Estate sale?

[PhiloFarnsworth]

I have a comp that the MLS characterizes as a typical sale; everything about it confirmed that until, in speaking to the buyer's broker I found that the actual seller did not live in the home. He was the son of the owner who the broker believes was deceased recently. While the time on market and the history of the sale suggest a typical marketing and market price, of all my comps, it appears to adjust out as the lowest value of all the neighborhood comps.
I have explained what I found from the conversation with the broker and used this info to justify putting less weight on this sale. The affect of this weighting is minimal, but it does explain the lower sale price for this comp.
I believe that this is an arm's length sale. It is not technically an estate sale where an executor or lawyer sell the dwelling. However, there appears to be some affect on the motivation of these particular sellers, but within typical ranges. I plan to give all due explanation to my reasoning in the addendum. There are too few comps in the area and this is too good a comp, given all other characterisitcs not to use one way or the other.
My question is: Should I use the UAD specification of Estate sale or Arm's length sale in the grid?

 

[Mr Rex]

How did the son sell if he was not the executor of the estate?

 

[Mark K]

Estate Sale.

The son was likely the executor but even if the property had been transferred to the son at an earlier date with the father retaining a Life Estate or some other occupancy arrangement, it is effectively an estate sale.

Most of these sales tend to be at the lower end of the range but if they are in good condition at the time of sale, they are reasonable comps.

 

[Calvin the Airedale]

The explanation you've given makes this an estate sale. That doesn't mean it isn't a good arm's length indicator. Presumably, heirs and executors are also trying to maximize their economic outcomes. If the sale was adequately marketed I would not be afraid to use it as a comp.

IME, one of the most important features of such homes are the condition and decorating. Estate housing often has dated interior decor and fewer mechanical updates than housing being sold of with more normal motivations. These factors are often a larger influence than any suspect seller motivations.

 

[PhiloFarnsworth]

So, if I understand you correctly, I want to use the Estate sale UAD designation. Given that the alternative "arm's length sale" UAD implies that any estate sale is NOT an arm's length sale is one more reason to rework UAD.

 

[J Grant]

UAD has a sep category for what "non arms length"...the problem with UAD is it defines what most think of as regular owner sales as "arms length", then has the other categories, but does not mean they are not al since non AL has its own drop down fill in....

 

[Mr Rex]

So, if I understand you correctly, I want to use the Estate sale UAD designation. Given that the alternative "arm's length sale" UAD implies that any estate sale is NOT an arm's length sale is one more reason to rework UAD.

The reason there is a separate category for estate sales is there typically is less motivation than a true arms length sale. The reason this is the low sale in the search is that the son was inclined to take less than he would if it had been his primary residence. What did he have to lose compared to a typical owner occupant sale? He simply wanted to cash out his family's assets.

 

[Restrain]

what we have seen is that "estate" properties generally need work. The carpet is worn, paint is worn, appliances dated, no updates, etc. The person just lived in it, doing the minimal repairs. That is usually the differential, not the fact that an "estate" is selling it. If you look at it that way, and adjust accordingly, you'll probably be OK

 

[Joyce Potts]

No, deceased people, their estates, heirs and the attorney's seeking their 3% of the probated assets have different motivations. They don't fit the definition of FAIR MARKET VALUE. Deceased is about as distressed as it gets. The heirs don't want their fair share. The attorneys certainly dont' want theirs. Right?!

This is why the General Purpose form that I use does NOT provide a definition of Market Value but requires the appraiser, analyst or form monkey to actually do some research, perhaps above and beyond USPAP (hint: IRS) and provide the definition within his report. Oh horrors, you mean the pre-printed definition isn't in there so I argue about its interpretation?

 

[mark hurlock]

I have a comp that the MLS characterizes as a typical sale; everything about it confirmed that until, in speaking to the buyer's broker I found that the actual seller did not live in the home. He was the son of the owner who the broker believes was deceased recently. While the time on market and the history of the sale suggest a typical marketing and market price, of all my comps, it appears to adjust out as the lowest value of all the neighborhood comps.
I have explained what I found from the conversation with the broker and used this info to justify putting less weight on this sale. The affect of this weighting is minimal, but it does explain the lower sale price for this comp.
I believe that this is an arm's length sale. It is not technically an estate sale where an executor or lawyer sell the dwelling. However, there appears to be some affect on the motivation of these particular sellers, but within typical ranges. I plan to give all due explanation to my reasoning in the addendum. There are too few comps in the area and this is too good a comp, given all other characterisitcs not to use one way or the other.
My question is: Should I use the UAD specification of Estate sale or Arm's length sale in the grid?

The definition of an estate sale is the disposition of a substantial portion of a person's assets.
Death is not a determining factor. A person could be moving or become incapacitated.
In my opinion, the normal disposition of ones assets is an arms length transaction.

If you have evidence the sale was under undue influence, then it is not arms length.

Being in a position to sell your assets is not undue influence.

An example of an estate under undue influence might be one of no cash assets to pay debts.

I have seen many estates take years to sell because the heirs did not need the money. They were not unduly influenced by anything.

There could be other reasons the sale sold for less, lack of remodeling, “as is condition”. Buyers low ball unoccupied sales, especially with oversupply of inventory.

The seller may simply be in a position to accept less to be competitive. That doesn't make them desperate.