Because she had seen his story on America's Most Wanted, and loved to gossip. True, his fiance (Sela Ward's character) may have not believed it, but somebody in the neighborhood probably would, given the chatterbox she was. Thus, she was a loose end that needed to be tied up. Couldn't afford the risk. And Michael got suspicious, because he overheard the entire conversation from his window (beginning to end), between Grady/David and the mailman. The mailman said simply that the old woman had had an accident and died. That was it. He didn't go into detail. When Grady/David came back inside, he said the old woman had fallen down the stairs and broken her neck. Michael heard this conversation as well. The mailman never told him that. Only that she had died of an accident. If Grady/David were innocent of this, he couldn't have known those details. He would have just repeated what the mailman had said, that the neighbor had had an accident and died, instead of those specific details.
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