You've probably all seen the information about how to buy property under market value. Usually they list a bunch of scenarios where the vendor is "distressed" and therefore keen to offload the property fast, regardless of price.
And you've probably noticed the word "Death" on those lists. Heck, I've got it on my list of cheap buying opportunities too!
Deceased estates may be a way to get a good deal on a property. But for a Property Developer, they can be quite challenging to negotiate, leaving you with a brain that hurts, like a zombie has been munching on it.
Let's take a look at how a deceased estate deal is likely to pan out, and how you can make sure you walk away with your brain intact.
To start with, there are likely to be multiple people involved in the deceased estate:
Each one has a slightly different role, and it can take a little while to work out what exactly is going on behind the scenes. But persist, because it's vital you understand the power dynamics in the situation.
Now, it's hardly a new concept for me to say: "Find out who the decision maker is." I say it a lot! You might be dealing with a really helpful agent, for example, but in the end they're not the one signing off on your offer.
So let's look at the 3 different categories and see how their input might affect your negotiation.
The Executor
Essentially, the job of the Executor is to carry out the wishes of the deceased person after their death, which may include selling assets such as their home.
Sometimes the Executor is the family lawyer, or another trusted professional, but it may also be someone trusted within the family circle.
The Executor position certainly has a lot of scope to make decisions about the property sale, and they may even, on the surface, appear to be the main decision maker.
So it's easy to fall into the trap of assuming they're the one you need to get onside in order to get a deal on the property.
But while the Executor may appear to be the decision maker, it's quite possible they're not the true power broker in the equation. That's more likely to be...
The Beneficiaries
If you're lucky, there's only one beneficiary to the estate, as that will make your job a lot easier. Mostly, though, there's more than one, and that's when it starts to get tricky.
Basically, beneficiaries fall into two main categories:
And if you're really lucky, and there's a zombie stalking you, you will have a mix of both categories!
For the first group, they really don't give a proverbial about the price (mostly). All they want is for all this yukky stuff to be over so they can set about rebuilding their lives after their loss.
For the second, it's ALL about price. They see this as their one opportunity to cash in, and they want to get every possible cent they can.
Which means you need to have two very different approaches, depending on which type of beneficiary you're dealing with.
If the beneficiaries are grieving, then it's incredibly important you empathise with them and take your time. Quite frankly, you have to care about what they're going through and be sensitive. In this scenario, faking it probably isn't going to work. You really DO need to care.
It's an extremely difficult time for them, and everything you say is amplified due to their heightened emotional distress. So take some extra time to get to know them, and do your best to help ease their pain.
When the time comes to talk terms, it's going to be about selling fast. Messing about with the sale of the house just reminds them of their loss. So a fair price with quick terms is most likely to get the deal over the line.
With the "greedy kid syndrome" it's all about price. So in that scenario, terms don't matter as much as offering absolute top dollar. Lots of opportunity there for longer settlement, as an example.
Aha, I hear you say, but there's a third category, where you have lots of beneficiaries, some from group 1 and some from group 2. How does that work, given they want such different things?
Well, my best advice to dodge that zombie is to use two offers. Give them both, price or terms, and let them work it out.
The Public Trustee
The third scenario involves a Public Trustee. They might have been given the role of the Executor in the will, or may have become involved because there was no will, or there are no family or friends who can act in the deceased's best interests when they die.
Let me make one thing clear - a Public Trustee has no interest in the outcome of the sale, in regards to price or terms. They just want to get their job done. In fact, in most states the Public Trustee is required to sell the property at auction, regardless of the outcome.
So if you don't want to buy at auction (and despite what you might have heard, these properties don't generally sell at rock bottom prices - they have a reserve), then your only chance to negotiate will be if the property is passed in at auction.
As I said, check the laws in your state as they do vary a bit, but be aware there may not be an opportunity to negotiate a deal that suits you. So the deal needs to stack up as it is, warts and all.
There's definitely a lot of skill required when dealing with deceased estates, otherwise the zombies will have you dodging back and forth and going round in circles, until they get you so disorientated they can finally get their hands on your yummy brain. Multiple beneficiaries with different needs definitely fits this category!
But if you approach the situation with a plan, then determine who are the power brokers making decisions and what their motivations are, you have at least a reasonable chance of escaping with a good deal on your development site.
