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Maybe you need to sell a property to pay off an estate’s debts, or perhaps you’re a real estate investor on the hunt for a bargain. If you’re interested in a probate sale, know that it’s nothing like selling or buying a house the usual way. It involves the courts, legal requirements, and a whole lot of red tape.
Probate sales are sometimes a necessity for heirs, and if you’re a buyer, you can add a property to your portfolio at a fantastic price. Below, our probate funding service explains what to know about probate sales.
What Is a Probate Sale?
A probate sale in real estate is a court-supervised process that involves selling off a decedent’s property when they didn’t have a will. Probate sales are typically required when the decedent’s estate doesn’t have enough liquid assets to pay off debts and creditors.
Once the sale is finished, the court will use the proceeds for debt payment, and then distribute any remaining proceeds to their heirs.
Probate sales are typically held for real estate, but you can liquidate assets of any kind in a probate sale, such as vehicles, jewelry, antiques, etc. For the purposes of this guide, we’ll be discussing real estate probate sales.
Here are a few key differences between probate sales and regular sales:
- Regular real estate sales can take two to three months to complete, while probate sales take longer (usually six to 12 months)
- In a regular sale, the buyer can negotiate repairs. Buyers can’t do this for a probate sale because the property is sold “as-is.”
- Probate sales require executor authorization, while regular sales do not.
- Buyer contingencies aren’t allowed for probate sales.
- The probate sale price must be at least 90% of the property’s appraised value. Regular sales require no minimum price.
Who Can Sell a Probate Property?
Unlike a regular house sale, not just anyone can sell a property in probate. Parties who have the right to sell probate property include:
- The probate court
- The court-appointed administrator or executor
- Heirs who want to sell property that they’ve inherited during probate
Perks and Drawbacks of Probate Sales
Probate sales largely benefit buyers who are looking for a great deal on a property that’s below market value. However, because probate properties are sold as-is, there’s a risk of buying a real fixer-upper that requires very expensive repairs.
Being able to sell a property as-is appeals to sellers. There’s no need to spend thousands on costly repairs and buyer contingencies.
Probate sales can take a long time to complete, however, and there’s a potential for delays if there are any disputes among heirs. Additionally, because the court or executor is responsible for selling the property, sellers may not be able to negotiate the price.
Tips for Sellers
Here’s how to handle your probate sale with finesse:
- Petition the court to start the probate process if you haven’t done so yet.
- Request court approval to sell the home. You will need to provide a selling plan and order an appraisal of the property.
- Maintain the property during the selling process. You’ll also have to continue paying for property insurance and property taxes.
- Hire a real estate agent to help you market and sell the house. Marketing can be tough for as-is probate properties, some of which are in rough condition. A savvy real estate agent can help you present the property in a good light.
- The court may mail a Notice of Proposed Action to heirs outlining the terms of the sale (this is required in certain states, like Texas). If heirs do not object, the sale will proceed.
- If a court hearing is required to finalize the sale, it will occur within 30 to 45 days.
- Close the sale and distribute the funds evenly to all heirs.
Tips for Buyers
Want to buy a probate property? Doing so isn’t like buying a house the usual way, but you could score your dream property for an incredible price. Here’s how to navigate the buying process.
- Search for probate properties online via a real estate auction website or your county probate site. You can also work with a realtor who handles probate property sales. Additionally, you may be able to find probate property listings in your local newspaper.
- Once you’ve found a property you like, order a home inspection. The inspector will survey the property and point out its faults. While probate properties are sold as-is and you can’t ask the seller to make repairs, you can use the inspection to decide whether or not the purchase is worth it to you.
- Compare the price of the property with other homes in the neighborhood to determine whether the house is a good deal.
- Make an offer on the property. The higher your offer, the more likely the court will approve it. Note that other eager buyers might outbid you, and you’re welcome to outbid them as well. It’s not uncommon for there to be bidding wars over a hot property in a probate sale.
- Provide a deposit via cashier’s check. Your deposit must be 10% of the home’s value.
Need an Inheritance Advance? Call Rockpoint Probate Funding
Want to learn more about navigating probate sales? Are you due an inheritance but don’t want to wait for the lengthy probate process to finish? Contact Rockpoint Probate Funding at (888) 263-8588. We also welcome you to read more of our blog to discover what you need to know about probate.
