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A Fixer Home Selling As Is In a Probate Process
Today we would like to discuss a fixer home selling as is in a probate process. This was a recent sale on a listing where the seller was a “probate administrator with full authority.” I could write a book on selling probate listings but, I will stick to the as is portion of this sale as it is most interesting yet often confusing for buyers. From the photo you can see the exterior condition. There were also interior issues.
The seller left behind quite a bit of personal property in the interior, which we had to deal with. Also, due to dust, molds or other issues, these listings can require Hazmat.
Probate properties are sold as is, as a general rule. Also, sellers must declare if there was a death in the property within the past 3 years. To show a property in this condition, a seller may have to do some type of remediation prior to us marketing the property. So, this property had some remediation work completed before going on the market.
Also, as the seller had passed away, his payments had gotten behind so the property was in foreclosure. The foreclosure process, once a Notice of Default (NOD) is filed, is public record. We can tell if a home is in foreclosure because the NOD is shown on the tax profile (most of the time).
In this situation, we had a very short window to cure the loan default, so acquiring a hard money loan became urgent. I know several companies that do hard money loans but they usually require a minimum loan of $75,000 – $100,000. This property needed less funds and these are expensive loans with fees based on loan amount. Fortunately, I know a source for this type of loan. In fact, this particular hard-money lender used to flip homes. That company was willing to loan this estate the funds to pay off the delinquent liens and cure the foreclosure action.
The buyer was very committed to purchase the property. Also, the buyer’s agent was familiar with the area. She knew the importance of buyer’s inspections such as a well and septic. During the inspection process, a local company inspected the septic and found it was not working. They had to additionally bring in a backhoe. Further complications, it had been snowing at this elevation and there were very icy road conditions. A backhoe was not easy to arrange. The extent of the repair was extensive and the estimate, expensive. The even larger looming issue was it could be months before the work on the septic could be completed due to weather. Would the buyer move forward with these issues?
This defective septic system was a surprise to everyone. The estate attorney, the professional fiduciary, and the heir were all informed. I suggested a credit be considered as it was the request of the buyer’s agent. The reason for this credit was to encourage the buyer to continue forward with the purchase, in lieu of cancelling. The parties all agreed a credit was in order to provide a close of escrow as soon as possible. An immediate closing would prevent the estate from incurring any further costs or any other expensive surprises. With the winter weather conditions, a hard money loan due in one year, a septic that may not be operational for months, and property insurance issues, we needed to close asap.
Oh, yes, I forgot to mention the insurance challenges. The seller researched many insurance companies. Dealing with a very high fire rating for the area and an unoccupied property, these two items prevented most insurance companies from providing full coverage. A California basic fire policy was obtained to prevent a major loss from fire. Due to all of the recent California forest fires, all agreed there was immediate need for fire insurance to be in place. This is all part of listing a fixer home selling as is in a probate process.
We finally closed escrow and the buyer was thrilled to own the property. The buyer’s agent did a good job of completing inspections and keeping her side of the transaction moving forward. The probate attorney was fabulous to work with, too. In fact, we sold the property with all the personal property inside, including a truck and a trailer in the yard. The attorney completed all the additional documentation for the personal property to be included in the sale, without warranty expressed or implied. The professional fiduciary and her team were top notch, I cannot say enough kudos about their expertise.
As you can see, this was not a traditional real estate sale, this was a probate. Being declared an Expert Witness in probate court, I am often selected to work on very complicated cases. This is because I have been selling probate properties for over 10 years. It is a sub-specialty practice I enjoy. Closing a fixer home selling as is in a probate process is no easy task. Expertise counts here as mistakes are not tolerated within the probate court. Everyone is expected to complete their official duties in a professional and competent manner.
If you have a potential probate sale, a successor trustee sale, a conservatorship sale or a traditional real estate re-sale home, you can feel confident in the Weintraub & Wallace team to close the escrow. We are a solution-based team. Call us today at 916-233-6759.
— JaCi Wallace
How Does an AS IS Sale Work in Sacramento?
Technically, when you get right down to it, the question about how does an AS IS sale work in Sacramento makes little sense because every sale is AS IS. But buyers don’t really understand that concept and many of their agents fail to grasp the verbiage, too. For example, many agents do not spend time perusing our purchase contracts. However, they should because our California Residential Purchase Agreement, paragraph 11, states the following:
11. CONDITION OF PROPERTY: Unless otherwise agreed in writing: (i) the Property is sold (a) “AS-IS” in its PRESENT physical condition as of the date of Acceptance and (b) subject to Buyer’s Investigation rights; (ii) the Property, including pool, spa, landscaping and grounds, is to be maintained in substantially the same condition as on the date of Acceptance; and (iii) all debris and personal property not included in the sale shall be removed by Close Of Escrow.
AS IS does not mean that after a home inspection the seller is required to make repairs nor otherwise satisfy the buyers’ concerns. Now, if you consider a first-time home buyer, well, not unusual to discover this type of buyer harbors a bit of confusion, especially if you listen to a buyer’s agent assuring the buyer she can make the seller do repairs. Not true. Every home presents defects. Every home requires upkeep and maintenance. No law requires sellers to make a home suitable for a buyer’s tastes or preferences.
