While I was hosting a local radio show in Atlanta recently, a call came in about a buying a house that was in foreclosure.

The house, which had previously sold for $425,000 (and is valued around $700,000 by the county tax assessor), had been foreclosed upon by the bank. The radio show caller was shopping for a foreclosure and was wondering if he should make an offer for the property.

The house was big and undervalued, the caller said. He really liked the house and grounds, which were on several acres. However, as he walked out the backyard and into the forest which surrounded the home, he stumbled on a grave.

The grave was for “Mother Mary,” he said, and was dated 1901. After exploring further, he came across other grave markers. It turned out that the land on which his house was built originally belonged to a nearby church. This was a small graveyard for parishioners.

(Later, I received an email from someone who had lived in that very same house for a year and saw the blog entry (www.thinkglink.com/blog) I posted about the call. He said there were 33 bodies buried there, and that they couldn’t be moved, and the state required that there needed to be free and open access to the gravestones.)

The caller wanted to know if I thought he should buy the house. Or, would the idea of having a cemetery in your backyard scare away prospective buyers?

I asked him how he felt walking out the back door of the house and into a cemetery. He said that it was a little eerie when he first walked among the graves, but that after awhile he got used to it. His seven children think it’s neat and it might work well for Halloween.

“Or, Day of the Dead,” I added.

But thinking about the problems associated with this house for sale made me think about other kinds of serious issues sellers deal with every day. Problems like having a nearby dump, dry cleaners, or gas station are tough. I once heard from a seller who lived next door to a railroad tracks. When the train rumbled by, as it did from time to time during the night, the whole building rattled. House for sale or depot for sale?

Most houses have some problems. But when you have a house for sale with a big issue like a cemetery in your backyard, it can hinder your ability to sell your property – particularly in a tough housing market.

Of course, the time to think about how tough it will be to sell a house is before you buy it. Here are some ways to frame the issue:

Can the defect be fixed, reversed, reinvented or resolved? When you list your house for sale, your job is to overcome any potential objection a buyer might have. Whether you have an oil tank buried in your yard, or your deck needs to be replaced, or your grass has bald spots, buyers will use these problems to take a pass on making an offer. But if the problem can be fixed, reversed, reinvented as a positive or resolved, you may be able to buy the property on the cheap and profit later.

Can you live with the defect? You may not like the fact that there is a four-lane highway in front of your house or a cemetery in your backyard, but if you can live with it, you may be able to make your house dollars go a lot further. Your property may not appreciate as much over the year, but you may be able to afford an otherwise out-of-reach neighborhood in the school district of your choice.

Can you buy the property at a price that will compensate for the defect? If you can purchase the property at a price that accounts for the defect, you may be able to live in a much nicer community at a price that remains affordable. But you may have to live with a lower sales price when you decide to sell the same property later on.

Are there other redeeming qualities about the property? Is the house in a great neighborhood, with a good school system? Does it come with a big parcel of land? Is the house beautiful and filled with amenities? All of these qualities will come into play when it comes time for you to list the house for sale. If you can sell the property on its merits, and aren’t picky about the price, you should be able to sell it down the line.

Just remember, a house with a defect may not appreciate as rapidly as a home that doesn’t have a serious issue. The old saying still applies to all of these properties: location, location, location. The home with the better location, on a better lot, on a better block, will generally appreciate faster and will be easier to sell than a home with location issues.

But if you can fix the problem, and redeem the property, you may reap a significant profit when the time comes for you to list the house for sale.

Published: May 28, 2008