Editor’s Note: The Playbook is an RISMedia biweekly segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every other Thursday for another addition to the series.
As so-called “discretionary” housing transactions have fallen against the backdrop of rising mortgage rates and an uncertain economy, agents need to look at the kinds of sales that are still taking place. As morbid as it might sound, people are always dying. When that happens, the owner’s home often ends up on the market.
Probate transactions—either from the buyer or seller side—are complex, unique and potentially treacherous. Besides having to understand and adhere to a new set of legal guardrails, you will likely be navigating intense emotions and interpersonal conflicts from the seller(s). And you likely won’t be looking at a property in its best state for a sale.
But none of this means you can’t consistently find success in probate, according to Sophia Delacotte, an agent affiliated with Compass working in the San Jose, California, region. Delacotte tells RISMedia that she has specialized for years in probate, and has developed guidelines that she says will avoid the worst “sh**shows” that arise from these transactions.
“The thing is, a lot of agents are like, ‘You want to sell your house. Sure. When can I swing by?’ Here we go. We do the listing presentation, we sign,” Delacotte describes. “I’ve seen that many times…if you have a probate, you have to contact the lawyer who is in charge of the estate, you might need some documents. That’s the beginning.”
The complexities of every state’s legal system—and the specific legal matters arising from any individual probate—can vary widely. But if you want to avoid things like an elder abuse lawsuit or 14 months on the MLS, you must understand the basics—and always tread carefully, Delacotte says.
Do your own research
It happens more often than it should. Someone approaches a real estate agent and says their mother, grandmother, grandfather or other family member is “incapacitated,” and tries to sign a listing agreement with them.
“You need to check the owner of record. You do not deal with the daughter, the cousin, the grandmother, the housekeeper,” she urges.
There are some cases, that Delacotte refers to as “pre-mortem,” where a family may begin the process of a home and estate sale when a family member is sick or losing mental capacity. Those are also very tricky, but the same rule applies—make sure you are dealing with the person legally entitled to make decisions about the home, and be extra careful in cases where the owner seems to be making less rational decisions.
Delacotte says there was a case a few years ago where an agent sold a home for an elderly woman, despite the fact the woman had nowhere else to live. That agent should have “connected the dots,” Delacotte says.
“Especially with the elderly, that’s the thing. You want to sit face to face with people. I refuse to talk to only (family members),” she says. “Even if the trust says that if your mom is incapacitated, you can sell the house, you need the documents. It’s as simple as that.”
Expand your presentation
Once you have a bonafide probate sale—having spoken directly to the legally authorized owner as well as the lawyer overseeing the estate (who Delacotte says she always “keeps in the loop”)—then you can start “phase one” with your listing presentation. And to avoid potentially messy situations, it is vital to be very thorough, and also to include everyone who is even tangentially involved in the process.
“We’re going to put everyone on a call. All the beneficiaries…and I’m going to do the listing presentation for you, Mr. and Mrs. Legally Appointed Persons, but also to the beneficiaries. You have to have them understand how it works,” Delacotte claims.
Sometimes that is as many as 17 people, all with a stake—both financial and personal—in the outcome of the sale. Delacotte says her goals are to prepare people for the process so there are no surprises, and also help instill trust in the overall system—letting them know they all have legal rights and that a court is supervising to make sure no one will “screw them” out of their inheritance.
A very important point to address early on is pricing. With probate sales, Delacotte argues the best offer on a house is not, in fact, the biggest number.
“That’s a mistake…people say, ‘Oh yeah, let’s take the highest one. Yeah, my commission’s going to be higher.’ Well, no,” she says.
The court must also approve the buyer’s offer, not just the person appointed to sell the house. And any issues that come from an appraisal and appraisal contingencies can very quickly end up in court, which takes the house off the market for months.
Delacotte says that a savvy buyer’s agent can use that leverage to drive the price down. So the best offer for everyone will be the “safest”—and ensuring that everyone understands this from the get-go will avoid huge conflicts later on.
That can be a difficult pill to swallow, but once people comprehend the risks, and have some time to ruminate, it is much easier to get everyone on board.
Delacotte adds that it is also very important to make yourself available to answer questions from beneficiaries after any larger group meeting, as people are often hesitant to ask questions in front of their family members or when they are thinking of a lost loved one, but are more comfortable later in a one-on-one situation.
“You move their brains to understanding,” she says.
The big close
Delacotte says she is able to close probate sales in the same amount of time as any other home sale. All it takes is having a process, and paying attention to the details—even though there will likely be more of these.
“One, two, three, one, two, three—it’s like when I took classical ballet. It’s as simple as that,” she says.
A detailed transaction timeline with regular check-ins helps both sides, just like in any other sale.
Another potential pitfall, though, is the buyer’s agent. Delacotte says finding out whether that person has experience in probate transactions allows her to better navigate that whole aspect of the sale—knowing whether to send more reminders about deadlines, for instance, or provide any special forms that are required.
“That’s my third phase. It’s pretty much making sure that the buyer’s agent and the buyers are doing everything they must do to allow the title company to close the deal,” she laughs.
If you effectively prepared your sellers, though, this part is likely not as difficult—though Delacotte warns that slacking off carries much greater risks, since the entire process is more involved, whatever the scenario.
Again, it is all about preparation—making sure no one is surprised, and everyone is on board well before the actual decisions have to be made.
“The key to a cool transaction is make sure they got it. Make sure they understand at the beginning—at the beginning, not as it goes,” Delacotte emphasizes. “If you explain (something to the clients) two or three weeks before, then you say, ‘Hey guys, you remember—this is the perfect example of what we were talking about. Let me walk you through that again.’”
Key takeaways:
-Probate sales are legally fraught—only deal with authorized people, and make sure you see documentation yourself.
-Include anyone who has a stake in the transaction, and make sure to loop in lawyers.
-Make sure you go through expectations with everyone as soon as possible—particularly around pricing.
-Advocate for offers that are safest rather than highest, to avoid a drawn-out court process.
-Be extra vigilant to ensure buyers understand the process and are meeting deadlines.
