Although many realtors are ethical and honest, it’s no secret that many are not. Here at AgingParents.com, we hear too many sad stories of older adults getting ripped off over the sale of the elder’s residence. One can readily understand how this happens.
An eager realtor hears of a sale opportunity. The elder does need to sell his or her home for a number of legitimate reasons. Among them, to move closer to family in another state, to pay for long term care, and because managing and keeping a household in repair becomes too much for an older adult losing independence. The older adult without a spouse, partner or kids is an especially vulnerable target for a greedy realtor looking only for a commission, not what would benefit the seller.
Here’s a real-life example.
Walter, age 80 has been developing memory loss for some time. He’s a licensed professional with many years of experience. He is single, has no children and no family anywhere nearby. He wants to retire and asks his buddy at work for some help. The buddy is not an honest player. He engages a realtor who is also not on the up and up. The buddy knows full well that Walter is developing dementia and is not clear minded enough to make financial decisions. The buddy collaborates with the realtor to arrange a private sale to a friend of theirs, Briana. She doesn’t have enough to cover a reasonable down payment. She also can’t qualify for a loan due to poor credit. Nonetheless, the sale is arranged by the realtor. He and Walter’s buddy set it up so that Walter is carrying a note for $1M for the sale himself. He has no understanding of this.
The realtor knows that Walter has dementia symptoms and prior to the sale, contacts Walter’s out of state relative, cousin Jack. He tells Jack that Walter should have a successor trustee appointed, as he is impaired. Jack does nothing. So, the realtor, Walter’s buddy and Briana proceed anyway, asking Walter to sign paperwork he does not understand. Walter does what his buddy suggests because he trusts the guy. The home is sold for less than its. market value. Walter gets only a fraction of the sales price in cash. He has no idea that he has been ripped off. Cousin Jack later moves Walter to live closer to the only family Walter has in another state. He shrugs his shoulders at the way the home sale went. Jack puts Walter in assisted living. Walter has funds to pay for it from other sources and that is where he will remain for the rest of his days.
Several people got away with cheating a man out of the full sale price of his valuable home. Those people all benefitted: the realtor, the unqualified buyer, the “buddy”, who is suspected of getting a kickback, and all those who took fees in the real estate transaction. Walter had no one to protect him and ensure that would not be subject to the influence of a dishonest friend. This is a classic case of “undue influence”, as the law calls it. Someone uses a relationship of trust to cause harm to an elder.
The Three Things To Know About Elders Selling Real Estate are these:
- Pay attention! If you have an elder in your life who is alone and has no one watching out for him/her, you can be that person to look over the elder’s business. You need to care enough to do this and you need legal authority, such as becoming the person with Power of Attorney or becoming a successor trustee for the elder.
- Cognitive impairment is a red flag. If you know any elder who is about to sell their home, you want to know if the older person is cognitively impaired as Walter was. It can be obvious. If so, find out whom have they appointed to take responsibility. No cognitively impaired person should enter into financial transactions. If it’s your own aging parent, get involved! Speak to the realtor. Ask questions. Find out who is appointed to help the elder and warn that person. Ripoffs are too easy.
- If an impaired elder has no family involved when real estate sale is contemplated, and they can’t remember appointing anyone to help, steps must be taken. Sometimes they can still appoint someone to have Power of Attorney. Sometimes guardianship (conservatorship in CA) is needed. . Report to Adult Protective Services or to the local district attorney’s office if you are seeing anyone taking advantage of a vulnerable elder. The county may be able to apply for guardianship for the solo elder.