Selling a house in probate can seem like an intimidating and frustrating process. It’s certainly not a simple and one that can cause strain on a family, but with a little bit of knowledge it can go a lot smoother and easier.
Real estate is sold in probate court when the owner of a property passes away. If there is no appointed heir when the owner passes, the property is turned over to the courts and then appointed.
After all the steps for selling have been taken care of, which we’ll explain more later, the probate court will handle proceeds being split between beneficiaries.
The short answer to, “How to sell during probate,” is to hire a top notch, experienced local real estate professional.
To make things even easier, you can sell the house to a local real estate investor who will buy your probate house for cash. Of course, they will buy the house at a slight discount depending on the condition of the property. Think of it the the “trade in value” of a car when you buy a new car. The dealer will offer you the “wholesale” price in exchange for taking the car off your hands quickly.
If you want to sell your house for the retail price, which could take several weeks or even months depending on the condition of the house. Hiring a real estate agent who is knowledgeable in the process will make it far easier for you.
To make things even easier to understand, here is a basic explanation of how the probate sale process works. Keep in mind that some states are much simpler, and some more complicated in their probate regulations.
Appointment of an Administrator or Executor
If someone has been appointed in a will by the decedent, and they are willing to act as the executor, then that person is appointed as such. If there is no appointed executor, then the closest relative will be appointed as an administrator either by the court or other relatives.
Sale of the Probate Property
Appraise the property first. There are appraisers you can easily find by a quick search online, or if you have already selected a real estate agent they will most likely have a referral. The property must sell for at least 90% of the appraised value.
The home is listed for sale and marketed for exposure. Your agent will list the home on the multiple listing service so that it ends up on sites like Realtor.com and Zillow. Buying agents will know that the property is a probate sale.
A buyer must make an offer accompanied by a 10% deposit, which may be rejected by the sellers. The offer is subject to the court’s confirmation, and the seller is not committed to that buyer even though their offer was accepted. The estate representative, through their probate attorney, will then submit to the court to confirm the sale. If all parties agree, then a future date is set for the sale to be finalized in court.
When the property has an accepted offer, a Notice of Proposed Action is mailed to all heirs, simply stating the terms of the proposed sale. The heirs have 15 days to review the notice and pose any objections. If there are no objections, the sale may proceed without a court hearing.
The Overbidding Process
Before approving the original buyer offer, the judge will ask if there is anyone in the courtroom who would like to bid on the property. The next bid must be 5 percent plus $500 above the original buyer offer. The judge will also accept additional bids in much the same manner as an auction until the highest bid available has been made at the confirmation hearing.
If a new buyer wins, then the 10% will be refunded to the original buyer.
Upon accepting an overbid, the buyer must give a 10% deposit in the form of a cashier’s check. That check is given to the Executor at the hearing by the winning bidder. A contract is then signed. This contract can have no contingencies and escrow usually closes within 15 days after the hearing.