And you've probably noticed the word "Death" on those lists. Heck, I've got it on my list of cheap buying opportunities too!
Deceased estates may be a way to get a good deal on a property. But for a Property Developer, they can be quite challenging to negotiate, leaving you with a brain that hurts, like a zombie has been munching on it.
Let's take a look at how a deceased estate deal is likely to pan out, and how you can make sure you walk away with your brain intact.
To start with, there are likely to be multiple people involved in the deceased estate:
- beneficiaries (e.g. children)
- executor
- public trustee
Each one has a slightly different role, and it can take a little while to work out what exactly is going on behind the scenes. But persist, because it's vital you understand the power dynamics in the situation.Now, it's hardly a new concept for me to say: "Find out who the decision maker is." I say it a lot! You might be dealing with a really helpful agent, for example, but in the end they're not the one signing off on your offer.
So let's look at the 3 different categories and see how their input might affect your negotiation.
The Executor
Essentially, the job of the Executor is to carry out the wishes of the deceased person after their death, which may include selling assets such as their home.
Sometimes the Executor is the family lawyer, or another trusted professional, but it may also be someone trusted within the family circle.
The Executor position certainly has a lot of scope to make decisions about the property sale, and they may even, on the surface, appear to be the main decision maker.
So it's easy to fall into the trap of assuming they're the one you need to get onside in order to get a deal on the property.
But while the Executor may appear to be the decision maker, it's quite possible they're not the true power broker in the equation. That's more likely to be...
The Beneficiaries
If you're lucky, there's only one beneficiary to the estate, as that will make your job a lot easier. Mostly, though, there's more than one, and that's when it starts to get tricky.
Basically, beneficiaries fall into two main categories:
- They're grieving, trying to process their feelings, and just want to move on.
- They’re suffering from greedy kids syndrome
And if you're really lucky, and there's a zombie stalking you, you will have a mix of both categories!
For the first group, they really don't give a proverbial about the price (mostly). All they want is for all this yukky stuff to be over so they can set about rebuilding their lives after their loss.
For the second, it's ALL about price. They see this as their one opportunity to cash in, and they want to get every possible cent they can.
Which means you need to have two very different approaches, depending on which type of beneficiary you're dealing with.
If the beneficiaries are grieving, then it's incredibly important you empathise with them and take your time. Quite frankly, you have to care about what they're going through and be sensitive. In this scenario, faking it probably isn't going to work. You really DO need to care.
It's an extremely difficult time for them, and everything you say is amplified due to their heightened emotional distress. So take some extra time to get to know them, and do your best to help ease their pain.
When the time comes to talk terms, it's going to be about selling fast. Messing about with the sale of the house just reminds them of their loss. So a fair price with quick terms is most likely to get the deal over the line.With the "greedy kid syndrome" it's all about price. So in that scenario, terms don't matter as much as offering absolute top dollar. Lots of opportunity there for longer settlement, as an example.
Aha, I hear you say, but there's a third category, where you have lots of beneficiaries, some from group 1 and some from group 2. How does that work, given they want such different things?
Well, my best advice to dodge that zombie is to use two offers. Give them both, price or terms, and let them work it out.
The Public Trustee
The third scenario involves a Public Trustee. They might have been given the role of the Executor in the will, or may have become involved because there was no will, or there are no family or friends who can act in the deceased's best interests when they die.
Let me make one thing clear - a Public Trustee has no interest in the outcome of the sale, in regards to price or terms. They just want to get their job done. In fact, in most states the Public Trustee is required to sell the property at auction, regardless of the outcome.
So if you don't want to buy at auction (and despite what you might have heard, these properties don't generally sell at rock bottom prices - they have a reserve), then your only chance to negotiate will be if the property is passed in at auction.
As I said, check the laws in your state as they do vary a bit, but be aware there may not be an opportunity to negotiate a deal that suits you. So the deal needs to stack up as it is, warts and all.
There's definitely a lot of skill required when dealing with deceased estates, otherwise the zombies will have you dodging back and forth and going round in circles, until they get you so disorientated they can finally get their hands on your yummy brain. Multiple beneficiaries with different needs definitely fits this category!
But if you approach the situation with a plan, then determine who are the power brokers making decisions and what their motivations are, you have at least a reasonable chance of escaping with a good deal on your development site.
