Zillow : Skeletons in the Closet: Buying and Selling a Home with a Notorious Past By Brendon DeSimone on 21 Nov 2014

Every home has a history. Many homeowners ask, "Who lived in my house before me?" Today's home buyers, with access to so much information and technology, want to know as much as they can about a home's history before they even sign a contract.

Sellers of homes with notorious histories should disclose to buyers what they know - particularly if the events occurred recently. Not unlike a window leak or work done without a permit, a notorious past will put downward pressure on the home's price.

I once showed a home in San Francisco that appeared to have water damage and mold in some of the bedrooms. The seller happened to be present and told us point blank that he used to grow marijuana in each of the bedrooms, and that was the reason for the stains. It was a bizarre showing, but we couldn't help feeling grateful for his upfront disclosure. That is not always the case, however.

A majority of escrows fall apart due to disclosure or lack thereof. If you have a home with a past, you should know the disclosure laws in your state. If you are buying a home and want to know about its past, review the disclosures clearly and do research on your own. Here are some tips for both buyers and sellers who find themselves in this unusual situation.

If there was a death on the property, it's smartest for a seller to err on the side of caution by putting it out there at the time of listing. Obviously, homes where a natural death occurred carry less of a stigma than homes where there was a murder or suicide.

In California, Civil Code Section 1710.2 requires that the seller must disclose knowledge of any death within the past three years. But buyers in states without this type of law still have access to tons of information, and savvy home shoppers will do their research.

If a seller chooses not to disclose, it will likely come back to bite them, either in the form of a lawsuit after the fact, or by losing a buyer who discovers the death during the escrow.

Previous criminal activity - particularly burglary or theft - can impact the home's value. From the theft of a bicycle to illegal drug activity, sellers should disclose what they know. In some states, disclosure statements require that they reveal not only their knowledge of criminal activity on the property, but anywhere in the neighborhood.

If the home must be sold soon after a death on the property or with knowledge of criminal activity, the buyers will likely know about it. Bring the home to the market in its best possible light.

If an elderly person died peacefully in the home, it is prudent to do some work to the home so the buyer is not reminded of the death. Cleaning, painting and finishing the floors or replacing the carpet will give the home a fresh look and feel.

Also, first impressions are lasting. A buyer may be so impressed with the location and condition that, when they learn of the death, they aren't bothered.

Buyers should always check and recheck what they are told by sellers. In addition to reviewing building and property tax records, every buyer should be on the lookout for the "unknown."

Start by Googling the address. It is amazing to see what comes up. Past police reports, neighborhood association meeting minutes, local blogs and news stories tend to live forever on the Internet.

Additionally, go to the home at different times of day and ask the neighbors what they know about the home's history. Whether or not you have reason to believe the home had a questionable past, it's imperative that you research as much as you can.

For obvious reasons, homes with a notorious past tend to be less valuable. For a buyer who wants a certain size home or location, a stigmatized home may be their best way to get it.

The good news is, the more time passes, the less the stigma - and the depressed value - lingers.

Unlike the presence of a leaky roof, or a furnace that is near the end of its life, it is difficult to put a dollar value on a home with a sullied history. If you are in it for the long haul and not too afraid of the stigma, an infamous home might be a great way to build some equity.

Related:

• How to Investigate the Neighborhood Where You Want to Live
• Full Disclosure: Reveal Your Home's Flaws to Speed the Sale
• Hate Thy Neighbor: Shocking Neighborhood Stories

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.