You have a situation where you need to sell real property that’s occupied. The occupant can be a paying tenant or someone that was not authorized to occupy it. In some cases, the occupant is one of the estate’s beneficiaries. The occupant does not want to vacate the property, is unwilling to provide access to the property to show it to prospective buyers, and refuses to allow access to your agent to conduct open houses or any combination of these.
You consult with an eviction attorney, who advises that the eviction process may take at least six months, or more, and there is a cost. The estate or trust does not have the funds to pay for the eviction, or, needs the funds from the sale as soon as possible and can not wait for the duration of the eviction.
What to do?
Owner-occupants won’t purchase a property they have not seen, and, won’t be willing to take on the risks of an eviction and the costs involved. You can, and many agents will advise you just to sell the property occupied. This will require you to sell the property at a substantial discount to an investor. Many agents will tell you they already have investors lined up to purchase such properties, and they do! But will this generate the best and highest value for the estate? Would this be acting in the estate’s best interest? Would you be upholding your fiduciary duty and your commitment to act in the best interest of the estate?
There is another option to consider! You may offer the occupant relocation assistance for vacating the property within a short period of time. I have completed these transactions hundreds of times and developed best practices that motivate the occupant to cooperate with me and leave in a short period, usually two weeks. If the estate doesn’t have the funds available for payment of the relocation assistance, my firm can provide those funds and will obtain reimbursement through escrow once the property has sold.
For more information about this, or other probate real estate related topics, please contact me at 323-606-1919 (call or text).
You have a property to sell and you represent the administrator of the estate. Some of the beneficiaries occupy the property. The occupants have informed you that they will vacate the property just before the close of escrow, but there is no guarantee they will. There is no court order stating that they will.
What to do?
As the listing agent it is your duty to act in the best interest of the seller, and generate the highest possible offer for the estate.
The standard purchase contract indicates the property will be delivered vacant to the buyer. In this case, there is no guarantee that the occupant will vacate the property prior to the close of escrow and leaving the contract as it is, places the seller at risk of being in breach.
Another option some agents may propose is to specify that the property may be delivered occupied, which will make owner-occupant buyers lose interest in the property, as it poses additional risk and cost. The property would most likely be sold to an investor at a substantially lower price.
The strategy that should be used in this scenario is to add a provision to the purchase contract stating that if the occupant does not vacate the property within a specific date, the buyer has the right to cancel the transaction and have their deposit returned.
This provision accomplishes three important goals, it:
- Protects the seller from being in breach of contract.
- Provides the buyer with a level of comfort that should the occupants become non-cooperative and refuse to vacate, the buyer can cancel the transaction and retain the deposit.
- Motivates the occupants, who are beneficiaries of the estate, to vacate the property by the date specified. If they don’t vacate, there’s no sale, and they won’t receive their distributions.
Attracting owner-occupant buyers results in generating the highest possible offer for the estate, and that should be the ultimate goal. Owner-occupant buyers obtain financing most of the time and are willing to pay substantially more than what an investor would pay, thus providing a far greater return for the estate.
For more information about this or other probate real estate related topics, please contact me at 323-606-1919 (call or text).