The death of a loved one is never easy to deal with. But it becomes even more complicated when there is a probate process involved. The probate process begins when a member of the family passes away and they have real estate and other properties to distribute. The property goes into the management of the probate court, especially when there is no appointed heir. If you want to know about selling a property that needs to go through probate, this guide is for you. You will learn everything you need to know to make this process easier to handle on your end.
A probate property is any property that is owned by someone who recently passed away. This asset needs to be transferred which automatically puts the property in probate status.
If there is no direct heir of the deceased individual, the right to that property is automatically awarded to a probate court. The court will be responsible for deciding how to distribute the assets, including the property of the deceased.
The short answer is no. You won’t be able to sell a property that needs to go through probate. The probate must be granted first before you can execute a sale on that property.
However, it does not mean that it can’t be sold at all. The court has the right to sell the property while on probate. No one, not even the family members or relatives of the deceased individual, have the right to sell the home on behalf of the deceased person.
There is nothing that would limit you from putting that property on the market though. It is important that you add this detail to your listing, that way, the buyer can decide if they want to wait until the probate is granted or not.
The entire process can take anywhere from 6 to 8 weeks. But for more complex cases, it can take longer than that.
There are different processes and steps that you need to fulfill before you can get started on the probate sales process. Make sure you check with your local government about how this works. However, in most case, the court will be the one to assign an executor for the will, or an administrator if the deceased individual has no will.
One of the initial steps taken by the administrator is to determine if the deceased individual has legitimate creditors. If there are any existing creditors, the first task is to liquidate the properties and assets of the individual to pay the creditors. An appraisal will be done on the property to determine its market value to pay the creditors through the liquidation process.
A petition will be submitted to the court seeking its permission to sell the home, especially if a buyer has already made an offer on the property. If there are no objections from the court or the family members of the deceased, then the sale can go on.
A bidding process will ensue in the event that there is more than one interested buyer for the probate property. As always, the highest bidder earns the right to buy the property. The winning bidder must provide a check for the value of at least 10% of the price they bid on the home.
Before you decide to sell a home that needs to go through probate, it is important to know the benefits and potential drawbacks of this transaction. This will help inform you and your future buyer about the process ahead so you can both be on the same page.
Pros
Probate properties typically sell for a much reduced price than similar properties in the area. Because of this, probate properties are an excellent option for investors. They can buy the property “as is” and then fix it up to be sold at a much higher price for a profit gain.
It is the best route for property investors looking to scoop up a bargain.
Cons
While there are benefits to buying a probate property, there are also added risks that buyers need to be aware of. One of the most difficult aspects of buying a probate property is that it takes a long time to assume ownership. It takes about a year until the buyer is able to close on the home, even if your offer has been accepted. This is due to the legalities involved in the process to make sure there are no objections or disputes with the family members of the deceased, among other things.
Another downside to buying a probate property is the lack of opportunity to request repairs. These properties are sold “as is,” so the buyer will have to shoulder any repairs. This can be daunting because the full status of the home is not disclosed by the time of the sale. Hence, buyers might not even be aware of the extent of the repairs needed until they have bought the home.
And this is not the only added expense that you must account for when buying a probate property. You must also consider the costs involved with hiring a specialized real estate agent or probate attorney to guide you through the process.
Given the potential downsides to buying a home in probate, you need to think smart when selling a property that needs to go through a probate. One option is to market the property to house flippers. There are many flippers who buy houses in dire conditions to do their own renovations before selling the home. These would be your ideal buyer for this type of property since they won’t be able to conduct any inspections prior to the sale or bidding.
It is also recommended that you target cash buyers when selling this type of property. There are added complications involved when working with a lender to finance the home purchase. Since the appraisal of this type of property is considerably lower than other properties on the market, buyers could end up paying money out of their own pocket to shoulder the difference between the appraised value of the home and the offer made by the buyer for the home.