What you'll need:
An old white T-shirt
Wide glass or cup
Take an old T-shirt and cut it up into long strips. Blow up a balloon, and place it on a wide cup or glass. This will hold the balloon in place while you arrange strips of T-shirt on the balloon, making sure it covers everything and there are no holes.
Mix white glue with water in a large container, and using a brush apply it to the T-shirt. Keep applying until the entire T-shirt is covered and soaked through. Allow to dry over night. Once dry, pop the balloon removing it slowly making sure the T-shirt stays the correct shape.
Using a black permanent marker, draw two eyes on your ghost. Place in front of your house with a battery operated tea light underneath.