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Due Diligence, Keeping Emotions in Check Key When Dealing with Inherited Property

Due Diligence, Keeping Emotions in Check Key When Dealing with Inherited Property

By Gonzalo Berthin and Charles MacAdams

It’s happened to many of us. You suffer the devastating loss of a parent or other loved one and are faced with the disposition or liquidation of their estate, sometimes while you’re still in mourning. As an heir, it’s a period fraught with emotions, and it might be difficult to think clearly. If you’re the executor or executrix of the estate, you have a fiduciary responsibility to ensure everything is handled responsibly and in adherence with the will. And if you wear both hats, it can be a particularly tumultuous time.  

If you’ve inherited a piece of property, you basically have three options:

a)You can live in the property, assuming it is habitable

b)You can put the home on the open real estate market

c)You can sell the property to an investor, who may re-sell it or keep it as a rental property

 

Each has its pros and cons, and what an heir chooses to do will vary based on their particular circumstances, goals and financial priorities. For example, listing the home on the market may involve repairs and renovations, staging/furnishing, hiring a Realtor and all the steps like appraisal and home inspection that go along with it. This could be a great way to cash out, but there’s a myriad of details that need to be managed, especially if the home isn’t immediately salable. And the timeline is unpredictable.

 

Selling to a property investor might be a more practical course for many, but it’s not for everyone. If the property holds a lot of memories, for instance, sentiment might compel you to sell directly to a family that you “trust” to take care of it and make more happy memories. Additionally, you’ll probably sacrifice getting top dollar for the convenience of moving the property quickly, and as-is. But if you decide to go this route, it pays to conduct due diligence and go into the process with eyes wide open, knowing what to expect.

 

Investors, for many obvious reasons, have a different motivation than your average buyer, and not all investors have the same exit strategy.  Some investors are wholesalers, who look to get a property “under contract,” creating an “equitable interest” in it. Once equitable interest is created, the wholesaler will need to look for another buyer, and sell the contract to another investor, thus pocketing the “spread” as profit.

 

A “flipper” will buy and renovate the home, often involving several months of work, before they can re-sell it. The flipper will incur holding costs and carrying costs, which are all factored into the offer. And the third type of investor, called an “investor-landlord” will buy your home, renovate as needed often with contractor-grade materials, then rent the property for cash flow.

 

Regardless of who you’re dealing with, you’ll have to recognize that the offer you get often won’t reflect the retail market value. It’s typically a discounted offer so the investor can realize a reasonable profit on the other end. Again, this might not work for everyone, but if you’re anxious to dispose of the property quickly and with little fuss, this might be the best way.

 

Aside from not worrying about renovations and repairs, selling to an investor means no open houses or showings, so no need to beautify or stage the home. This can be of great benefit if you live in a different state than the inherited property, and typically you wouldn’t have to personally attend the closing either. But maybe most appealingly, you’ll typically receive an offer within 24 hours, and sometimes on the spot. In addition, there are no contingencies, no home inspections, and closing can be fast – well within 30 days – and on your schedule.

 

But with thousands of “investors,” “wholesalers” and “flippers,” there are also possible scammers looking to pray on unsuspecting, often highly motivated sellers, including people who are particularly vulnerable after dealing with the loss of their loved one. Estate administrators should know who they’re dealing with.

 

At minimum, find out if the investor does this full time or part time, and whether they are local to the area. While there’s nothing inherently wrong with a part time investor who buys and sells in areas outside of their own, you’ll want to see an established track record, and some referrals. And you should check for proof of funds and whether they have any complaints with the Better Business Bureau.

 

Some other things to consider:

 

  • Does the company have a physical address? Be wary of an unpublished address or postal box.
  • Do they have a website? Although its easy to create a basic site, a reputable firm will list credentials, names/bios of its principals and partners, contact information and possibly testimonials from real people.
  • How many homes have they bought and sold? The more history they have, the better. That also tells you they know what they’re doing.
  • Does the investor deal with you in a professional manner? Run away if you feel high pressure to sell, if they don’t quickly return your call or e-mail, or if they’re anything less than cordial and respectful. True professionals will be business-like. If you decide not to sell to them, they won’t take it personally and will just move on to another prospective seller.  

 

Selling your inherited property to an investor can reduce stress during a difficult time. It makes a normally complex transaction a much easier one, and can help you move on quickly and with peace of mind, as you won’t be at the mercy of banks, appraisers, home inspectors and buyers who may or may not come through in the end. But like anything else related to an inheritance, it is a personal decision that should be considered carefully. Talk through your options with family members, a trusted financial professional or estate attorney, and others who have been through it. And don’t do anything based on emotion or any external pressure.

 

Gonzalo Berthin and Charles MacAdams are partners in CKS Properties LLC, dba SouthJerseyPropertyBuyer.com, a 14-year-old home investment company headquartered in Cherry Hill, NJ. Find them at www.southjerseypropertybuyer.com.



Sell my house AS IS, Sell my house quickly, Sell my house for cash.Some items you should consider when selling your house to a real estate investor

Sell my house AS IS, Sell my house quickly, Sell my house for cash..

Some items you should consider when selling your house to a real estate investor

Ask yourself:

  • Does the investor understand my situation and my goals?
  • Do I feel comfortable about doing business with this person and his company?
  • Is the company local? Do they understand the local market?
  • Has the investor bought houses before? How many?

Check:

  • Did the investor show up on time to appointment?
  • Did the investor come prepared for the appointment and treated my house and my specific situation with respect?
  • Did the investor inspect my house before he/she made me and offer?
  • Did the investor give me a written offer?
  • Is the offer a true “as is” and “cash offer”
  • Is the investor actually planning to buy the house or just try to sign a contract to wholesale it?
  • Did the investor explain to me some of the numbers about the purchase?
  • Do I feel pressured to sign anything or is the offer a no-obligation offer?
  • Does the investor have an office or just works from his/her car?

Why CKS Properties LLC? (d.b.a. WWW.SOUTHJERSEYPROPERTYBUYER.COM)

  • We take as much time as it takes to understand the sellers situation and goals
  • We are a local company. We understand the local market.
  • We can close as quickly as you like or we can work within your schedule
  • We pay all standard closing costs.
  • We will buy the house “As is”. If you decide not to take anything from the house that is OK. If you want to take some or all your personal belongings, that is also OK.
  • We have purchased over 130 houses in the area.
  • We have been in business for over 10 years.
  • All of our offers are in writing.
  • We value our reputation as profession real estate investors and treat all owners with respect.

Call us for a free, no oblication consultation: 856 520 8343


Company News

Gonzalo Berthin | People on the Move

Gonzalo Berthin and Charles MacAdams, formerly partners in the Philadelphia-area franchise Homevestors, have launched SouthJerseyPropertyBuyer.com more


Charles MacAdams | People on the Move

Gonzalo Berthin and Charles MacAdams, formerly partners in the Philadelphia-area franchise Homevestors, have launched SouthJerseyPropertyBuyer.com more