Alex West (Bud Cort) roomed with Norman Bates (Kurt Paul) at the state lunatic asylum nearly twenty years for killing his abusive stepfather, and they became close friends. After Norman's death, Alex learns that he has inherited the Bates Motel, which has been vacant since Norman's arrest. Alex travels to Norman's California hometown (renamed Fairville for this film; in the original film it was Fairvale) and with a little help from teenage runaway Willy (Lori Petty) and local handyman Henry Watson (Moses Gunn), Alex struggles to re-open the motel for business, until rumors about the place being haunted by the ghost of Norman's mother, Mrs. Bates, are apparently true. Only to find that the haunting was a prank and the ghost was the bank manager, Tom Fuller (Gregg Henry), who refused to give Alex a loan by trying to scare him away. Tom is then forced to help Alex and the others with renovating the motel or face prison for fraud. The motel was soon finished with the renovation.