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
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.
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.