What Happens to a Murder House?

Imagine you're shopping for a new house. For months you look, but every place falls short of expectations: It's too expensive. Or the neighborhood is a bit sketchy. Or the lighting isn't good. Or there's simply not enough space. And then you find the perfect home.

The only small detail to be aware of—the broker tells you, as you prepare to sign the papers—is that the last homeowner axed his wife and three young children to death.

Would you still buy?

Research shows that properties with uncomfortable histories lose value—even when they've sustained no physical damage. James E. Larsen, a professor of finance at Wright State University, tells A&E Crime + Investigation that his 2001 study showed a cross-section of homes where homicides, suicides or hauntings were reported sold for 2.9% less than market value, and sat on the market for approximately 47% longer than average houses.

Of course, not all stigmas are worth the same financial downgrade: A house with a reported murder will likely take more of a price hit than one with a reported haunting. According to some real estate appraisers, a well-publicized homicide can slash a home's value by 15 to 25%.

Steve Lehto, author of American Murder Houses, says that in some cases, the decreased value is justified—not because living in a murder house is spooky, but because it brings unwanted attention.

"If it was a high-profile murder—I would not want to live in a house where people came by every single day, stopped in front of the house and took pictures. That would drive me nuts," Lehto says, adding that he encountered exactly that at various properties while researching his book.

"While I was photographing Gianni Versace's mansion, I had to wait for people to stop posing in front of the gates. And this was more than 10 years after the [fashion designer’s] murder."

In less publicized cases, though, much of a home's value seems to return with the passage of time.

"The stigma disappears after about six years, seven years—somewhere in that range," Larsen says. "I guess that gives the neighbors time to move away, and for whatever goriness that went on to fade from the news."

There is no national standard around stigmatized property. According to Larsen, approximately half of the states have laws requiring brokers to disclose the dark past of their properties. But even among that half, the laws about what counts as stigmatized property varies wildly.

In New York Supreme Court, Stambovsky v. Ackley in 1991 found that if a seller believes his house to be haunted by ghosts, he has a legal obligation to tell prospective buyers as much. Known more commonly as the "Ghostbusters" ruling, the same "haunted house" standard is held in Iowa and Massachusetts.

Other states have different quirks: In Indiana, sellers must disclose if their home previously housed a meth lab. In California, sellers have to disclose if a murder occurred at the house—but only if it happened within the previous three years.

According to Larsen, a lot of the stigmatized property laws originated during the HIV/AIDS crisis: when prospective buyers were uneasy about purchasing homes previously inhabited by HIV-positive tenants, despite medical evidence saying that the disease couldn’t easily be transferred. Because of that history, "in virtually all" states with stigmatized property law, sellers must disclose if a previous tenant had suffered from an infectious disease—even diseases that can't be casually transferred.

Then there's the rare instance when a murder boosts a property's value. That's the story with the Lizzie Borden House—a three-story Greek Revival-style home in Fall River, Mass.

In 1892, Andrew and Abby Borden were murdered in that house with a hatchet. After Lizzie—Andrew's daughter, Abby's stepdaughter—was tried and acquitted for the crime, no one else was ever charged. Borden remained in Fall River until her death.

Today, the Borden family home is a bed and breakfast and museum. There's a gift shop where guests can purchase Lizzie Borden bobbleheads and bloody-axe baseball caps. There are night tours. Guests can sleep in the bedroom where Abby's bloody corpse was discovered.

Lee-ann Wilber, the manager and part-owner of the home, says she and her then-boyfriend bought the property for "around $600,000" in 1996 from previous owner Martha McGinn. Wilber estimates the Borden home to be worth more than $1.5 million today, although she’ll be the first to admit that it's just an estimate—they have no plans to sell.

"The guests seem to like it," Wilber says. "True crime fans, to lawyers, to police officers, to paranormal people—everyone has a different reason for coming."

With Fall River having fallen on hard times, Lehto says the house "has got to be worth more because of what happened there. I don't think that building would be worth as much without the history."

But he cautions speculators not to jump to the wrong conclusion: "To simply say, 'I live in a house where a murder took place,' I don't think that would increase its value. It doesn't work that way."