A haunted house may make for great movie material, but in real life, trying to sell one can be murder. Houses that have been “psychologically impacted” by a murder, suicide or illness take 50 percent longer to sell and are sold at an average of 2.4 percent less than comparable houses, according to a study by Wright State University’s James Larsen and Joseph Coleman.
A house with a violent past may be a good investment
But for investors, a house with a violent past may be an investment worth looking into. After all, because of “crime scene stigma,” these houses often sell for well below market value. The condo where Nicole Brown Simpson lived was sold two years after she was murdered for $200,000 less than the asking price, according to
USA Today. After it was bought, the owner promptly remodeled it and changed the official address of the property, according to
USA Today.
Strategies such as remodeling, demolishing and address changing, among others, may help an investor get beyond the stigma of a psychologically impacted house. Demolishing a property or changing the address may additionally help with another problem common to psychologically impacted houses: Tourists. Unless investors aim to turn the property into a tourist destination, tourists and others interested in the property may be a nuisance.
One of the most famous houses affected by this problem is the house on Long Island that was the setting of The Amityville Horror novel and movie.
The Lutz family bought the Long Island house, the site of a quadruple murder, for $80,000 in 1975. After allegedly experiencing supernatural phenomena at the house, the Lutz family moved out of the house and sold the property to the Cromarty family, according to CNNMoney.
The Cromarty family lived in the house at 112 Ocean Avenue for a decade but was eventually forced to move, because the stories and subsequent visits destroyed their property, according to CNNMoney.
The Cromarty family sued the Lutz family, claiming that sightseers were destroying their privacy, and won a settlement, according to CNNMoney. The house, which most recently went for $310,000 in 1997, has subsequently been remodeled and the address has been changed, according to AmityvilleMurders.com.
For creative investors, purchasing a property infamous enough to draw tourists may be beneficial. The owners of the house where the Clutter family was murdered, featured in Truman Capote's novel In Cold Blood, eventually began opening their house for $5 Sunday tours after failing to fend off unwanted visitors, according to USA Today.
Failure to disclose information about murders, suicides and other such situations related to a property can be grounds for a lawsuit. Some states don't require disclosure, but it never hurts to ask a real estate agent.
Buyers should research the address of a property as part of their due diligence. Investors buying houses in distant areas should be particularly thorough. While they may think they are getting a good deal, there may be a reason—such as a well-known crime scene—why no locals have bought a house, even if it is listed below market value.
Crime scene stigma may lower the price of a house
In California, sellers are required to disclose any deaths that happened on the property in the last three years. The California Association of Realtors recommends that sellers and agents disclose any death on the property—no matter how recent—if asked, according to
Realty Times. Ostensibly, these suggestions are intended to avoid liability lawsuits, which can be far more expensive than any price decrease caused by disclosure of a property’s history.
In some cases, famous crime scenes have actually increased a property's price. The mansion where Gianni Versace was shot in 1997 was purchased for $19 million in 2000, the highest price paid for a house in Miami-Dade County at the time, according to USA Today.
However, investors should be aware that the Versace and Clutter properties are anomalies; few houses are scenes of murders or suicides famous enough to make the national news or to have a book or movie featuring the house.
It is certainly worth asking an agent whether a property has any violent or supernatural events in its past. This information could help buyers get a good deal; they could use any such occurrences to their advantage when negotiating their price.
While such things may drive down the cost of a house significantly, if an investor plans to sell or rent the property, then remodeling or demolishing it—and changing the address, if the house is well known—may be wise, so as not to scare off future purchasers.
