Articles and audio on New York Probate Real Estate

Probate for Realtors: What You Need to Know

Probate for Realtors: What You Need to Know

If you’re a realtor, there’s a good chance that you will (or perhaps already have) run into a property that belonged to someone who is now deceased, whose heirs are selling the home in probate. When that day comes, what will you need to know? What makes a probate sale different from any other real estate transaction?

How to Inherit US Property When You (the Heir) Live Overseas

How to Inherit US Property When You (the Heir) Live Overseas

Inheriting someone’s home or property can be a stressful and overwhelming process. If the property is located in the US, and you happen to live outside of the country, it can be even more difficult.

E333 Seller Credit When Selling Probate Real Estate

E333 Seller Credit When Selling Probate Real Estate


This happens when the buyer agrees to a higher contract price, but the seller also agrees to credit back a set amount to the buyer, so the net purchase price is lower.

For example, if the buyer wants the house for $250,000, they would set the contract price at $300,000 with a side agreement that the seller would credit $50,000 on the closing statement, effectively making the price $250,000.

Why not just a price reduction?

Why not just a price reduction?

Co-ops (and sometimes condos and homeowners’ associations) want the closing price to be (artificially) higher to maintain their average price per square foot. They don’t want records to show that a unit sold for significantly less than other units, because, in theory, it will eventually drag down the value of the building. Even though a lower price is reasonable for a probate property that needs major renovations, it doesn’t benefit the co-op.

Sometimes cash buyers and investors want the recorded price to be higher, so they can show flip buyers a slimmer profit margin. For example, an investor pays $250,000, hoping to flip it for $350,000. When the investor goes to sell the property, the buyer can check the public records to see what the investor paid. It will show that the investor is trying to make a $100,000 gain. If the records show that the investor paid closer to $350,000, it won’t look like he’s making a large profit.

What can a seller credit be used for?

What can a seller credit be used for?

Non-professional executors and heirs are sometimes worried that the situation seems sketchy. They wonder if they are really allowed to give a seller’s credit. No worries; it is legitimate and fairly common.

In non-probate situations, it is most often used as an incentive to the buyer to cover some repairs or pay for closing costs. Sometimes repairs need to be done for the property to be sellable. It’s a way of putting the repairs on the buyer instead, when the estate is cash-poor or the executor just doesn’t have time.

Usually cash buyers only

Usually cash buyers only

A seller’s credit is mostly used for cash buyers for a few reasons.

There are often small credits for something like a broken stove. But sometimes there are legal issues with the property or major renovations are needed. If the credit is a large amount, greater than 10% of sale price, it makes the closing figures look non-traditional. Banks don’t handle that situation well, so a seller’s credit is usually not a good option for a buyer who needs to take out a loan.

Selling a probate property has many nuances; it’s not the same as a regular house sale. You may have sold your home once or twice and figure that selling probate real estate is easy. The reality is that probate real estate can be very different.

To learn more about what to expect during probate, check out my book, “How Probate Works, “ available on Amazon.

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E310 How to Sell Cash-Poor Probate Co-ops

E310 How to Sell Cash-Poor Probate Co-ops


How do you sell a probate co-op, when the estate has no other cash?

Why does the estate need cash? To pay for all the preparations, such as movers to clean out the property, cleaners, contractors for minimum renovations to make the property marketable, and more.

For some houses, cash buyers/investors may be an option. But for other houses and the many co-ops in NYC, it’s not an option.

Sell personal property

Sell personal property

When the estate has no cash or bank accounts, it’s usually because the accounts have named beneficiaries. When the estate only has accounts with named beneficiaries, there’s no operating account for the estate. Beneficiary designations are one of my pet peeves; they usually mess things up rather than solving inheritance problems.

So, the estate has a valuable piece of real estate, but no means to pay for the necessary steps to turn it into cash. Usually, the personal property in the residence is junk. I know someone may value their yard sale treasures or the dining room set that took forever to pick out, but no one else wants it. Antiques and high-end pieces can be sold easily, but generally it’s not worth the cost of running an estate sale for the other personal property.

In this situation, the executor has no choice, so maybe but maybe they can sell enough pieces, jewelry, or anything to raise funds for the estate. Again, not a great situation: you’re essentially asking your executor to conduct a garage sale in hopes of raising enough money to clean out the rest of the junk!

Ask heirs to pay

Ask heirs to pay

Another undesirable option is asking the heirs to pay. The bottom line is that the heirs almost never have available funds. Even if heirs have the funds, they probably don’t want to contribute. Besides, even if one heir funds the estate, it causes imbalance and it is recipe for drama. The one who funds the estate will expect special treatment over the other heirs.

