Posted by A well lived in home presents some reselling challenges
Medicaid qualification required selling at tax assessed value (TAV)
A client’s attorney contacted me that their client had to get her home listed for sale in MRIS as soon as possible prior to December 31st. This was due to the asset’s status regarding Medicaid. The home needed to be listed at TAV, no less or more.
I listed it sight unseen and then the following week her son and I had an appointment to get inside, get the keys and get started on cleanup for the sale. He cancelled, so I went on my own, not knowing what to expect and it was bad – worse than I imagined it could be. Another brother and sister-in-law had been living there and they were hoarders, had pets, and never, ever, ever, cleaned – ever. They were there “thinking” about getting their stuff organized to move out. They were very nice and kind of chuckled about the way the place looked. They also had not been paying the rent, nor the condo fee which left it to the other responsible brother to pay.
A week later and they were still “working on it”. They said they would have all their personal belongings out by the next week. Further complicating matters, the home was in Maryland and the rest of the family was in Virginia. In the meantime, I was giving the family updates for which they were appreciative. This went on for several weeks until the responsible brother gave a deadline to clean up and get out. The hoarder brother promptly left and when I say left, he and his wife left and left everything else left in the house.
I was certain I could sell it at this stage, but not at TAV. I was going to get a contractor to front some of the renovation and disposal costs and get it ready to sell. The client had little available money and if she did pay anything I was told it would complicate the Medicaid application for money spent on renovations.
The house was supposed to sell for at least the tax assessed value and, therefore, the MRIS listed price. If the house were in decent shape, the comps were $30,000 over the listed price. In the current condition, it was worth $50,000 less than the listed price which was verified by the first offers coming in. Get the first look as I did from this video link.
The hoarder brother and his wife never came around. The responsible brother came to the house for weeks which turned into months with his wife, kids and a third brother showed up. The cleanup began. They did not want to spend money on an outside vendor and luckily they had the skills to do the work themselves. Over five months’ time, the unit became almost habitable. Doing it on their own, the dedicated son and his wife painted the entire unit. They re-tiled the bathroom and refinished the bathroom vanity. They even chopped up the piano because it was going to cost $300-$400 to haul away and dispose. During those first months, we had many showings once we could walk around the mess. No offers came at TAV.
The unit’s condition at this point was clean and neat. However, the refrigerator, range, dishwasher, clothes washer and dryer had eventually been removed. There was no flooring except in the two bathrooms. The flooring had to be pulled up and the base under the floor needed to be painted and somewhat fumigated due to the previous pet situation.
I held several general open houses and broker’s open houses to attract traffic. At this point in the story, we had a showing that resulted in a full price offer with a $15,000 seller concession. Adding in contractor estimates for finishing the second bathroom and for the renovation of the kitchen plus invoices for appliances, the attorney for the client felt that this would be a very acceptable offer for medicaid qualification purposes and allow the property to be sold at TAV even considering the seller concession. The hard work had paid off.
The last complication was the fact that the unit was previously an MPDU and we had to do an MPDU profit calculation for Montgomery County. I was able to get a document swiftly from the MPDU office indicating that the County waived its right to purchase the property. We went through the profit calculation and the proceeds to the county, about $13,000 would be paid from closing.
Closing was non-eventful and provided a grateful end to this chapter of the family’s story. The family was able to sell a shell of a condo unit at TAV with some cash back to the family. This ten-month adventure turned out successfully for all parties. I would say the success was due to one son’s dedication and an incredible effort to throw away just about everything in the unit and his ability to paint, drywall and tile just enough for a buyer to come in and see the potential for finishing off the unit themselves.
If you are ever faced with a challenge, please contact me. Not everyone has the skills or time that this family had to clear out and clean up the home. I have a network of trusted vendors, from professional organizers to junk haulers, to do the work for any circumstance. But most importantly, you can trust that I have the patience and perseverance to be with you and guide you every step of the way to move you faster.