Investing in a "murder house"

[John Franczyk]

I have a lead on a single family property in suburban Milwaukee. The house is in an estate and the lender filed a foreclosure action against the estate. It's going to a sheriff's sale in January. I reached out to the estate and the lender contacted me, but gave me little information other than the fact that they got a default judgment on the foreclosure claim for a little more than $170,000. Here's the wrinkle that I later discovered -- the now-deceased owner was murdered in the house by her adult son, who suffered from severe psychological problems. 

It's not my intention to be callous about this event, nor to belittle the problems of individuals who suffer from mental illnesses. Nonetheless, I would like to approach the bank with a lowball offer with an argument that if the property goes into the bank's REO portfolio, it will sit there for a long time because, statistically, fewer buyers will be willing to consider purchasing a murder house. The house itself was a crime scene. I believe that it is no longer sealed up, but there is a cleanup issue that the bank or the new owners will need to deal with.

Any thoughts or advice on how to approach the bank with this argument will be appreciated.  Thanks!

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[Mindy Jensen]

@John Franczyk , the neighbors will always tell the next occupant what happened. I don't see anything wrong with offering to the bank, but I wouldn't put much hope into it.

I would expect a HUGE discount before I bought a house like this. Some people are super creeped out by this information, while others don't care at all.

My neighbor died in his bathtub in the middle of August and wasn't found for 12 days. Eww. I did a lot of research on the subject, because I was concerned when the property was listed that it didn't mention it. (I'm an agent, and it wasn't in the agent notes, either.)

It turns out that every state makes up their own rules, but the property owner is not required to disclose in my state (CO) - it is considered stigmatizing the property. In California, you have to disclose any death (except for one as a result of AIDS) for three years. 

A quick Google search shows that in Wisconsin, you don't have to disclose unless it affected the structure. https://dearmonty.com/home-sellers-disclose-a-murd...

What would be your plan after you acquired the property? I would recommend disclosure, as the neighbors will certainly share, and it looks like you were trying to hide the fact if you do not disclose.

It doesn't sound like it was a sensational murder. In CO, they are trying to change the law after a family bought a serial killer's house undisclosed and were not happy about it.