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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
Flippers Rule in Some Sacramento Markets
June is shaping up to be a pretty good month for my real estate closings. I’ll probably have more sales close in June than any other month this year. I just closed a regular home sale in Curtis Park. This was a beautiful brick home in the St. Francis Oaks subdivision. Everybody who saw the home said pretty much the same thing about it: it was gorgeous but it wasn’t updated enough for their tastes. So, it sold to a flipper. I am seeing many homes in Sacramento sell to flippers nowadays, which is a stark contrast to 5 years ago.
It’s a challenge to negotiate between the two parties, to give a flipper enough room for a profit and to give a seller enough money to make the seller happy. But that’s a challenge I tackle day-in and day-out. My seller’s happiness and satisfying my seller’s goals is paramount to me.
It’s rare to sell a home in Sacramento over $300K without updates to a first-time home buyer. Like I’ve said many times, it’s the Sacramento flippers who originally focused on foreclosures who are to blame for the changed attitude of today’s buyers. There are tons and tons of rehabbed homes that have been resold. I’m not saying there is anything wrong with it because flippers have taken older, abandoned homes in disrepair and turned them into turnkey homes for first-time home buyers. That’s a good thing.
Sacramento flippers are actually good for neighborhoods. They revitalize downtrodden areas. Goodbye boarded-up homes, hello sparkling new stucco and shiny gutters. But they also shape buyer’s expectations, often unrealistically.
It’s no longer enough to buy a home with good bones and potential. Buyers don’t want those homes. Not when they are tempted by all the rehabbed inventory on the market. So the only surefire way to move homes without updates, which are now called fixers, is to sell them at a discount to compensate. The problem that arises for sellers who want to fix up their own homes is a seller cannot compete with a flipper. Because the average seller can’t buy materials at wholesale, nor do most ordinary sellers have access to low-cost rehab crews.
If a seller improves a home for resale, the seller is quite likely to lose money on the sale. A seller doesn’t generally enjoy the profit margins that flippers possess. So, that means the homes that need updates are more often than not sold to flippers.
Last year my database held very few flippers. Not so today.
