A blacklisted iPhone (the IMEI number with iPhones) is commonly known as a bad ESN iPhone. An iPhone with a blacklisted ESN is a phone that cannot be activated with any carrier (AT&T, Sprint, Verizon, T-Mobile etc.).
A phone that can never be activated is not a phone - it's an expensive paper weight
Blacklisted ESN's are usually reported to the national blacklist database by a carrier who has not been fully paid for a financed iPhone.
What this means is; if you sell your blacklisted iPhone to someone else, on Craigslist for example, you'll need to disclose to any prospective buyer that your iPhone has a bad ESN and cannot be activated (used as a phone). This will make it pretty much impossible to sell.
If you 'forget' to tell a prospective buyer that your iPhone is blacklisted they'll be mighty unhappy when they take their phone to their carrier and discover they just bought an expensive paper weight. That's when things can get ugly!
You best option is to sell your blacklisted iPhone to CellBeach.com. They are a highly regarded company who will buy your Bad ESN iPhone at a great price.