Wednesday, March 19, 2008

Twists and Turns in Probate and Trust Sales

Fire Sale in Los Angeles

There's a buyer for every property...if the marketing is right

Mrs. Thomas (not her real name) was a neighborhood school teacher. She would walk to school every day and the kids in the neighborhood always made sure that her house was protected, even on Halloween. She was very much cherished by her community and her neighbors were sad to see her move, along with her husband, as they started to age.

We don’t personally know Mrs. Thomas. We were hired by her conservator, under the authority of the court, to sell Mrs. Thomas’s house. The reason for the sale was to assure there would be money to take care of her. With her husband’s death and all her other assets spent, the only resource she had left was her old house in Los Angeles.

We took the listing in October 2007. When we arrived to view the property, there was no way we could miss it. The entire property had been “tagged” by local gang members. Every exterior surface, including the driveway, was covered in paint. When we entered, we found that carpeting, pipes, moldings and even the water heater were missing. What do you suppose we found in the two rental units in the back of the property? Bed rolls, a pillow and personal items belonging to a squatter. The garage was totally filled with trash.

Initially, when viewing the comparable sales in the area, we had thought the property would be worth around $400,000. But after seeing its condition and finding the new tenants, we knew it was worth substantially less.

We knew that this property had to hit the market and cause a big stir. So we decided to list it at the outrageous price of $199,000. Within an hour of the property coming on the market, the phones would not stop ringing. Within four days we received eight offers, all well above the asking price of $199,000.

We were able to get a buyer who would agree to the usual terms (as-is, no contingencies and a 10% deposit) and we also got the buyer to agree that the property might not be in the same, current condition at the close of escrow.

On October 31, 2007, there was a fire at the property and Mrs. Thomas’s house was burnt almost to the ground. We notified the buyer, who agreed to move forward at the same purchase price. However, he wanted the insurance proceeds as well. This was agreed and, at his own expense, the buyer planned to board up the property to protect it from further damage. As his crew started to board up the burnt house, they were approached by local gang members who continued to taunt and threaten them as they tried to protect the house. As a result, the buyer pulled out and asked to cancel his contract.

So once again the property had to go onto the market, but this time we knew we would not get the same amount as before. It went back on the market at $199,000. We received five offers and accepted the highest offer with the clear understanding that there was no way to insure that the property's current condition would be the same at the close of escrow.

When we got the court hearing date, we continued to market the property aggressively to reach all interested buyers so they could come to court and overbid. At the hearing, we had four additional interested buyers and the property was bid up and up. The sale was called and the buyer opened escrow.

The funny thing is, the fire actually helped Mrs. Thomas because she was able to get more money than we ever imagined. This was because the insurance proceeds from the fire did not get transferred to the original buyer but were transferred to Mrs. Thomas. And these funds are tax free. So although her house sold for less than we originally thought, she actually got more in the end.

We wouldn't wish a story like this on any buyer or seller. But because of the court requirements of the conservator sale, and because we were prepared to market the property, whatever its condition, it turned out to be a win for both parties.

There is no reason to work with another agent when it comes to your Probate and Trust Real Estate Needs. The Sanborn Team is dedicated to making sure you and your clients receive the maximum amount possible for a piece of real estate. We never undersell any piece of property.

Call us today to learn more about our services 310-777-2858 or browse our website at