This has come up several times over my 20 year Probate Agent history and I have been successful each time just approaching this from a common sense focus an not taking "No" for an answer. So let me explain what happened and how I took some steps which allowed me to earn a big fee on this probate most would have dropped. This is an extreme example of Probate Real Estate deals so don't freak out.
My probate tracking system brought to me an estate (all heirs out of state) who wanted to sell the family home which happened to be in my town and close to my office. They wanted me to bid on it (heir) as in this case the Executor was also the Estate Attorney. In Probate Real Estate this will come up from time to time and you need to know what you are doing. Anyway, the heir (daughter of deceased) asked me to bid, contacted the estate attorney and told him I will need access. I contacted the attorney and he told me his real estate agent would meet me there. KISS OF DEATH! The heir didn't tell me she was listing with anyone but this is usually what happens. Anyway I learned to just keep moving forward so I set the time and showed up. Good Probate Agents keep moving forward folks!
This agent was a big player in town but more of the old school who really was just managing his office and taking care of past clients. Not really a tiger on the hunt in new business but a player just the same. He met me, we exchanged some words (pleasant) and he told me the property appraised at $230K. I made my notes, did my thing and thanked him. I rechecked the file and found the court referee (court jester I call them) had completed the appraisal. I knew this property was worth probably a little more as there was a potential lot split. The problem was also complicated by a developer who purchase the land in the back to build a small 5 house tract and the estate was carrying a note waiting for the construction loan. Anyway when this developer heard the estate had me look at the property and where going to sell he immediately wanted the property as well. Probate Real Estate will bring some crazy situations.
So first we both made offers, mine was $150K and his was $10k more. I was told by the heirs they wanted my $150k and really didn't want to deal with the developer but $10k more was alot to give up. So to confirm my deal I offered to buy the $40K note the estate was carrying for the developer and cash them out. The developer couldn't do it so it cemented my offer. I learned about the note being carried by the appraisal of assets in the file and the heir bringing it up. I knew the construction loan was due in about 3 months so I would only have to carry for a short time.
Now I had to deal with the appraisal as the attorney told us we could not do this based on the appraisal of $230K the lowest the estate could sell would be $207K. I went into the argument the appraisal wasn't needed under the I.A.E.A Probate Law but I was running into a stone wall as attorneys will do. He wasn't moving on the appraisal even though I was right. What I had to do was change the appraisal. So I asked the heirs for a letter explaining how they wanted my offer of $150K and that I had showed them the comps and they still felt good with my offer as it was net to them. I took their letter and wrote one of my own explaining why the appraisal of $230K was wrong based on comps I found, work needed, and other facts and figures. I then sent everything to the court referee (appraiser) who within a week reduced the court appraisal to $180K. This was good as 90% of the $180K was $162K and I still had to add my commission. I charged a $10K commission plus $2k in closing which made the 90% rule price and we moved forward. That is smart Probate Agent101 thinking so remember it. Leave your commission out on your offers for you clients until you have a final net price. If the $150K worked I would have asked then but knowing I have an appraisal issue I used it for add ons once the appraisal came in.
What was the reason the court referee reduced his appraisal. The reason was the information I gave him from the Heirs (letter to reduced), my letter (reasons why) and the comps (lower ones but still relative to an "as is" sale) gave this court referee the "OK" to reduce and the data to back it up. All I did was gave the appraiser a CYA out and it was enough. This is how you handle appraisals in Probate Real Estateif you can't get a deal done over it. Just take the liability off them somehow and you will receive your price most of the time. Remember under the I.A.E.A process we don't need property appraisals but they will show up from time to time.
Funny thing is on top of getting my price, the devolper received his construction loan and paid off the $40K 2nd to the Estate on the other property so I didn't have to cash it out. We sold the subject property to an agent contact of mine who had an investor who wanted to split the lots and build another home which they did about 3 years later. We sold to them for $260K on a $162K purchase and made a ton all in 90 days. The heirs where happy with my price and new it was wholesale plus they had the $40K note cashed and where going to be able to complete the probate process now that the creditors could all be paid. This was Win/Win/Win for everyone.
Think outside the Box.....Probate Agents who know what they are doing are making thousands from this niche. "Six Figure Probate Agent"
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