In Among the Mansions of Eden, last year’s dishy book on Beverly Hills, author David Weddle quotes a real estate agent on how they get their best listings. “The Four D’s: Death, Divorce, Destitution or Disease – that’s how good properties come on the market,” the agent says.
If dealing with death and divorce are mainstays in the residential real estate business (we’ll leave destitution and disease aside for now), brokers say the ways they deal with these emotionally sensitive situations differ widely.
Most brokers say it is much easier to sell an apartment whose previous occupant has died, because they do not have to walk the emotional tightrope that often exists when dealing with a couple whose marriage is ending, forcing them to split what usually is their biggest asset.
Most often in cases of death, heirs want to sell the property, pay the estate taxes and move on with their lives, says Michele Kleier, president of Gumley Haft Kleier.
If the inheritor has plenty of liquid assets, they have time to get as much money for the property as they can, and sales are not rushed.
“Almost all estates are represented by an attorney,” said Stephen Kotler, executive vice president at Douglas Elliman. “They are going to get the highest and best price they can get, unless it was occupied by the same person for 50 years. In some cases if there is cachet to the name of the person that lived there, it may sell for more.”
Occasionally heirs may need to sell quickly to pay the estate taxes, and the situation is more rushed. “We’ve had situations where property was sold off after the spouse died either to cash out or to pay the estate taxes,” said Kotler.
Difficult situations also arise, said Kleier, in the cases of family disputes or when a property is going to a charity.
“Sometimes with a death it can get difficult if the money is going to several heirs who are fighting over money and one doesn’t have money,” says Kleier. “Or one of the heirs may have an emotional attachment and feels it’s worth more than it is.”
“But the most difficult negotiating is when the estate is not going to heirs, but to a charity,” adds Kleier, because they are usually in a position to try and get every last dollar they can.
Brokers must also manage the expectations of a surviving spouse.
“The surviving spouse may not have lived anywhere else for many years and is moving to a much smaller space,” said Kotler. “You have to manage the expectations for what they are going to get now, and I think it’s up to the broker to do that.”
As far as how properties fare on the sales market, properties that have fallen into disrepair during the later stages of the owner’s life and require renovation “frequently move a little more slowly,” said Frederick Peters, president of Warburg Realty Partnership.
For the broker trying to sell a property after a death, apartments “are usually empty, so there is easy access,” he said. “It’s much easier to show it and sell it, as opposed to divorce when it’s difficult to get in.”
Sales spurred by a divorce can be a much more difficult situation to handle, because one side usually has more at stake than the other, especially depending on how contentious the divorce is, said Kotler.
“Some couples are upfront as you walk through, and with others you become aware that there is a divorce or separation situation,” he said. “Even if it is messy and they are not speaking, you still have to make everybody feel very equal.”
“Sometimes they are trying to shield the children as much as possible, so you may be showing the property during school hours when the kids aren’t there,” he added.
Divorces also often create co-exclusive situations, said Peters. “When the property has to be sold and the spouses hate each other, it’s almost certain that each spouse wants a broker and it ends up as co-exclusives,” he said. “The obligation of the co-exclusive brokers is to be on the same page in the advice they are giving and make sure that the apartment isn’t just another weapon in the battle.”
Overall, the percentage of deals generated by death and divorce sales is very small and not a statistic generally tracked by brokers.
“People pay what they are prepared to pay – more if they are excited or less if they feel they are being gouged,” said Peters. “You don’t necessarily know it’s a divorce unless it becomes clear during negotiating.”
“With estate sales it’s usually pretty clear,” added Kleier. “They have the look and the smell and the feel of an estate.”
Kotler said most of his estate sales come to him as a result of referrals. “Business comes through past relationships and attorneys,” he said. “In one recent case I knew the attorney in a relationship that goes back about 10 years, so he came to me with the business.”
The stereotypical example of brokers handing out business cards at funerals is practiced by very few, Peters said.
“It’s a very small percentage of brokers who are insensitive to the grief of family members,” Peters said. “Most are not aggressive enough because they are worried about impinging on the family member.”
“Instead, they let a week go by and write a letter expressing sympathy and offering services to value the apartment or any other way in which to be of help,” he said.
But Kleier came across a situation recently in which the day after a husband’s obituary appeared in the newspaper, the wife got a package from a broker which used information from her husband’s life (he was a fairly well-known person) worded as if the deceased owner was a personal acquaintance, exhorting her to sell because the financial obligation would be too much for someone living alone.
“She was so furious that she wanted to sue the company,” said Kleier.
So how long is a decent interval to wait? Wait too long and you lose the listing, make contact too soon and you look like a vulture.
“If I get a listing, it’s because I know the attorney, by referral or knowing someone from the family,” said Kleier. “In a recent estate sale, I happened to know the attorney, and I was interviewed and they chose me. I have never gotten one by writing a letter. That’s beyond what I am willing to do.”