Some of the duties of the estate representative include settling claims, paying outstanding taxes and debts, and distributing the remaining assets as stated in the will.
If there is no valid will, any remaining property is taken over by the probate court who will usually appoint the closest living relative or surviving spouse as an executor of the estate. In these situations, the state’s laws determine who gets what part of the estate.
Real estate probate more specifically refers to the process that is undertaken when a decedent’s estate either transfers ownership or is sold to someone else after the death of the homeowner. Some homeowners can avoid probate court after death by placing their assets into a revocable living trust. This is a signed, notarized written document that indicates who will take over the property when a loved one dies.
Keep in mind that state laws affect the probate process, too, so it’s important to check with a lawyer familiar with your area.
Because probate homes come as-is, they may require some work, but those who are willing to put in the investment might be able to capitalize by flipping the property afterwards at a much higher price.
Furthermore, if you end up paying more for a probate home than the amount at which it was appraised, you won’t be able to make up for the shortfall through your lender. The difference will have to be made up out of pocket, and you will be on the hook for it financially even if your mortgage approval falls through. In the purchase agreement for a traditional home sale, you would normally be protected in this scenario with a financing contingency.
Depending on your level of comfort, you may also have to incur the extra costs of hiring an attorney and real estate agent who specialize in the unique requirements of probate sales.
The presence of a will and the identification of a specific beneficiary of the home can make the sale go more smoothly – and more quickly. However, between the local probate court, the executor, the realtor, and multiple interested buyers, further delays may still occur. Even if your offer is accepted, it could still take months before you assume ownership.
Even though you won’t be able to get your down payment back if you change your mind, you may still want to request a home inspection so you know exactly what you are dealing with and what the potential costs of repair may be. If all turns out well, be prepared to wait 30 to 45 days for your offer to be confirmed by the probate judge.
While this process is ongoing, the executor still has the right to accept other offers. If there are multiple interested buyers with accepted offers, they will all meet on a set court date to petition the court after the 30 to 45 day waiting period. This process is like a live auction, with each buyer making a bid until the highest offer has been reached. The property will then go to the highest bidder, who must immediately provide a cashiers’ check in the amount of 10% of the new purchase price. Make sure you decide in advance the maximum amount you are willing to pay for the property.
- Appointing of the executor of the estate. This is essential for the commencement of the probate process to begin. The executor of the estate is either named in the deceased person’s will or appointed by the courts
- Appraising the estate assets. The executor will have the property appraised by a realtor to determine a listing price.
- Listing the property. Once the selling price has been established, the property will be listed and marketed.
- Selling (and approving the sale). After an offer is submitted, negotiated, and approved, all heirs to the estate receive an official notice of a 15-day period in which they may object to the sale of the property. If no objections are received, a court date will be scheduled to officially execute the sale of the home.