Some people say that ghosts walk the halls of Snowball Mansion. While the presence of supernatural spirits may be up for debate, one thing is certain: This 6,720-square-foot home in Knights Landing, Calif., is haunted by its past.

A foreclosure rattled the house, leaving it vacant for more than three years, the target of local vandals. Even more frightening, the home recently sold for a price that was 75% below its 2005 value.

Still, Mike and Nancy Stevens, the latest owners of the former bed and breakfast, are not deterred. "The moment I saw the photograph on the Internet, I knew it's what I wanted," Mr. Stevens says.

Tour the Snowball Mansion

View Slideshow

Max Whittaker for The Wall Street Journal

A view of the chapel from inside the house.

Located near Sacramento, the Snowball Mansion appears in "Haunted Places: The National Directory," a book that indexes popular supernatural sites by state and claims to have inaugurated a "haunted travel" industry. The book notes that Lucy Snowball, whose husband John Wells Snowball built the home in 1877, is blamed for phantom footsteps heard at night and the doorbell ringing at odd hours.

Many towns have a creeky old house that some locals believe to be haunted. Some are well-known. There's the Amityville Horror house in Long Island, N.Y., the inspiration for several horror movies and site of a gruesome murder in 1974. The residents who next occupied the Dutch Colonial home left in terror soon after moving in. Some even believe that the spirits of dead presidents haunt the White House.

A home's history and a juicy story can help bring tourists. Jerome, Ariz., bills itself as the "Largest Ghost Town in America" and offers ghost tours and haunted walks throughout the month of October. In Savannah, the Sorrel-Weed house, built by a merchant named Francis Sorrel in the 1840s, is thought to be haunted by Mr. Sorrel's wife and a servant with whom he is said to have had an affair, according to Orlin Reynolds, the manager of the Sorrel-Weed House Tours, which runs both historic and haunted tours of the home.

When James and Cheryl Fuhring ran the Snowball Mansion Inn starting in the late 1990s, they say a few guests reported seeing odd things, including a woman in period clothing walking into what was once the Snowballs' nursery, where their infant child is believed to have died in the night. According to HauntedTravels.com, Ms. Snowball sank into a deep depression and never overcame her grief. (The site also notes that the Snowball Inn had three "lavishly appointed" guest rooms and gourmet breakfasts.)

The evidence on any "haunting" is, of course, circumstantial. Several members of the Snowball family—including Mr. Snowball and his wife—are buried at a local cemetery, but some are missing birth dates and death dates; the story of the baby dying in the night could not be confirmed.

The Fuhrings, who now run a bed and breakfast in Durham, Calif., say they never saw ghosts in the home, but they felt Ms. Snowball's presence. "She was very kind and helpful, and she wasn't anything really to be afraid of," Mr. Fuhring says, noting that he and his wife did experience the erratic ringing of the doorbell, as well as rattling windows.

Mr. Fuhring says that they sometimes asked Ms. Snowball for financial help—and it often worked. Large parties booked the Inn several times after the Fuhrings made their appeal. Ms. Fuhring also asked Ms. Snowball for help selling the home, and they did so within a month of listing it in 2005— for $1.9 million, initially.

The buyer put down $1 million on the Snowball Mansion and financed the remainder with two loans. She never made a payment on those loans, and she never moved in: It turned out that the buyer was part of a multimillion-dollar real estate fraud scheme, and the house got tied up in an F.B.I investigation. Finally, earlier this year the mansion was returned to the lender and placed on the market.

The Snowball Mansion looked pretty eerie by the time Mr. and Ms. Stevens came on the scene: Vandals had broken windows and doors and had stolen the copper wiring and the air-conditioning unit. Insects had overtaken the facade. Windowpanes were cracked. Some fences needed mending.

Unfazed, Mr. Stevens, a 60-year-old entrepreneur, and his wife, Nancy, snapped up the house for $470,000 in September. They moved in with their 14-year-old son, 15-year-old daughter and Mr. Stevens' 89-year-old mother from Palm Springs, Calif., earlier this month.

With five bedrooms and five bathrooms, the house has enough room for his family, and he also thinks it will make a good restoration project. "It's actually gorgeous inside," says Mr. Stevens, noting that the wallpaper and plaster molding are in good shape. "By Thanksgiving, everything should be back to normal and looking good." Already the couple has brightened up the place: Pumpkins adorn the front steps, and life has returned to the bedrooms.

Often, tales of a resident ghost can affect the salability of a property. "I've had some people who really have had problems and won't buy a property because they think the karma thing is all wrong," says Dorian Bennett of Dorian Bennett Sotheby's International Realty in New Orleans, a city known for its ghost stories. The name "Marie Laveau" attached to the history of a home in New Orleans will often scare off potential buyers, he says, because of its association with a local 19th-century voodoo practitioner of that name. Unfortunately for local brokers, the name is as common as Jane Smith in the city, Mr. Bennett says.

Realtors are not required to tell prospective owners that a home is believed to be haunted, says Walter Molony, a spokesman for the National Association of Realtors. While Realtors must disclose information about known material factors that could affect a sale, in 44 states and Washington, D.C., hauntings fall under a category of "psychological stigmas," and are considered non-material factors that affect the desirability and salability of a home. (Other non-material factors include past use as a drug den or the site of a murder.) Of course, Mr. Molony points out, Realtors must respond truthfully to any question.

Gena Riede, the agent who represented the Stevenses in their purchase of Snowball Mansion, says she read about the supposed hauntings online and disclosed them to the couple.

Mr. Stevens has lived in the Snowball Mansion for just a few weeks, and says he has not seen anything out of the ordinary. His mother, who occupies a "granny apartment" on the ground floor, says she has.

"Mother often complains that we have been moving furniture above her," says Mr. Stevens, noting that he and the rest of the family have been asleep two floors above during those times. "It's probably due to her sensitivity to noise than to ghosts."

Write to Sushil Cheema at Sushil.Cheema@wsj.com