We’ll share 3 recent problems we encountered while selling probate real estate: a bad septic tank, firing a broker, and co-op listing prices. We’ll share these stories with you and add key takeaways for executors and those facing probate.
Septic tank problems in probate
Any leak or other problem involving a septic tank is a huge headache. Septic water leaking into the ground soil is an environmental violation.
In our case, a problem appeared during the septic inspection (thankfully it was not a full-blown leak). It required our whole team (me, the other attorney, and the real estate broker) to work together quickly to save the deal by replacing the tank. As we’ve mentioned several times before, selling probate real estate quickly is key. Otherwise, the estate bleeds money while the property sits on the market (not to mention impatient heirs and looming IRS deadlines).
- You need a great team (broker, executor, attorney) who understand probate, the need for speed, and the risks to the executor. These are tough situations that require competent professionals. The team must be able to communicate well and do it quickly.
- It is best to have a local executor: someone who understands local laws and customs.
How to fire a real estate agent
This situation is never easy, but being an executor is not for someone who avoids conflicts. Speed and risk assessment are two things that are important during probate.
So, if you have a broker that is taking too long to sell, it will anger the heirs. Taking too long to sell also puts the executor at personal risk for the loss of property value. The executor can’t just let it sit and let the bills accumulate.
A real estate agent who is not a good fit may make poor pricing decisions on your behalf. Perhaps the agent is a slow communicator or a poor evaluator of buyers. You don’t want to waste time on buyers who cannot close.
- Take time to choose the broker carefully.
- Make sure they understand probate’s unique risks and priorities.
- You should try to hire an executor with a trusted network of reliable, experienced agents.
- If the executor doesn’t have a specific real estate agent to work with, a savvy executor knows to sign a limited listing agreement so he can get out of it quickly if needed.
Co-op pricing strategy
This is kind of NY-centric, since there aren’t a whole lot of co-ops elsewhere.
We’ve talked about why co-ops are a pain for probate, and pricing is one of those reasons. In probate, you want to price aggressively (low) to sell with speed. You wouldn’t want the neighboring unit to sell faster than yours because you wouldn’t come down $10,000. But you don’t want to list too low, because you must get a good value for the heirs.
On top of this balancing act, the co-op adds more complexity: the co-op board must be satisfied with the price, so it can’t be too low. The co-op has the right to reject deals that don’t preserve the value of the building as a whole.
Because of this, co-ops listings can:
- Make the price too high for the market but make the co-op happy. Then it sits for months.
- Make the price lower and get buyers, only to have them frustratingly rejected by the board over and over. This ends up being a waste of time, and the co-op goes back on the market.
- You need savvy executor who can set realistic expectations for heirs and explain to them that co-ops are just difficult to deal with. In this situation, an executor outside of NY with no knowledge of co-ops would be a huge disadvantage.
We hope these anecdotes were helpful to you. To learn more about how probate works, check out my book, “How Probate Works,” available on Amazon.
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