Anyone who combs the real estate listings of NYC for long enough is sure to eventually come across the words “estate sale.” This can be a very interesting segment of the market. It presents buyers with the chance to pick up one-of-a-kind apartments that you’ll find nowhere else. But what will attract some buyers to estate sales will put others off.
Here’s our guide to making sense of them.
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What is an estate sale?
The phrase estate sale usually refers to the sale of the contents of a property. However, in NYC, especially among real estate brokers, the term means a property whose original owner has passed away. You can usually spot them on listings which describe the property as being sold in estate condition. This is a polite way of saying that nothing may have been updated and it may need renovations.
What are the pros and cons of an estate sale for buyers?
Depending on how you look at it, estate sales can either be good or bad. Some buyers find it creepy to live in a residence whose former occupant has recently died. Personal effects and their furnishing style will still be in place, making it feel like something of a mausoleum.
Other buyers though find such residences enchanting. A testament to a long and well-lived life. But one thing that definitely scares people about estate sales is their high prices. Sellers may be motivated to sell the property quickly and avoid taxes but they’re usually not desperate. Some of these properties haven’t been renovated in decades. If major renovations are needed, such as plumbing and electrical wiring, a low asking price can quickly look less appealing.
Estate sales also come with an added layer of complexity. The broker handling the estate sale needs to be knowledgeable of the complexities of probate. Adding to that, they’ll need to be able to deal tactfully with still-grieving relatives. It often happens that these transactions involve multiple executors. Not all of whom may be in the same state or fully agree on how to handle the sale. This can sometimes lead to the sale dragging out as emotions become involved and can even lead to the whole deal falling through. All this so needs to be taken into consideration when dealing with estate sales.
How to handle an estate sale for sellers
For an estate sale to move forward an executor must be appointed. The first step in the process, on the passing of the deceased, is for the family members to take out a death certificate. If a Will has been left this needs to be presented at the probate court where its authenticity will be determined. Once deemed authentic the person appointed as the executor of the Will shall become responsible for managing the property and executing the plan laid out in the will.
If no will has been left behind the court will appoint someone as the administrator of the estate. It’s not a requirement that the executor or administrator be a family member and you’ll sometimes see lawyers appointed.
Federal and NY estate tax liens on closing
It’s highly recommended that you request and receive a lien from the NYS Department of Finance will in advance of closing. This will mean both federal and NY estate taxes or else the buyer could find themselves stuck with having to pay any estate tax owed.
Why speed is important with estate sales
Ideally, an estate sale should be carried out as soon as possible. If done within a year of death the IRS typically assumes that the sale price is the full market value for the calculation of the estate tax. If done a year after death an appraisal will need to be carried out to establish the value of the property on death, something called a date of death appraisal.