Wow, that hurt.
We spoke over the phone with the executor on this home early on in her executor journey, and we stayed in touch here and there. In those interactions, she seemed open to enlisting our help one day, so we were surprised to learn that she had listed the home with an agent without ever meeting us in person. That led to some internal reflection on our part because we feel in our hearts that our process leads to the best results for estates needing to liquidate real estate – ‘how did we let this happen?’ we wondered.
Fast forward about three months, and we got a call from this somewhat embarrassed executor because the home hadn’t sold. It hadn’t even had one single showing in those three months! She asked us if we’d still be willing to help her.
We arranged to meet at the property.
We met with the executor at the property for our unique Max The Estate™ Consultation. During our get-together, the executor said she’d valued our input and planned to work with us until a close friend told her that she just HAD to go with HER agent friend. We shared our opinion that the former agent had priced the home WAY too high and, compounding that error, the agent obviously hadn’t invested any time or money (or possibly even thought) in preparing and marketing the home. We spoke a bit more and toured the home, and during that time, the executor mentioned how she hadn’t been making any mortgage payments on the house over the past year. We stopped in our tracks – “WHAT?”
It turned out that the executor’s mother had taken out a loan that we’d never seen before – an equity-sharing loan in which the lender gave her money up front, and no payments were required. Sounds great, right? We were curious. It took a few days until the executor could find the underlying paperwork on the loan, and it turned out that the CATCH for the “no payments” was that in return for the investment, the lender got a nearly 50% interest in the property. That meant that when it was sold, they potentially got a LOT of the proceeds – well above and beyond the money they had loaned.
We did some deep digging on the specifics of her particular loan, and the gist was that if the home sold at any higher than a particular number, the loan payoff amount would suddenly jump by over $48,000! Contractually, even one dollar over that particular number would cost the estate $48,000+. That also meant that if the home HAD sold for the aspirational number the former agent had ginned up, it would have cost the estate over $140,000 more in the loan payoff.
With that loan information now in hand, and after explaining the payoff calculations to the executor and her attorney (who was left in shocked disbelief that a loan like this existed), we came up with the specific sales price for the home, and the executor gave us the go-ahead to wrap things up.
Aside from the odd mortgage issue, the home also needed some decluttering and organizing, and our Silvina Foley helped guide that process along. Minor updates were also needed to get a continued certificate of occupancy from the town, and our related renovation company helped with that.
Silvina placed the home on the market using a unique strategy that drove a lot of traffic to the house quickly. She attracted 42 showings and the home sold at the required amount that wouldn’t trigger the payoff increase (saving the estate at least $48,000. Likely even more…)
Thinking back on this we wondered what would have happened if we hadn’t been able to help. The executor would have found out a couple of days before closing that the mortgage payoff was some needlessly astronomical number and she probably wouldn’t have blinked because she’d think ‘that’s just how things are’. She would have paid a contractor or two to help get the house ready for the CO and she would have been doing all of this on her own, with no backup physically or emotionally. And at the end, some average agent would have been at the closing to collect their outsized payday for the few hours of work that they had put in. Personally, we find that disturbing.
More money to the estate. Less hassle to the representative. That’s what we do!