By Karen Sinchak Higby
April 2010
When a person dies, his or her home is often one of the most valuable assets in the estate. In many cases, the home will be sold by the executor, so the cash proceeds of sale can be distributed to the heirs. Until recently, homes could usually be sold in six months or less, especially when the executor was willing to drop the price below the market norm.
Today, the picture has altered dramatically. Because of the downturn in the real estate market, due in part to the number of foreclosures and the inability of prospective buyers to obtain financing, a home can be difficult to sell, even at a substantial price reduction. Executors are finding themselves still sitting on the estate's home after two years or more. Funds must be retained in the estate to cover the ongoing costs associated with the estate home - mortgage expenses, taxes, insurance, maintenance and repairs, etc. Oftentimes, the heirs receive little or nothing until the home can be sold. Worst of all, vacant homes have become targets for vandalism. Appliances, lighting fixtures, even copper plumbing, has been ripped from homes, bringing down the already depressed value even further.
We attorneys who represent executors, find it difficult to advise our clients about how best to deal with these problems. The role of the attorney in counseling his client who is serving as an executor is to make sure the executor meets his fiduciary duty to the heirs of the estate. That can be a difficult task in today's economic environment, especially when there is a vacant home to sell.
One option for the executor is to rent the home until it can be sold. The obvious advantages are that some or most of the expenses can be shifted to the renter and the incidents of vandalism can be reduced or eliminated. Unfortunately, the disadvantages are glaring - finding a qualified renter can be a daunting task and delaying the sale usually makes the heirs more frustrated.
The good news in this dreary picture is a new real estate service which can eliminate most of these problems. An example is Arizona Vacant Home Solutions, LLC. This firm places qualified, temporary home managers (not renters) in a vacant home for whatever period it takes to get the house sold. The home managers are carefully screened; they know in advance that they must be willing to show the home to prospective buyers while they are occupying the home, and that they must be willing to move out on short notice, when the home is sold. During the term of occupancy, Arizona Vacant Home Solutions will pay most of the carrying costs other than debt service. The advantages to the estate are enormous - the home is no longer vacant, it is no longer attractive to vandals, it "shows" better to the prospective purchaser, and the estate's expenses are greatly diminished. Sometimes, the home manager turns into the purchaser. This appears to be a win-win situation. The key to its success is the diligent homework undertaken by the placement firm in identifying qualified home managers. That might mean someone who is new to the city or area and wants a chance to get the feel of a new community before buying into it. Or it might be a high-level executive who is on temporary assignment and prefers a home over a hotel room. Or it might be a person in the process of selling a home elsewhere who has a good income but can't qualify as a buyer until the other home is sold. It seems as if there are a myriad of situations which produce that qualified temporary home manager for a vacant home, frequently with their own furnishings, making this matching of interests work well for both parties. Executors (and also trustees of trusts, who have identical issues with vacant homes) are better able to fulfill their fiduciary duties to the heirs they serve.
Hats off to firms like Arizona Vacant Home Solutions who have had the vision to solve one of the real estate market's toughest problems!
Karen Sinchak Higby, Attorney
SINCHAK & ASSOCIATES. P.C.
8901 E. Pima Center Parkway
Suite 135
Scottsdale, Arizona 85258
Phone: 480-991-8101
Fax: 480-991-7447
khigby@sinchakpc.com
April 2010
When a person dies, his or her home is often one of the most valuable assets in the estate. In many cases, the home will be sold by the executor, so the cash proceeds of sale can be distributed to the heirs. Until recently, homes could usually be sold in six months or less, especially when the executor was willing to drop the price below the market norm.
Today, the picture has altered dramatically. Because of the downturn in the real estate market, due in part to the number of foreclosures and the inability of prospective buyers to obtain financing, a home can be difficult to sell, even at a substantial price reduction. Executors are finding themselves still sitting on the estate's home after two years or more. Funds must be retained in the estate to cover the ongoing costs associated with the estate home - mortgage expenses, taxes, insurance, maintenance and repairs, etc. Oftentimes, the heirs receive little or nothing until the home can be sold. Worst of all, vacant homes have become targets for vandalism. Appliances, lighting fixtures, even copper plumbing, has been ripped from homes, bringing down the already depressed value even further.
We attorneys who represent executors, find it difficult to advise our clients about how best to deal with these problems. The role of the attorney in counseling his client who is serving as an executor is to make sure the executor meets his fiduciary duty to the heirs of the estate. That can be a difficult task in today's economic environment, especially when there is a vacant home to sell.
One option for the executor is to rent the home until it can be sold. The obvious advantages are that some or most of the expenses can be shifted to the renter and the incidents of vandalism can be reduced or eliminated. Unfortunately, the disadvantages are glaring - finding a qualified renter can be a daunting task and delaying the sale usually makes the heirs more frustrated.
The good news in this dreary picture is a new real estate service which can eliminate most of these problems. An example is Arizona Vacant Home Solutions, LLC. This firm places qualified, temporary home managers (not renters) in a vacant home for whatever period it takes to get the house sold. The home managers are carefully screened; they know in advance that they must be willing to show the home to prospective buyers while they are occupying the home, and that they must be willing to move out on short notice, when the home is sold. During the term of occupancy, Arizona Vacant Home Solutions will pay most of the carrying costs other than debt service. The advantages to the estate are enormous - the home is no longer vacant, it is no longer attractive to vandals, it "shows" better to the prospective purchaser, and the estate's expenses are greatly diminished. Sometimes, the home manager turns into the purchaser. This appears to be a win-win situation. The key to its success is the diligent homework undertaken by the placement firm in identifying qualified home managers. That might mean someone who is new to the city or area and wants a chance to get the feel of a new community before buying into it. Or it might be a high-level executive who is on temporary assignment and prefers a home over a hotel room. Or it might be a person in the process of selling a home elsewhere who has a good income but can't qualify as a buyer until the other home is sold. It seems as if there are a myriad of situations which produce that qualified temporary home manager for a vacant home, frequently with their own furnishings, making this matching of interests work well for both parties. Executors (and also trustees of trusts, who have identical issues with vacant homes) are better able to fulfill their fiduciary duties to the heirs they serve.
Hats off to firms like Arizona Vacant Home Solutions who have had the vision to solve one of the real estate market's toughest problems!
Karen Sinchak Higby, Attorney
SINCHAK & ASSOCIATES. P.C.
8901 E. Pima Center Parkway
Suite 135
Scottsdale, Arizona 85258
Phone: 480-991-8101
Fax: 480-991-7447
khigby@sinchakpc.com
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