Was it real? Yes and no.
A lot of the stories or histories of the locations were completely fabricated, a lot of the "paranormal" things were actually rigged to happen (such as doors slamming, lights flickering, etc.), and it's even been said that some of the contestants were plants/actors put in to evoke a certain kind of reaction in the 'real' contestants.
But the FEAR was real, and that's what makes the show so entertaining for me. I never believed in paranormal stuff, but such a visceral emotion in the real contestants was great, even if somewhat exploitative.