Selling a House in Probate: Navigating the Legal and Financial Challenges
Typically, selling a property is a reasonably simple agreement between the seller and buyer which allows the transaction to be completed in a fairly quick timeframe. However, this is not the case when selling a house in probate. The process needs lots of patience from all parties involved. This article will highlight the critical information you need to know before selling a house on probate.
So, What Is Probate Property?
When someone dies, the property left behind needs to be distributed as per their instructions in the will. Probate refers to a legal process involving courts to ensure the properties left are shared as per the deceased wishes outlined in the will. Assets in real estate are also part of the probate, and the process is more complex than sharing personal items.
How the real estate assets are handled in probate depends on various factors, more so the stipulations on the will. If the will has clear instructions on who to take over the property, the process is more straightforward. However, if the deceased left no clear instructions on the will, the process might be more complex. For instance, one of the heirs may be looking forward to selling or keeping the property, while lenders may want to sell the house to recover their debts.
If the real estate asset is jointly owned in some states and one of the partners dies, the property doesn’t have to go through the probate process. The surviving owner takes over. However, some states don’t recognize such processes. Thus, it’s essential to understand your state law on properties.
Can a House Be Sold While in Probate?
Yes, the house can be sold, but the sale can only be completed after the court's verdict. This is where the probate process becomes complicated. The house on probate cannot be legally sold until this court process has ensued. However, you’re allowed to sell, market the property on various platforms, get a buyer, and agree on the price. Still, you will have to wait for the probate process to be concluded for you to complete the sale. Your buyer is allowed to look for a mortgage to buy the property, but no transaction or exchange of contracts can happen until the courts give a verdict.
To be on the safe side of the law, always inform your buyers about the status of the property you’re putting on sale. You may even be surprised to find a buyer who’s ready to wait for the probate to be granted.
Selling a House During the Probate Process Can Be a Chore: Here’s How to Make It Easier
There are different ways of selling a house under probate:
1. Real Estate Agent
You can usually sell the house using a real estate agent. Like selling an ordinary house, remember to ask for the agent’s quotation and fees first. Again, don’t forget to inform your agent of the status of the property. The agent will communicate the same to prospective buyers. Generally, this will net the most money.
Putting the probate house on auction could also be a good idea of selling the property. However, most auctioneers follow their standard practice of completing a sale in 28 days. If the auctioneer agrees to be patient with you for longer, the better. Check the auctioneer’s fees as well.
3. Selling to a Cash Buyer
You can sell the property directly to the buyer. You don’t need to hire a real estate agent or auctioneers. This can be the easiest way to sell your probate house. However, the buyer should offer a fixed cash price with ready cash. Inform the buyers that the house is under probate to ensure they are prepared. This ensures transparency and gives the buyer time to prepare and complete the process as soon as probate is granted. The cash sale process is less complicated and quicker than involving a real estate agent or hiring an auctioneer.
4. Selling to a House Flipper
You can also opt to sell the probate property to flippers. House flippers buy dilapidated houses, renovate them, and resale. It could be an excellent option to save you from doing the repairs to turn around the home before selling. In a situation where you don’t have enough money to repair the property, selling it to a house flipper would be a good idea. However, house flippers are only interested in a property if:
- It’s located in a prime area easy to find a buyer
- The property is easy to renovate and resell within a few months
- The property is not a historic asset
- The house has few structural issues that need repair
There Are Typically Issues Involved in a Probate House Sale - Here Are Some of the Most Common
Selling a probate property is quite different from typical real estate sales. The following issues are involved in selling a probate house:
- Sold as-is: Mostly, probate property is sold as it is; no renovations or repairs take place before the sale.
- Legal process: When the deceased left no clear will on how the property will be shared, you might expect a legal tussle that may delay the sale in the future.
- The sale takes longer: Selling a probate property requires patience since the timelines may be longer than expected. It may take months or even years to complete the sale.
- Deposit is required: The probate house buyer should make an offer with a cash deposit. However, the deposit will be included in the down payment after completing the transaction. Mostly, the deposit is capped at 10% of the sale price.
- Jurisdictional issues may be involved that are difficult to navigate.
- Multiple family members in the process can sometimes muddy the waters.
A Few Steps to Follow When Selling a Probate House
Selling a probate property is a complicated process that takes time to be concluded. Here, both the seller and buyer need to be very patient. The probate process looks like a sequential timeline that involves the following:
- The first step is filing the matter to a probate court.
- The court will then appoint a property administrator or executor.
- Now, the administrator will get an appraisal and start setting the house sale price. At times, the price will be determined by the probate court.
- Your probate house is now listed for sale at this stage.
- Buyers start making offers that include a 10% down payment. The down payment is refunded if the buyer fails to win the bid.
- You will present the offer to courts that will decide to accept or reject the offer. Besides, the deceased family members will also get an opportunity to share their opinion on the sale terms on the table. If the parties accept the offer, a court date will be set within 30-40 days to approve the sale formally. During this period, other buyers interested in the property are free to make higher offers.
- The sale confirmation day comes, all interested parties must be present in court. After the court’s pronouncement, probate property is sold to the highest bidder, just like in an auction. The administrator and the buyer will then sign a contract.
- House inspections are done at this point. However, the buyer cannot back out due to inspection reasons.
- The property goes to the closing process.
How Is Money Dispersed During the Probate Process?
Once the sale has been completed, the money is then used to repay any outstanding bills, loans, legacies, or taxes as indicated in the will. The remaining money will then be distributed to the beneficiaries equally. The court may also give further directions if there’s any disagreement on how the cash should be shared.
When Selling a Probate House, Here Are Some Things to Keep In Mind
Various factors need to be considered when selling a probate property. Some of the issues to always pay attention to include:
- Court pronouncements: Failure to follow the court's directions may further complicate the whole process. If you have challenges in understanding or implementing court directives, hire an experienced probate attorney to guide you or follow up on the matter on your behalf.
- The buyer bids: In selling the property, many buyers may place their bids by making the 10% down payment. However, remember the highest bidder is supposed to win the sale. This should be adhered to, and the other buyers who didn’t win the bidding should get their refunds.
- Utility bills: If you have started the process of selling a probate house, make sure some of the utility services such as water, gas, and electricity have stopped. Remember, after the sale, you will have to clear the bills.
- Sell-as-is or not: Although many people prefer selling the probate property as it is, the seller is free to renovate or repair the house. However, this depends on various factors, such as the availability of the money to fund the renovations and the agreement between the beneficiaries.
- Timeframe: Before getting into selling a probate property, you need to be psychologically prepared for a prolonged process. Probate house sales may even take years to be concluded.
Conclusion: Selling a Probate House Involves Extra Steps
Selling a probate house is possible, but due process needs to be followed. It’s wise to seek probate attorney services near you to help you undertake the whole process smoothly. The attorney will advise you, inform you of the progress, and follow up on the matter on your behalf.