Expedite That Probate Sale

by Joe Ramos, Vice President & Sales Manager, Old Republic Title Company

In his capacity as sales manager of a major title insurance company (and at his previous position as a real estate broker) Mr. Ramos shares his experience and expertise with getting estate realty sold in less time. This is the first installment of several articles on this topic.

Frequently, a probate estate consists of little more than a single family home and eager heirs. When it's determined that the real property ought best be sold, selling delays can and do add countless months to the time when final distribution can occur.

In this article we'll examine a method that estate sellers often overlook that will attract buyers near and far and doesn't require deep discounting or fancy footwork.

A Typical Scenario:

An estate containing real property is conducted under IAEA of the probate code. The executor of the estate represents that the property, to her knowledge, is free and clear of liens and has been owned for nearly forty years by the decedent. The decedent had acquired her spouse's interest upon his death by recording an affidavit death of joint tenant along with the death certificate.

The couple's daughter, having been named in the will, is executrix of her mother's estate. Since she has received letters testamentary with full powers of authority she lists the property with a neighborhood Realtor. This property is believed to be valued at just under $200,000 and is located in an area acceptable for VA and FHA financing.

How it was Originally Marketed:

The attorney recommended to the client that the estate require an offer having terms with at least a 10% down payment deposit and only conventional financing to be acceptable.

These terms were part of the broker's listing agreement, attracting only one (low) offer during a six month listing period, with 3% down and FHA terms. When the seller countered (upon advice of estate's counsel) at 10% down and conventional financing, the buyer "walked."

There is a Better Way:

All sellers (probate and non-probate) who market properties in areas dominated by FHA, VA and low income financing run the risk of not attracting buyers when these modest terms are not offered, especially in this economy. Sellers likely eliminate 40-50% of the potential qualified buyers from even making an offer on the estate's property. While sellers typically want to sell "as is" it may not be reasonable to attract a retail buyer without this financing. Therefore, properties should be priced accordingly lower if no financing is offered.

Limiting Conditions to Include:

Protect the estate by limiting the amount of discount points the estate is willing to pay.

Order termite report up front and limit estate's exposure by dollar amount.

Estate should have right to approve or disapprove any work requirements that lender may require. What's the cost?

Buyer's credit report should be submitted with all offers to assure creditworthiness.

Buyer should be prequalified by reputable lender experienced with these transactions.

Do This to Avoid Last Minute Surprises:

A preliminary report should be ordered from a reputable title company upon deciding to sell in order to avoid unknown title defects, title vesting (ownership) problems and locating private lien holders (which could require posting a lost instrument bond). This can ultimately result in losing buyers when title delays cause lost loan commitments.

In Summary:

Lenders can typically close these 3-5% down loans in 45 to 60 days. Estate sellers who insist on requiring conventional financing for buyers should think twice before eliminating countless bonafide offers with low down payments.