Found a gem while driving for dollars, what do I do next?

Question

Hi! I was driving for dollars today in a neighborhood in the Bay Area that is pretty expensive and well kept so when I saw the shape this property was in, I was shocked. I did some research and found that a man in his 80s lives in the property by himself. He has children but it looks like they're all out of state. What's your advice in how I should approach this situation? I'm interested in reaching out to see if he's willing to sell but I want to navigate that conversation carefully and know what to offer him so that it's a fair deal for both parties. Any advice is greatly appreciated!! Thank you in advance!

Frank Chin · Answer

I gone through experiences with my parents, who lived in the property in NYC since 1948 as renters, then purchased it in 1963 for $25K, and due to the explosive growth of real estate prices here had been constantly contacted since the 1980's when the property was worth $250K. They passed a few years ago when the property was finally sold for $1.1 million.

The property was built in 1890, needed new siding to look decent, but otherwise in good shape. We just finalized our mom in law's estate a year ago since her passing, as well as my mom back in 2015, and it takes quite a while to go through an estate for someone who lived there for years.

My dad was tempted to sell back in the 1980's when he retired. and couldn't believe the property went up ten-fold and was tempted to sell. After speaking to him, told him he would have to pay capital gains, find another property even more expensive to buy, and likely higher property taxes or find a place to rent particularly if he wants to stay in the neighborhood where he knows everyone. Problem with renting is you can't predict how long you live. Turned out my parents lived for another 30 years since they were first tempted to sell. Selling a property for $250K in the 1980's, paying capital gains, rent a place which is what they were thinking in hindsight, the money won't last for 30 years. But staying where they are, collecting some rent that covers their expenses, lower property taxes because they've been there so long is their saving grave.

These are the issues facing our parents.

We are currently doing some estate planning ourselves and placed our property in land trusts, and long term probably an irrevocable trust. So someone approaching us about selling our home would have to confront these issues. Furthermore, we lived here for years, though we thought of moving to a warmer climate, we would rather stay where we are for a while, enjoy ourselves, travelling, instead of cleaning up our house and have a flipper make a few bucks.

From where I am, these are the issues facing potential sellers when you speak to them. You'll have better luck where property is in probate. We sold our mom in law's property in probate after spending six months clearing out the place and fixing it. In her final years, we held on to her property, vacant, because she believes she'll get well someday and want to move back there. She was against moving to a nursing home so all of us kids took turns taking her in and taking care of her.

Jason Hsiao · Answer

Establish contact somehow and try to build rapport first @Elisa Ting. This can be through direct mail, try to find his phone number if possible, I'd say go knock on his doors but with COVID it might not be a good idea now.

I might not even bring up real estate in that first conversation. Just talk about how long they've lived there, how much the neighborhood has changed, and bring up when appropriate what his future plans are or what he plans to do w/ the property and figure out how to help him.

They don't always want to sell or ready to sell. No need to be pushy, simply ask if they wouldn't mind giving you a call if anything were to change.