Because every estate sale is different, generalizations are risky. But based on conversations with buyers, sellers, and especially brokers, here is a guide to some of the things worth knowing about this fascinating world.
What Exactly Is an Estate Sale?
Especially outside of New York, the phrase often refers to the sale of the contents of a residence — kind of like a high-end garage sale. But in Manhattan real estate circles, the term refers to a property that has come onto the market because the occupant(s) has died. When the person dies, the house or apartment is offered for sale by the estate, usually siblings or children.
Sounds Morbid, No?
Certain potential buyers find it creepy to visit a residence whose occupant has recently died, occasionally on those very premises. Unopened mail may lie on a table; a desk may have sat untouched for months. Some buyers refuse to set foot in an apartment that they perceive as linked to a death.
Other buyers find such premises endearing, a testament to a long life well-lived, and are enchanted with furnishings and décor that attest to such lives.
Are Estate Sales More Complicated Than Other Real Estate Transactions?
Sometimes, which is why brokers like Richard Babeck and the Karp-Dagan Team at Compass specialize in such sales. Brokers handling estate sales have to be knowledgeable about the intricacies of probate. They also have to be able to deal tactfully with still-grieving relatives.
Such transactions often involve multiple executors, who may not be in the same state or, more importantly, on the same page when it comes to issues like pricing and how to dispose of the contents of a house or an apartment.
Clearing out room after room filled with decades’ worth of accumulated stuff, ranging from the priceless to the trash-worthy, adds yet another layer of complexity. The recently launched, Compass Concierge program provides Executors with the financial means and strategic relationships with vendors to facilitate a timely and cost-effective cleanout of the apartment. We found that this is a critical point in the listing process. In an ideal scenario, you want to have the apartment “market-ready” to limit the amount a buyer will discount from the listing price when submitting an offer.
Important note: If you are going to be selling an estate where there are more debts than assets, this is what’s called being insolvent. If this is your situation it is important not to pay any debts you don’t have to—state law will set out a priority list for you to follow. If you pay some low-priority creditors, you could find you are personally liable for the amount you shouldn’t have paid out
What Are the Advantages?
A buyer can sometimes obtain a spectacular property without having to pay for someone else’s costly renovation. Especially for buyers eager to put their own imprint on space and imaginative enough to see past clutter, vintage appliances, carpeting, dingy wallpaper, and tiny rooms, estate sales can offer a temptingly blank canvas for the right buyer who is ready, willing, and able to do the work. It's an opportunity to get a slice of Manhattan living and make it your own.
They also like a motivated seller, and for various financial and legal reasons, sellers of an estate often try to dispose of a property as quickly as possible.
Are There Less Estate Sales These Days, Thanks to the Weakening Market?
Not really. “People die when they die.” And an estate generally is not able to hold off listing an apartment in the hopes of a better market. When someone dies, a clock starts ticking. There are taxes to pay. Expenses like maintenance, utilities, and insurance can add up fast.
Sellers don’t have the luxury of waiting to see if the market heats up. Generally, everyone involved has an incentive to get the estate settled as quickly as possible.
So if Time Is of the Essence, Do Estate Sales Equal Bargains?
It depends. If an Estate has sufficient resources, it may continue to pay for the upkeep of the apartment and maintain ownership until the right buyer comes along and can offer them an amount closer to what they are looking for. It's not necessarily a fire sale situation.
And while the Estate may want to dispose of the property quickly, some of these residences haven’t been renovated in decades. Even if the sale price seems reasonable, brokers caution buyers against underestimating the cost of major improvements like new wiring (to plug in all those computers) and upgraded plumbing.
When Looking Through Listings, How Do You Recognize an Estate Sale?
It can be tricky.
Some brokers identify estate sales clearly. Potential buyers learn to read between the lines, to recognize tip-off phrases like “rarely available,” or virtually staged photos with before and after shots.
A well-written description can also tip off whether or not the apartment is an Estate sale or not.
If You’re the Seller, How Should You Handle the Staging Issue?
With an estate sale, staging can range from a complete renovation to simply painting the walls white. With technology where it is today, specifically in the virtual staging world, you can make the apartment look and feel any way you would like. In fact, depending on the apartment you may want to virtually stage an apartment with a few different looks so it can appeal to buyers that range from traditional all the way to modern.