Ghosts Can Scare Off Buyers--and Drive Down Values : Real estate: For the seller, ‘stigmatized’ properties are more daunting than haunting. Disclosure laws vary.
A fabulous Hudson River view, stained glass windows, intricate woodwork and gabled towers drew lots of potential buyers to Helen Ackley’s Nyack, N.Y., house when it was put on the market six years ago.
But it was the ghosts, or rather talk of them, that scared off at least one couple who had put down a 5% binder on the $650,000 Victorian.
The buyers got back much of their deposit after an unusual legal scuffle in which the 18-room house was declared haunted “as a matter of law” by a state judge. It eventually sold at a slightly lower price.
Ackley, 68, who now lives in Orlando, Fla., insists “the taxes are what drove me out, not the ghosts” from the Revolutionary War era who she says were friendly.
Regardless of one’s belief in the supernatural world, in the world of real estate, supposedly haunted houses--along with homes in which suicides occurred, crimes were committed or environmental problems once existed--are considered stigmatized properties. They can pose special problems for sellers.
Because residential real estate purchases are often motivated by emotion, homes carrying a stigma frequently sell for less and remain on the market longer than “normal” properties despite the absence of physical defects. (In parts of the country with large Asian populations, there are even “feng shui” inspectors that try to determine a home’s karma.)
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Professional appraisers use special guidelines to value stigmatized properties.
“You can’t look through traditional multiple listing services,” said Frank Harrison, president of Harrison and Associates, a Woodstock, Ill., appraisal firm. “It’s a relatively exhaustive process.”
Harrison, who is writing a book on the subject for the Appraisal Institute trade group, begins by appraising the property as if nothing was wrong. He then checks the discount that comparable homes with comparable stigmas sold at within a 20-mile radius and over the past five years. Often he searches through public records and interviews brokers, an expensive process that can take three to five times longer than normal appraisals.
The amount by which real estate is discounted depends on the type and extent of the stigma as well as how long it remains in public memory.
“I haven’t found any real loss attached to suicides . . . but the more sensational, the more gruesome the act the bigger the impact,” Harrison said, adding that occasionally the value of neighboring homes is affected as well.
A few years ago, he appraised a house in suburban Chicago that was the scene of a double murder committed by a spurned boyfriend. Had the crime not occurred, the house would have been appraised at around $120,000, but the fact that the murders made front page news for weeks and the killer was still at large drove down the value to $95,000.
There are some properties, however, that may never be marketable at any price.
The Los Angeles house where actress Sharon Tate and six others were murdered by followers of Charles Manson 26 years ago was recently torn down and replaced by a new house. The Hamilton Township, N.J., house where 7-year-old Megan Kanka was killed by a convicted sex offender was also razed and a park is planned on the site.
It’s not yet known whether the vacant Brentwood, Calif., condominium owned by the estate of Nicole Brown Simpson, who was murdered on condo grounds, will be sold at market value.
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Some people see investment opportunities regardless of the notoriety.
“I would be inclined to tell my readers [that] if it wasn’t too bad of a stigma to buy these properties. You might be able to make a profit eventually after these things fade from memory,” said John T. Reed, who publishes Real Estate Investor’s Monthly in Danville, Calif.
William O. Keleher Jr., president of Prudential New Jersey Realty, based in East Brunswick, N.J., agreed: “If the price is cheap enough someone will say, ‘Hey, I can fix this up and make this a nice place to live and whatever happened before doesn’t affect me.’ It would take an extreme case to make it unsalable.”
A few buyers may actually welcome notorious niches, especially those of historical significance.
“A lot of businesses--bed and breakfasts, inns, restaurants--like the idea of having a ghost,” said Dale Kaczmarek, president of the Ghost Research Society, Oak Lawn, Ill., “They see it as an asset.”
In fact, organizations like the Ghost Research Society are sometimes contacted by businesses and celebrities for help in locating supposedly haunted haunts.
Barbara Shaunessy, a 48-year-old computer systems specialist, thinks ghosts, real or imagined, add to the charm of a house. Although she’s never had an ectoplasmic experience herself, visitors to her seven-bedroom 1806 house in Morristown, N.J., have told her they’ve seen images of what appear to be Union soldiers from the Civil War.
“The previous owners made a comment that the house will decide if it likes you. They never made any specific mention at the time,” she said.
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Perhaps one of the stickiest issues involving stigmatized real estate involves disclosure.
Ackley claims the stories were fairly well known about her suburban New York home being haunted by friendly ghosts who left little presents for the family. (The gifts, she says, included a gold baby ring and a pair of tiny silver tongs.) She even wrote about it in a 1977 Reader’s Digest article.
But the buyers, spooked by the notion of sharing their home with strangers, maintain they didn’t find out about the home’s history until after casually speaking with someone in town. A state appellate judge ruled Ackley should have told them since she deliberately had fostered the belief that her home was possessed.