Maintaining a home falls to the buyer’s shoulders. Welcome to home ownership. And whatever improvements the buyer wants to make. However, I can beat to death this topic as definitely reflected in other blogs you can probably note below this blog. Instead why not talk about how does an AS IS sale work in Sacramento, especially when buying, say, a fixer.
Often I include in counter offers the wording: Sold in its AS IS condition, and there will be no renegotiations, no credits and no repairs.
You probably think that sounds very straight forward and clear. Yah? But people pretend they don’t understand. Non capisco. No entiendo. Or, they thought they understood but completely forgot the neglected home exuded much deferred maintenance. It came as a shock to them, a total shock, mind you, that floors that give a little bit underfoot might bend due to a broken joist. Or that wet, rotting wood might produce termites. Or, that the sagging roof one could easily spot from the ground might need replacing.
So to these people, answering the question about how does an AS IS sale work in Sacramento, well, they make the mistake of assuming it works through attempts to renegotiate. Or extortion. By claiming brain injury or foggy memories. Or, by blowing defects out of proportion. What a fun game. And many try to play. When they really should consider admitting, hey, sorry, I goofed when I made an offer. Did not mean to commit. I’m not ready to buy AS IS real estate in Sacramento.
But that will happen when pigs fly.
Probably half of my AS IS sales blow up because those buyers did not enter into contracts in good faith. The other half close with the first buyer. But first buyer, second buyer, makes no difference to me which ultimately purchases home. The only thing for me to add: my sellers understand AS IS means AS IS. Nothing else. At least for my transactions. If buyers expect a discount or some other consideration, not gonna happen.
We Need a Price Reduction to Pay for Our Preferred Upgrades
Sacramento home buyers always have reasons for a price reduction but few matter.
Reasons for a price reduction in Sacramento. You’ve gotta love buyers who send offers with the explanation that they have adjusted the offer to account for all of the upgrades and repairs they plan to make. For starters, they think it has some bearing on the offer. Or maybe they simply just hope it is relevant in some way. It’s a wasted effort. Hello? I’d like to buy your house, but first you need to lower the price to to accommodate my desires. I’d like to install a swimming pool in the back yard because this house has no pool. What were you thinking, a lawn, in this drought? Plus, I’m really loving the Eames craze and plan to build low-level seating around the fireplace that’s not yet been built but which I will construct from hand-fired brick touched only by virgin hands.
Ooooh, I am NOT jiggy over the front door. No, see, this home really needs a double-door entry with a humongous lion head for a knocker. Do you know where I can buy such a thing? Oh, never mind, I’ll find it on eBay. Just give me that price reduction.
The roof is not jamming. That black and gray composition shingle is at least 10 years old. Whoa. It needs to be brilliant blue, perhaps imported tile from Japan. That kind of roof is really expensive, as you know, so I need to knock another $25,000 off the sales price. You don’t mind, do you, because you’re already making a boatload of bucks on this deal, right? Help a fella out, why doncha? What’s a price reduction to you anyway? It’s peanuts.
The kitchen appliances? The dishwasher, gas cooktop and refrigerator are white, for crying out loud. I don’t care that they’re brand new, I hate white. Hate it, hate it, hate it. If it’s not stainless with a hint of edgy ornate. Fuhgeddaboutit.
Let me also point out, I found a cracked tile in the master bath. Speaking of the master bath, I would really like a Jacuzzi instead of a regular bath tub. OK, it doesn’t need to be a Jacuzzi brand, but it still needs to bubble. Like my personality! Hey, look at my most recent selfie! I just shot it this morning when I ran over a homeless person in the street. My hair flowing in the wind. I felt this bump under my bicycle tire, but what the hey.
And the list goes on. Many buyers hold these types of opinions and demands today. Thank goodness there are still investors in the Sacramento marketplace. I’m finding that when homebuyer occupants thumb their noses, the investors swoop in. Lately, investors have been paying more, a lot more, than owner occupants to buy the same house. Why do you think that is happening? Could it be that investors know something that regular homebuyers do not?
You wanna price reduction in a low inventory market in Sacramento? Think again. If you need a Sacramento Realtor, call Elizabeth Weintraub at 916.233.6759.
Another Sacramento Home Has Closed Escrow
Want to read about a Sacramento home that closed escrow without a hitch? It’s not often in this Sacramento real estate market that I am afforded the opportunity to gush about what a smooth transaction we just closed because in squirrelly times like the present, the real estate business is typically anything but smooth. The escrow that just closed, with the exception of the document delay on Wells Fargo’s end, presented no problems at all. It was a miracle, in retrospect. I will probably close more than 100 homes again this year and, when I can count smooth closings on one hand, I consider myself and those around me fortunate.