Bridge loans

Bridge loans

A bridge loan is a short-term loan to get you from being illiquid to being able to sell the real estate. Bridge loans are not the same as usurious inheritance funding loans. This is a loan that is secured by the property itself. For that reason, some bridge loans have 0% interest!

So, what’s the catch? There’s lots of paperwork and specific conditions to get a bridge loan. Some loans require you to work with a particular broker or firm. But if that doesn’t bother you and you have no other options, it’s not too bad. Applying for a bridge loan is similar to filling out a mortgage application.

Executor

Those are the not so ideal solutions to selling a cash-poor probate co-op. If you dump this situation on a family member or friend, they probably won’t have nice things to say about you after your death. Hiring a professional executor is a good idea in this situation. To learn more, check out my book, “How to Hire an Executor,” available on Amazon!

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E243 Heir Won’t Leave the House

E243 Heir Won’t Leave the House


When one of the heirs won’t leave the family home, what can you do? It’s a pretty common situation. For example, mom passes away leaving three adult children. One adult son was living with her when she passed away, and he doesn’t want to leave.

Why heir won’t leave

Why heir won’t leave

The top reason is pretty straightforward: it’s like having free or reduced rent. Sometimes there’s the feeling of entitlement. As in, “I was the one taking care of mom during her last years, so what’s the big deal if I stay in the house?”

Then, there’s that litany of “dog ate my homework” type of excuses: I have an injury and can’t move right now; I don’t want to move my kids in the middle of the school year; I’m too busy to deal with a move, etc. We’re not saying these excuses are justifiable, we’re just saying that we’ve heard it all!

Can you evict an heir?

The short answer is yes, but it is an uphill battle. Evictions generally tough. You deal with notice requirements, assumptions that tenants have rights, extensions, etc. It could take many months to years to evict a tenant in a normal situation. Add to that, the complication that the heir is partial owner. In our example where mom passed away with three surviving children, that adult son is still an heir to one-third of the estate, even if he leaves the home. So, now it’s psychologically more than just evicting a tenant, it’s evicting a one-third owner.

Can you evict an heir?

In addition to a frustrating situation, evicting your sibling is probably pretty awkward! (“Happy Thanksgiving, sister; pass the turkey. And oh, yeah – here’s your eviction notice”). A situation like this can devastate families. A professional tip to avoid the awkwardness is to use someone else as the “bad guy,” such as a realtor or professional executor. If the home is a condo or part of a homeowner’s association, maybe make a call to the manager to discuss the eviction. If this works, it can save a lot of money in legal fees. The quicker the eviction is taken care of, the less money wasted. It’s expensive to let someone reside in a home for “free.”

How to buy out heirs

How to buy out heirs

More often than you’d think, the resolution is to pay the heir to leave. It doesn’t feel great to pay someone who is supposed to leave anyway but take a look at the cost-benefit analysis. It might be cheaper than the headaches, legal fees, mortgage payments, etc. As much as you might not want to pay him, it’s probably the best solution. It could also make those Thanksgiving dinners less tense!

Paying an heir to leave doesn’t mean you have to start with the highest number. Maybe start by offering to pay for the moving costs. Then offer more, as needed, until he actually leaves.

This is where having a professional executor comes in handy – he or she can do the awkward work for you. If you are interested in learning more, check out my book on Amazon, “How to Hire an Executor.”

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E224 3 Common Probate Real Estate Mistakes

E224 3 Common Probate Real Estate Mistakes


Here are three recent, real world, case studies of common probate real estate mistakes. Hopefully, you’ll learn how seemingly small errors can quickly snowball into huge, expensive problems, which you definitely want to avoid!

Letting the home fall apart

Letting the home fall apart

In the words of Benjamin Franklin, “an ounce of prevention is worth a pound of cure.” In our example, there is an older citizen who began to decline (this is normal especially for Solo Agers), so keeping up the house was a low priority. The family was focused on scrambling with doctors, Medicare, nursing homes, social workers, etc. So, it’s common to overlook a leaky pipe at the house and leave it untended.

After this particular senior passed, I visited her apartment. I found a bathroom covered in fuzzy, black mold from water damage. So, a little bit of water damage left unattended for months or years is now costing tens of thousands in remediation damage. Mold is a big red flag when trying to sell real estate. You have to take care of that before anyone would be willing to buy it. It could have been solved long ago with a $10 wrench or plumber visit. Now, that $10 fix could cost $10,000.

