Choosing the right Real estate team to handle the sale of real property in probate or a trust can turn out to be an unexpectedly daunting task, especially when combined with the enormous amount of stress that’s involved in losing a loved one. Families only have one chance at making a decision of who to go with and they hope that it will be the right one. The way to eliminate uncertainty is to do the proper due diligence in the beginning and make sure that you hire someone who has extensive experience selling properties in Probate.
APPOINTMENT OF THE EXECUTOR OR ADMINISTRATOR OF THE ESTATE
Usually, the decedent’s will names the executor who is responsible for handling the distribution of assets, including real property, to the beneficiaries. However, if in the event that no executor is named, if the executor is unwilling to serve, or if there is no will, the court appoints an administrator to carry out these duties. The executor or administrator is the person who has the authority to sell the property, a sale cannot proceed until that person is named. If there are no disputes from other beneficiaries than the attorney will file for the IAEA: The Independent Administration of Estates Act. Enacted in 1987, the IAEA has changed and streamlined the way in which probate sales may proceed. The IAEA is a series of laws allowing the personal representative to administer most aspects of the decedent’s estate without court supervision.
PREPARE THE PROPERTY FOR SALE
Oftentimes there is a significant amount of deferred maintenance on a property that is involved in a probate. If not properly dealt with, this could have a significant impact on the bottom line proceeds of the sale. If the executor/ administrator does not have experience working with contractors, cleaners, etc. to repair a property and bring it to selling standard then it would be wise to hire a realtor who does have this experience and has a team of vendors they work with regularly. Since many times the sales are time sensitive, meaning beneficiaries would like to sell sooner rather than later, working with someone who has experience in coordinating repairs and improvements to prepare a property for sale is invaluable in bringing expediency to a sale while still maximizing the sale price.
ESTABLISH THE ASKING PRICE
As described in the Independent Administration of Estates Act (IAEA) the Executor/Administrator will be the one to establish the listing price. The asking price will take into account the appraisal from the Probate Referee and should strongly weigh the recommendation of the real estate agent. The way to establish the asking price is to review comparable sales in the neighborhood within the last six months. Currently, the environment in our market commands listing prices that are roughly five to ten percent below the projected sales price. The reason for this is to increase exposure to buyers at different price levels to facilitate receiving multiple offers and encourage a potential bidding war.
MARKETING & SHOWINGS
MARKETING THE PROPERTY FOR SALE AND SCHEDULING SHOWINGS
The property is listed into the Multiple Listing Service and it is marketed to the public and potential buyers. This period should include multiple open houses and private showings for all interested parties. Depending on which real estate team you choose, the marketing strategy can diff er significantly. When interviewing realtors make sure to find out exactly what type of marketing methods they plan to use, how many open house weekends, and how much money they will be spending on marketing, and make your choice accordingly.
OFFERS & NEGOTIATION
TAKING OFFERS AND NEGOTIATION
After a reasonable amount of time “on the market” the listing agent will accept offers (an offer acceptance date is usually scheduled beforehand.) Once offers are received the listing agent will assist the executor in negotiating price and/or terms of the offers to establish an agreement between a buyer and the seller. Once an offer is accepted, a Notice of Proposed Action is mailed to all heirs, simply stating the terms of the proposed sale. (An accepted offer must be 90% or more of the Probate Referee’s appraised value). The heirs have 15 days to review the notice and pose any objections. If there are no objections then the sale may proceed without a court hearing.
COURT CONFIRMATION HEARING
A real estate sale goes into court confirmation when a person dies intestate (has not drafted a will) or without bequeathing their property. Here are some things to keep in mind with a Court Confirmation required probate sale:
- The offer must be written on a Probate Purchase Agreement Form
- A 10% deposit must be presented with the offer. Often times it must be a cashier’s check issued in the name of the decedent’s estate.
- Once offer is accepted it will have a “conditional acceptance” and the time periods for loan, appraisal, and property inspection contingency removals begin at this time.
- The attorney then applies for the court date which is 30-45 days after the application is filed. (Even after a court date has been set, a professional real estate team will continue to market the property aggressively to ensure more exposure and a potentially higher offer amount.)
- On the day of the court hearing another interested party may outbid the previously accepted offer. This person must be present at the hearing and bring a cashiers check for at least 10% of the overbid amount.
MANAGEMENT OF HOME PREPARATION
In addition to all of the complimentary services we provided above, our team will also manage the entire process of preparing the property for sale. Because of our experience with selling probate properties that may need some additional TLC, we have developed relationships with contractors, painters, plumbers, electricians, and handymen who will do excellent work at very reasonable prices in an efficient and timely manner. We will manage the entire project so that you don’t have to, and we will send regular progress reports with pictures throughout the process. Best and most important of all, our contractors will Defer Payment until Close of Escrow. So the estate doesn’t have to pay up front and can pay for the upgrades and repairs at the close of escrow.
One of the most common complaints about realtors is their lack of communication skills. We send out a weekly email status update to the executor and the attorney and are available by phone and text every day.