This article outlines the 6 major alternative approaches personal representatives of estates use for selling real estate that is not going to be kept in the family. (We discuss improved residential property with a house on it, not commercial, nor vacant land.)
If there are tenants or heirs living in the house they will have to be moved out before any sale closes.
There is a trade-off between perceived ease of transacting versus the amount of net proceeds captured. The “simplest” alternatives presented first yield the lowest gains. (The value of the property used as 100% below is the value of an empty, clean, un-repaired, un-remodeled, un-renovated house.)
- Un-Marketed Private Sale. You have already, or soon will, receive communications by mail, phone or email from investors offering to solve your problem quickly with minimum hassle. “Fast cash for your house today. No agent involved. We pay all closing costs. Close fast in as is condition.” These parties offer to significantly simplify your situation very rapidly with minimum bother on your side. The big catch is that they will generally offer between 50 and 65 per cent of the value of the property. And you did not even have to look for them. They find you. We never recommend choosing one of these solutions.
- Privately Marketed Private Sale. You can capture significantly more of the equity in the property if you allow us to privately offer the property to the dozens of investors we work with. Exposing it to more potential buyers will get you better offers. The idea is to gain you enough more equity to more than pay for a reduced brokerage fee. The property can still be sold exactly as is if you so desire. You may gain between 65 and 75 per cent of the value of the property. Although an improvement over #1 this approach is still neither the smartest nor the most popular.
- Publicly Marketed As Is Sale. You can gain much more of the equity if you let us list the property in the regional Multiple LIsting System AS IS with reasonably brokerage fees on the buyer side. This exposes the property to all the buyers and over 20,000 agents in the greater DMV (DC, Maryland, Virginia) area. The property can still be sold AS IS without clearing out, cleaning or repairing a thing. Multiple offers are likely and you may gain 75-90 per cent of the value of the property. The increased sale price due to the broad market exposure more than pays for the brokerage fees. This is the second most popular approach.
- Publicly Marketed Empty, Clean, As Is Sale. This is the most popular approach. We can facilitate and coordinate with you the timely removal of all personal property and simply having the house cleaned. Then it can be sold as is via the MLS as above. Without repairing, remodeling or renovating a thing you will get 90-100 per cent the value of the property. Multiple offers are not uncommon.
- Publicly Marketed Empty, Clean, Minor Repairs and Cosmetic Renovations. This is like #4 except that you repair cost-effective items and update paint and carpet as appropriate. Expensive updates such as kitchen remodels, new roof, new HVAC, new windows would not be covered here. Doing this brings the house to the level of a typical rental property ready for a new tenant and may yield 110-120 per cent of the base value.
- Publicly Marketed Maximum Value Condition. This approach requires the estate investing enough to bring the property to first cabin, maximum value possible, condition (just like a house on HGTV). The property will be professionally staged for maximum market appeal. Unless you are a builder, general contractor, or flipper we do not recommend this approach to most personal representatives. On the upside you may gain 125% or more of the base value. On the down side this lengthens your holding period, and ties up significant funds from the estate. There is the ever-present risk of over-improving and losing money. Given that the personal representative is accountable to both the court and the other heirs for good stewardship of the estate resources we rarely recommend this approach.