A property’s history can come back to haunt you
What is a stigmatized property?
Properties that are stigmatized may be perceived to be unsalable or undesirable for other than physical or environmental reasons. A property may become stigmatized because of murder, suicide, molestation, satanic rituals, or a reputation of being haunted or a “unlucky” house.
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.”
The seller has a duty to disclose the history of the property in most states. The courts would most likely view the willful nondisclosure of stigmatized property as adversely affecting the buyer’s decision. Disclosing stigmatized property may seem silly to some people but to others it could have a great impact on peace of mind.
There are four types of stigmatized property. The first is public stigma. This happens when the stigma is known to the general public and any reasonable person can be expected to know of it. An example would be famous homes from television and films could fall under this category. The next stigmatized group is criminal activity. A property is stigmatized if it has been used by drug dealer, prostitution or other criminal action. The next type is the most well known, murder/suicide stigma. California state law requires that any death be disclosed if it occurred within the previous three years. The last type is Phenomena stigma. Phenomena stigma occurs if a home is known for haunting or ghosts, or any other paranormal activity.
The Wall Street Journal has a short video about “Selling a Haunted House” that is interesting.
Source: Selling a Haunted House, (Wall Street Journal, Oct. 29, 2012)
One of the ways you can deal with this type of property is sell "as is"
Also this can be a money pit property. Check this out: