Insufficient funds in an estate after death to resolve outstanding property issues. Any advice? -

Insufficient funds in an estate after death to resolve outstanding property issues. Any advice?


Has anyone been in, or know of, a situation in which there are insufficient funds after someone's death to address property disposition - cleanup of house and structures on property, etc.?

I'm thinking of a situation in which an extensive cleanup would be required, but there's just not enough money for everything without the named Personal Representative using her personal assets, while a sibling remains noncontributory.

Abandoning the property would be inconsiderate to the neighbors, if not irresponsible. But if the property needs to either be demolished or restored, what other options are there?

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Maggie, are you suggesting borrowing against a potential, anticipated sale? I honestly wasn't aware that was possible for a residential property. I can understand that someone in business might get an operating loan, pledging profits from future sales as collateral but I'm not familiar with this kind of loan for residential property in an estate situation.

I'm intrigued.
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If it were me, I would borrow money from the future disposition of property with the guidance of the attorney being used to assist settlement. I'd also keep meticulous records.
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Thanks, everyone, for your very helpful advice. I appreciate your time and suggestions. And...I'm still digesting it all!

Another thing I want to do is explore the possibilities of finding a veteran's home rehab organization, something like Purple Heart Homes, as I'd like to see someone who could benefit from the very helpful neighbors move in there, if the house isn't demolished.

Thanks again; back in a few days after following up on your leads.
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Try a search on realtor website in your general area. Look at the values of developed and undeveloped lots, especially around your lake area. Take note of if any of the local offerings are "bank owned" or short sale properties. These are usually offered by realtors experienced in offering distressed or "as is" properties. Typically they have clients who are investors and "flippers". It will not cost anything to call a few of these realtors and get their opinion on how much it could be listed for and if they have any investor clients interested. Good luck.
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I'd attempt to:
- a bead on accurate value;
- determination of overall status of estate;
- & hard look at personal financial situation of the executor (& their sense of humor).

For 1 get current tax assessor bill. Get a house inspection done - cost is based on sq footage, so avg house runs about $ 400. Then with inspectors report in hand, get it appraised. Appraiser gets inspectors report. Appraiser about $ 300-600.
If there are deficiencies in some areas - like foundation - then you need to keep this in mind as property unlikely to be able to pass underwriters review so property cannot get a FHA VA bank held mortgage. FHA & VA are like 90% of market so that just leaves cash or conventional. If house is in an area where market is hot (like for me in new Orleans inventory is limited in preferred areas so houses go to bidding wars) that makes a huge difference. Otherwise a Realtor can give details on comps & DOM. Perhaps maggieMarshall can shed some insight on dealing with this from a Realtor perspective??

If its in estate - filed in probate - then likely there has been letters received from the "we buy your house" crowd. They seem to place price on land value then 20/40% of improvements (the house). So 100k maybe 40k. They seem to float money so their " offer" has to be done within a couple of days.

- value of estate...are there claims that will be an issue? Is there anything that will pop up at closing (like MERP)?

- can executor fund all this without jeapordizing their own finances & for how long? House must have taxes paid. If placed on market, must have insurance. A vacant dwelling policy (fire) is pretty costly & has to meet underwriters standards. I got one for my moms house and all had a comma in them for a 6 month period. If house is under 100k tax assessor value it seemed most carriers won't do a vacant dwelling either. Then there is utility & maintenance costs. Could be manageable or not, depends on your purse or wallet. As its in an estate, all this should be costs of the estate & reinbursed to executor. But executor needs to have the funds to front all this & wait for eventual sell.

The sense of humor part, well not everbody can laugh at finding a window shifted down allowing rain in which ruined a large section of flooring....or that estimates for tree removal are all comin in @ 2k.
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The home near us didn't have any maintenance done on it in about 50 years. The wood siding [not vinyl] has been painted just once. The eaves/soffits of this colonial home fell - literally dropped 1-2 feet across the span of the 4-bedroom home. Insulation fibers were windblown all over our yard during a winter, two years ago. The son's solution was to prop up a 6x10 stick of lumber from the lower garage roof to prop up the upper floor. Even summer winds tore more insulation out of the attic. The Dad was placed in an ALF last Nov, since he was no longer able to care for himself and kept falling. [He is now thriving and healthy, eating well, in the ALF. He's socializing, too, and quite happy.]

The son didn't want to put any funds into the home. He just gathered up his sons and a friend, rented a huge trash container and began pitching out what wasn't wanted. It remained in the driveway about 1.5 months [they worked in the winter]. The home sold last month.

The contents that didn't fit into the Dad's new home at ALF were just tossed, except for tools, etc., that others wanted. They gave the rooms a spit-shine of new paint, but that was the sole investment they did to sell. Clean, toss and spit shine.

