I just listed a home that the owner passed away in.  When the trustees were in my office to sign the listing agreement I told them that the death had to be disclosed.  Is the home worth less just because the owner chose to pass away peacefully in his home?  In my opinion no but it depends on how one looks at it.  If buyers are interested in the property they can't negotiate a lower price based on the fact that someone died inside.  Someone dying in a home is not a defect of the property unless of course it was under bad circumstances, a murder or suicide for example.  If a buyer has a problem with the fact that someone passed away in the home then more than likely they won't be interested in it at all. 

When I first started in real estate, death was not a mandatory disclosure, I am sure there were many buyers that had no clue that someone died in the home they purchased it, I know I was one of them.  My home was built in 1927, it was occupied by tenants when I purchased it.  A few years later my neighbor told me that the prior to leasing the house out, the previous owner cared for her Mother in it and that she passed away inside. 

When a loved one chooses to be at home when they pass they should have the right to do so and family member's should support and respect their wishes without being concerned about it effecting the value of the home.