Serving as an executor is a stressful job that has very few perks. One of the few benefits that an executor or administrator enjoys is the ability to control how and when the estate sells and disperses various assets. When it comes to major assets, such as real estate, you need to take great care in how you handle the sales process.
While you may know people who have an interest in the property, they need to make a fair market offer for any intended purchase. You have a fiduciary duty to the beneficiaries of the estate to maximize the profit that you make when liquidating assets. Choosing to sell estate property at prices below market-rate could result in legal and financial complications for you in the future.
Unless the will gives right of first refusal, selling on the open market is wise
Sometimes, executors have to handle a property that has been in a family for many generations. It can be difficult to think about someone outside of the family inheriting a place with so much history. Many times, people creating last wills and estate plans will include the desires of their family members and heirs in their instructions regarding real estate holdings.
The will could offer someone who currently rents or lives on the property what is known as right of first refusal. In other words, specific family members may have the first option to purchase the property and must decline that right before you can sell.
Typically, this requires that you place a fair market value on the property for an asking price. That family member can then accept that price or make a counter-offer as they would in any real estate transaction.
However, even if it is to a family member, selling real estate at below the fair market value could be a costly mistake. If no one in the family is willing to pay the fair price for the property, listing it open to the public is the best way to maximize the return you get for the property.
Take steps to protect yourself and the buyers
Disposing of real property through estate administration is a long and difficult process, as is true of any real estate transaction. To protect yourself, it would be wise to work with a Pennsylvania real estate attorney. That way, you can avoid making mistakes that could cause problems for you later.
When you receive and accept an offer from a buyer, you should consider including the contingency that they must have a buyer's title policy. It is possible for family members or heirs to later contest the sale of the property. Most of the time, they will not have valid grounds for such action, but sometimes they do. Insisting on a buyer's policy will simply protect the person who purchases the home from any future contention that may occur.