The son went to a realtor, and it was placed on the market as a fixer-upper. The popularity of the flipper and fixer-upper DIY shows on hgtv and others have made the concept a very appealing venture for investment or starter homes. There was actually a bidding war, 5 bids came in and they went with the highest offer. The new neighbor is quite nice and looking forward to the challenge at hand. [i just can't describe the state of the back yard ... it would sound like fiction.]

Don't despair ... the home will sell. The neighbor's home did have to go through an appraisal [perhaps the buyer was getting a loan?] to ensure that the price was suitable for the property. And that should be your interest, imo ... take care of debts, final expenses, [since the home is an asset, it needs to be sold for creditors, and sell the home if so defined by a will, trust, etc. Only after that, as i understand, are ANY disbursements/inheritances to be released to heirs.

But based on my neighbor's choice, to NOT put any money into the home, it still sold, at a price better than he dreamed possible. [There's even a lot of wood rot under the soffits - looks like the windows are frowning from the weight of the roof]. The front windows don't even open - they've not been opened in 50 years.

So don't be embarrassed - realtors are accustomed to transactions of this nature. My [deceased] brother's home was in such a state, we went over to get a final electric reading to close out the utility service, and oh my ... 5 days of cleaning up what we could, the house still sold for about $30,000 less than fair market value. But that's way less than it would have cost to repair the holes in the wall, etc.

If there is a cost for removing the items, can you do a Garage Sale - or if need be, there are folks/company's who do Estate Sales [for a commission or fee - be sure to get specifics on costs]. Those proceeds should be earmarked for the funds necessary to sell the home. That would hopefully negate your needing to pay anything out of pocket: you must be reimbursed if anything needs to be prepaid. Insist on it. There may not be any funds in the estate remaining for the heirs, but at least you can mitigate your/the estate's costs by selling household goods, etc., [you need cash/funds for taxes, keeping insurance in tact until the home is sold, and you'll need to keep water and electricity on as well.]

Imho, Craigslist is a daring proposition: i've known folks who've really been financially burnt for car purchases, or minor purchases, apartments, etc. For security, i'd personally not want to publicize online or in the newspaper, the fact that the home was empty - invitation for vandalism. It's a lot of hard work to learn how to sell a home yourself, the entire process, and the time consuming requirement to be available to show the property. Realtors are very discreet - and use an interesting mix of internet and networking to get the sales done. Privacy and security are well worth the commission [deducted from the proceeds at closing]. You're in my prayers ~ have Faith that it will sell, and not to worry about your disgruntled sibling. If they're interested in funds, let them put in sweat equity, working together for a garage sale, estate sale. Wouldn't it be a wonder if the chore became a bonding opportunity ~ a re-uniting of sorts, that repairs the relationship. Good luck ~ proceed in Faith, okay?
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GardenArtist, one way to find a Realtor is to go to various Sunday Open Houses and chat with the Realtor... ask him or her about "as is" homes to see what knowledge they may or may not have. You will know when you find the right person, it may take a few Sundays to weed them out. Or look to see who has the most For Sales in the subdivision. Can the property be sub-divided? Selling off one of the lots would give extra cash needed to help with the lot that has the house, to clean it out and get it ready for sale.

Some Realtors have investors who are looking for a house they can get at a reasonable price that they can flip, thus the house would be on the market a short time. Having the house in the Multiple Listing Service will give better coverage, thus other Realtors who know of investors will see the listing the day it is entered. You might have a bidding war :)
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I would invite three or four realtors associated with different companies to inspect the property and do a market analysis. This is done at no charge in my area. Each realtor should present you with some figures showing comparable sales and the pluses and minuses with your property. After you have this info, you can decide whether you want to list the property with any of them or try a "For Sale by Owner". If the real estate market is competitive in your area, the realtors may offer to lower their commission in order to get the listing. In any case, if you decide to list with a realtor, make it a relatively short contract, no more than 60 or 90 days. If it isn't sold during that time, you can move on to the next realtor. I also recommend an "as is" sale to avoid throwing more money and time into a property that may or may not sell for enough to recoup the cost. As for emptying the buildings, talk to auction companies or companies that do clear outs as a business and let them do the work. The reduced stress will be worth it.
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Sorry, I was away from the computer.
What we did was advertise and offer the property at a pubic auction (with a minimum reserve bid), the auctioneer's cut was much less than a typical realtors. It is also very popular here to offer land for sale by tender.
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There definitely is value in the lot because it has lake privileges as well as in a large workshop. The lot is also 2 lots, so it's an oversize lot.

How did you find an "as is" buyer? Were there buildings on the property, or did you have them razed?

Did you advertise directly, such as on Craigs' List? Did you use a realtor? This is what I've been to reach the people who will take a property "as is" and fix it up, if that's the option that has to be chosen.

I don't really want to pay a 6% sales commission to a realtor because the property probably will go just for the value of the land, but I'm not sure if any purchaser would want an offset for demo'ing the buildings.

I'm sure there must be an acceptable, safe avenue for finding these folks, other than signs posted on telephone poles at intersections!

Thanks for responding; it's the kind of information I was seeking.
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