If you’ve followed my newsletters, you know I make strategic updates to a property in order to sell faster at a higher sales price.
This case was different.
The Sunset District house was occupied by an elder whose health was failing. Her husband, who’d been in a nursing home paid by Medi-Cal, had passed and a trustee was appointed to oversee her care.
I was contacted by Lisa Bryant, a San Jose elder law attorney, to handle the sale of the home.
It would be particularly delicate. The home was protected in a trust, and the transaction paperwork had to be just right or Medi-Cal could come after the proceeds.
“This type of case is rare,” says Lisa, “so you need a Realtor who understands the chain of title and how assets are held.”
She cautioned, “The trust must be referenced on the deed, so the assets are protected for the surviving spouse. If we messed up, it could have been financially devastating for the family. That’s why I chose Craig, he has the knowledge and experience.”
The red flag downstairs
While touring the property, I had a sense that the downstairs unit was illegal. A tenant was living there, with a full kitchen. And a separate heat source was a sure sign the unit was an add-on.
I knew this would not fly with the San Francisco Building Department’s very strict rules. If they discover an illegal unit, they ask you to remove it and force you to get a permit to take it down to the studs. If you intend to rebuild, you need a permit for your new plans.
The client didn’t have the money or desire to do that. Usually, if you list the property with an unwarranted unit, most buyers won’t care. But if a neighbor or former tenant reports you to the Building Department, be afraid!
So, I decided to go a different way
Instead of painting, putting in new floors and resurfacing cabinets, then publicizing the home, I quietly looked for someone who would buy the house as-is. Otherwise, we’d run the risk of exposing the downstairs unit and being stuck on the market for months.
The trick was to match the property with the right buyer. In this situation, that meant someone who would occupy it as a single-family home, so the illegal unit wasn’t an issue.
I privately showed the property to prospects until we found a match. We gladly accepted their offer of $100,000 over asking.
The proceeds allowed the wife to move closer to her daughter and leave a legacy for the children, which was her husband’s wish.
Need advice about selling a property with an unwarranted unit? Drop me a note or call my office. I’m happy to advise.