E271 Non-Professional with Probate Real Estate
Today we describe some real-world examples of mistakes made by non-professional executors dealing with probate real estate.
Making it personal with tenants
Often times, a non-professional executor is a family member or friend who has too much history with the tenants.
For example, one of our executors helped the decedent in her final years and felt that the tenants were taking advantage of the decedent (late paying rent, not cleaning up after themselves, poor property upkeep, etc.). So, when the decedent passed, the executor has lots of bones to pick with the tenants: where the tenants parked, the condition of property, etc.
If tenants want to be difficult, they can make probate very difficult. As we’ve talked about before, it can be very hard to get rid of bad tenants in probate, so picking a fight isn’t helpful. For the sake of probate, it’s often best to let it go and move on.
In our example, the executor got into huge fight with tenants and the tenants called the police. A huge production was made, and we had to spend months in litigation to get them to vacate.
When a professional executor is involved, he or she doesn’t have that blood-boiling history with tenants. A benefit of hiring a professional executor is that we don’t get emotionally invested.
Knowing what renovations are worth doing
In the past, we’ve discussed certain renovations that almost always make sense (Episode 254: Best Renovations to do Before Selling Probate Real Estate) These include a fresh coat of paint, cleaning out the home, etc.
We recently had an executor who believed the decedent’s home was fine to sell as-is. Let me tell you that the place was not fine. But the executor had the position that if “it was good enough for my aunt to live there, it’s good enough for buyers.” Perhaps it was something sentimental to her that the house looked a certain way, but that’s not what buyers are looking for.
Because of this, the executor declined even a basic paint job. It is almost certainly going to be a struggle to sell.
Choosing the right broker
Choosing the right broker is tricky, even with a normal sale. You need to pick the right fit for the property and the right demeanor as a seller. Of course, it’s even harder in probate.
Even if you find an excellent broker for the neighborhood, you also need someone who understands probate issues. For example, I am dealing with a situation where neither the buyer’s broker nor the seller’s broker understood that the seller was in probate. So, the day before closing, they said they “need something called Letters Testamentary before we can proceed.” Only then did they learn that the heirs were not in agreement, so there was no property to be sold! It was a huge waste of everyone’s time.
That was an extreme situation, but there are many other nuance situations where if you don’t have a broker experienced with probate, time and money are wasted.
For example, we have an executor who hired the dreaded “friend” broker. Friend brokers can be great, but this is not the time to repay favors to a friend via estate work. Estates are complicated already. The second problem was that the broker was from out of state and didn’t understand local customs. Third, the broker listed the home at a high price. In probate, you want to sell fast, but listing at a high price psychologically pegged the executor’s mind to that unrealistic number. A probate-experienced broker would avoid that situation. High prices turn away buyers who know the area and know that the seller has unrealistic expectations.
When an offer finally came in, the out-of-state broker prepared a binding contract and had the executor sign it. (In New York, a lawyer usually prepares or reviews the contract, because there are a lot of nuances that can cause disadvantages and risk). As a result, this executor unknowingly made some big concessions and promises she didn’t need to make.
These are things we’ve seen a lot lately. We share these scenarios to help you avoid future problems and consider the importance of hiring a professional executor. If you are interested in learning more, please check out my book called, “How to Hire an Executor,” available on Amazon.
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