotional response on the part of a potential buyer. In addition to physical defects, a house may have unusual features or a history that negatively impacts its value. A home where paranormal activity, suicide, murder, cult activity, famous adulteries or other misfortunes and crimes took place could be categorized as a “stigmatized property.”

Understand disclosures so that your purchase doesn’t come back to haunt you.

Here’s a scary fact: A listing agent many not be required to disclose a stigma to buyers.

Ever heard the phrase “caveat emptor” (buyer beware)? In the past, sellers were not required to disclose anything about homes they were selling. Over the years, most states have made changes to this rule, and now require that buyers be made aware of certain issues.

The law urges buyers and sellers and their agents to engage in fair and honest dealing with all principals in the real estate transaction. However, the laws that regulate disclosure of sketchy events vary from state to state. Some state laws explicitly relieve the salesperson or broker of the obligation to disclose certain property stigmas.

For instance, what if a house is haunted? Massachusetts is particularly lax when it comes to stigmas. Here in the witch city of Salem, a seller’s agent does not necessarily need to volunteer information about paranormal activity or even a felony, suicide or homicide that has occurred in a home. Having said that, if you or your agent asks a seller’s agent directly, he or she must answer truthfully. This differs from California’s stringent laws, which, in addition to other disclosures, mandate that buyers be informed of any deaths that occurred at a property in the last three years.

While it’s certainly ethical for sellers to be upfront about any defects that may impact the value of a property, it may not be a legal requirement.

Before you fall in love with a home, do some research.

Since you’re unlikely to find the descriptors “haunted” or “former crime scene” in a property’s listing sheet, how should you go about digging up some dirt?

  • Go in with open eyes about the disclosures. Check with a real estate attorney in your state to see what disclosures are required. The Nolo website has summarized the laws in select states.
  • Ask! You can (and should) specifically ask the seller’s representative if criminal or paranormal activity has been reported. Again, sellers and their agents are legally obligated to reveal problems they’re aware of, when asked.
  • Carefully review the seller’s disclosures, if one is included with the listing. In many states, property owners are forced to put their real estate disclosures in writing.
  • Get the inside scoop from the neighbors. Before you sign on the dotted line, you’ll want to track down neighbors who may be able to alert you of any issues. One of my clients walked away from a purchase after learning from town gossip that the place had been used as a meth lab years prior.
  • Always Google the address of your future home! You may uncover a headline that sways your decision.
  • Check the local police logs to see if you can piece together anything that makes you uncomfortable.

Does your future home have skeletons?

You may learn that a former owner passed away in the house. In areas with older properties, this is likely going to be the case. In fact, you can research this information on sites like diedinhouse.com. This may not be cause for concern. Someone peacefully passing away in the comfort of his or her home is a lot different from a situation that involved foul play. It’s better to find out early that a home has “skeletons in the closet,” so you can either walk away or adjust your expectations/purchase price accordingly.