No agent is an island in this business. I might be a rock but I am not an island. I need my team members, escrow officer, transaction coordinator, lenders, title company, appraisers, office assistants and, most important, the agent on the other side to successfully close.
The trick is to not burden the client with every little hiccup in a transaction. That’s one of the reasons home sellers and buyers hire a Sacramento real estate agent — it’s to be a buffer. This doesn’t mean we don’t disclose what’s going on, but there are some behind-the-scenes situations that don’t affect the parties and the parties might be better off not hearing about it, until it closes, if ever. There is no reason on god’s green earth to make other people miserable if they can be spared.
That’s why Powers that Be created real estate agents. We are the ones who often bear the brunt of the transaction. We take the punches so our clients don’t have to.
The agent I worked with on this last transaction was wonderful. She worked tirelessly to meet the demands of the escrow, and I would eagerly work with her again in a heartbeat. Many agents are fabulous in this business and will do whatever it takes to close. In the beginning, though, her buyer was a little bit wary and not as optimistic as his agent.
The home that sold was newer, built in 2010, so we weren’t overly worried about defects or problems, although every single home on the face of the planet will have some kind of defect. There are no perfect homes out there. But because so many escrows lately have developed problems midway through after buyers discover a small defect and suddenly wanted to renegotiate or lower the price, the seller, on advice from a legal friend, elected to be upfront about what she expected. Cut off that behavior at the pass.
In the counter offer, she explained the Sacramento home was sold in its AS IS condition. Yes, that verbiage is in the contract, but few pay attention to it. She simply asked the buyer to agree not to request repairs nor try to renegotiate, regardless of what a home inspection may reveal. The buyer was worried that he could not cancel, but after he thought about it he realized that was not really a valid concern. The seller wanted assurance of some sort that when she removed her home from the market, the buyer would not continue to negotiate.
She wanted the AS IS clause to mean AS IS. Not maybe. There are buyers in Sacramento who have no intention of closing on the sales price they offer. They know it when they write the offer. These types of buyers plan to further reduce the price after the home has been removed from the market for a few weeks. That’s a sneaky way to do business.
Some buyers don’t know when the negotiations have ended. Some negotiations, on the the other hand, never end. But this one did. It stopped at the counter offer. The buyers agreed and the escrow closed, as they say in Shakespeare, without further ado, sigh no more.
Buying a Home in Sacramento in AS IS Condition
AS IS — two simple words that seem to cause so much confusion in Sacramento real estate. I can say AS IS over and over until the cows come home and it doesn’t seem to sink in. My sellers can ask me to draw a counter offer or an addendum to a purchase offer that clearly states there are: no repairs, no credits, no renegotiations, as the home is sold in its AS IS condition, and buyers can sign that document, yet soon as their pen leaves the page, their memory of this contractual agreement vanishes. Did they dip a feather quill into lemon juice? Have a lobotomy?
My heart goes out to buyer’s agents who have to deal with the AS IS Condition issue day-in and day-out. They can explain that a seller will not give them a credit nor make any repairs but the buyers will still push. I realize that sometimes it’s not the buyers who are the problem — it can be their relatives or their coworkers or their drinking buddies: Hey, when I bought my house, the seller painted the entire interior, bought me all new appliances and threw in a Mercedes. The implication being that the buyer is a wuss or a nitwit. The self-important braggers neglect to point out this was 20 years ago or in a different city but the point is it is not this transaction. All transactions are different.
When I receive an email from an agent with a single sentence attempting to defy the AS IS, I know what happened. The sentence might say, my buyer is requesting a $3,000 credit to closing costs. Or, my buyer would like to know if the seller will split the cost of a new roof, which might have been a talking point during negotiations. So, the agent feels a little silly having to ask that question because the agent had already discussed it with the listing agent and the buyer prior to the offer. I know the agent pointed out the roof and said it was the buyer’s responsibility. And I know the buyer understood. And we both know that I know.
Still, the buyer’s agent must ask the question if the buyer poses it.
If the buyer’s agent thinks the buyer has half a chance of obtaining any of these requests — which the buyer had made after the buyer promised not to make them — the buyer’s agent will try to build a case for the buyer. But when there is no case presented, just the request, I know the poor agent is feeling the pain.
Buyers often don’t stop to consider that they might be irritating the seller with these types of requests. Especially when they tripped over the sidewalk walking up to the front door. They should not come back later after promising not to ask for repairs and demand that the seller replace the sidewalk. It makes the buyer look like an idiot (or conniving), none of which sets well with the seller. Any special requests the buyer might need down the road, such as an extension to close or any gifts such as refrigerators or washers and dryers are unlikely to be granted when a buyer attempts to break a promise.
If a buyer doesn’t want to handle the consequences of purchasing a home in its AS IS condition, then maybe the buyer shouldn’t try to buy a home under those conditions in a hot Sacramento seller’s market. It’s all a part of home ownership anyway. Things break, malfunction and stuff need to be updated, repaired and maintained — all during the life of a home buyer. It’s scary for a buyer starting out, and that’s where the buyer’s agent can be an invaluable tool.