DIY renovations

DIY renovations

Do It Yourself renovations have become popular. Too many heirs watch too much HGTV! When someone dies, there’s almost always a nephew who sees a fixer upper and wants to “Flip this House.” Too often, they have no idea what they are doing.

In this case, the son-in-law started renovations that were actually not too bad looking. But he did not get the correct permits and authorization paperwork, so he had to stop in the middle when the co-op management found out. Now we’re trying to sell a half-finished home. The toilet is literally in the middle of the bedroom.  We probably would’ve been better off if we just sold it pre-renovation, if you take into account the delays we are now experiencing. At least it would have been intact.

Tenants in probate property

Tenants in probate property

We’ve talked before about how tenants can be a nightmare in probate (E157 How to Deal with Nightmare Tenants in Probate) Tenants of estates don’t respect the need to pay rent. They pay if and when they feel like it. But it’s even worse when the estate suddenly gets tenants who weren’t even there before the homeowner passed. Here are two current, frustrating examples:

Example 1: The home aid won’t leave. We had a Solo Ager who needed help at the end, so he hired a home aide through Medicare/Medicaid. After the man passed away, it’s understandable that the aide needs a little bit of time to figure out where she’s going. But she didn’t leave! The heirs are don’t like conflict and were not sure what their legal rights are, so they didn’t do anything about it. Now, every day that passes, the aide is slowly creating a sort of tenancy! It will be harder and harder to get rid of her. We’ll probably have to evict her, and that will incur costs and time.

Example 2: A decedent passed away with an investment property and he was a small business owner. Since he passed away, the business shut down. The heirs felt bad for an ex-employee and allowed him to stay in the decedent’s condo! So now, a problem that didn’t exist before has been created. The heirs also gave him extremely low rent. Of course, he won’t be leaving now without a court-ordered eviction! The heirs were well-intentioned but created a huge problem for themselves.

How can you avoid these mistakes? Hire an excellent probate lawyer to guide the executor, or better yet, consider a professional executor to run the show. A professional executor would know not to make these mistakes and won’t make decisions based on emotions tied to the property.

Check out my book on Amazon, “How to Hire an Executor,” so you can choose the person who is the best fit.

E203 Why You Need an Experienced Probate Lawyer

E203 Why You Need an Experienced Probate Lawyer


Linda spent six months working with a general lawyer (meaning someone who practiced personal injury, litigation, and a dash of probate on the side). There was not much progress in those six months, so Linda became frustrated and transferred the case to us. Sadly, we had to basically start from scratch, because the general lawyer did essentially nothing.

What causes probate delays? Bad lawyers

What causes probate delays?

In Linda’s situation, six months went by and it was as if nothing happened in her case. One of the reasons for the delayed probate was because the general lawyer did not know what preliminary Letters Testamentary were. An experienced probate lawyer would have noticed right away that Linda had a complicated probate and would have immediately filed for preliminary Letters Testamentary. If this had been filed immediately, Linda could’ve started “executor-ing” months ago.

Another reason probate can be delayed is drafting the Petition wrong. In Linda’s case, the general lawyer didn’t understand which family members must be notified, and therefore hadn’t even begun collecting their contact information.

Lastly, probate can be delayed because a general lawyer might not realize that the Will isn’t properly witnessed. (As a side note, this is a good reason to find an experienced attorney to draft your Will). Getting the correct witnessing on a decedent’s Will takes a lot of time, including tracking down the witnesses and having them sign affidavits. An experienced probate lawyer would notice the incorrect witnessing and get started on the correction process immediately.

As with any practice, if a lawyer does not have much experience in a certain area of law, he or she will probably miss important details and cause delays.

When a lawyer gives bad advice

When a lawyer gives bad advice

In Linda’s situation, her deceased relative owned an income-producing property, and the general lawyer told Linda not to collect rent anymore from the tenants! This led to non-payment and problems with the tenants, which will cost the estate more money to work out. Instead of listing the house on the market during the summer, this lawyer’s bad advice means that Linda now must winterize the house. With proper legal advice, the house could have been sold and done with before the cold. In summary, bad legal advice causes more stress and aggravation for the client.

How can you avoid all this? Shop around: Compare lawyers, call their office, and visit their websites. Make sure you’re working with an experienced probate lawyer from the beginning.

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E66 5 Myths About Probate Real Estate landscape

E66 5 Myths About Probate Real Estate

Doesn’t it feel like everyone is telling you it’s “so easy” to make money with probate real estate?

So let me share the real deal, from the perspective of a professional executor and probate attorney. That means I’m the guy actually selling the probate real estate.