Are you responsible for selling a probate property? Unless the property is in a living trust or is deeded as a “transfer on death,” it is in probate. Do you know how to sell a house that is in probate? In this article, we address common questions asked about selling this kind of property.
Selling probate property: how is it different from selling a non-probate property?
Probate is a court-supervised process during which someone is granted legal permission to settle a deceased person’s debts and distribute their assets. Debts and assets comprise a deceased person’s “estate.” Probate courts impose certain requirements that govern the settling of estates, and these must be fulfilled following court-set timelines. Requirements and deadlines vary from state to state. Selling probate property requires compliance with court-set requirements and schedules. Selling a non-probate property is easier because the court is not involved and there are no timelines or court-imposed requirements to deal with.
What are the important terms I should know?
The probate process has its own vocabulary. It is helpful to get familiar with the following terms.
Will: The court-recognized document in which a person says what should happen to his or her possessions and assets.
Trust: An instrument in which one person (the trustee) holds property belonging to another person (the settlor) for an heir or beneficiary.
Custodian of the Will: The person who has the will when the writer of the will dies.
Decedent: A person who has died.
Beneficiary: A person who inherits the assets of a decedent.
Executor:A person appointed by a probate court (and usually named in a decedent’s will) to handle the affairs of the decedent’s estate and sell real property.
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Probate: The legal process overseen by a probate court in which a decedent’s assets are fairly distributed and debts settled.
Testate: When a person dies and has left a will.
Intestate Succession: When a person dies without leaving a will, intestate succession is the order of people who inherit the decedent’s property. Probate court establishes the order.
Probate Referee: A person who appraises a property being sold through probate. Usually, the estate pays for this service, and payment is calculated as a percentage of the property’s appraised value.
What happens when a house goes into probate?
What happens to a house in probate depends on whether or not the decedent left a will. Three possible scenarios are as follows:
The decedent left a will, named an executor in the will, and stated that the property would go to their family. This scenario is “testate probate.” The executor must be granted legal authority by the probate court to sell the property and distribute the proceeds to the heirs named in the will.
The decedent did not leave a will, and no heirs or beneficiaries were named. This scenario is “intestate probate.” If the house was not placed in a living trust or deeded as a transfer-on-death deed, the probate court judge names an immediate family member as the estate executor. The executor must follow the probate court’s timeline for disposing of the house while complying with probate requirements.
The decedent left a will but did not name any beneficiaries. The court-affirmed executor is responsible for selling the deceased’s home and must comply with the court’s decisions regarding distributions of the proceeds.
Do I need professional help selling a house in probate?
The purpose of probate is to make sure a deceased person’s assets are distributed fairly and debts are settled properly. The court wants to make sure that no fraud occurs and, to that end, institutes stringent requirements, deadlines, and hearings. Get knowledgeable professionals on your team, including an experienced probate attorney and a real estate agent who understands local probate rules and deadlines. The attorney represents you before the probate judge and handles documents and court petitions. An excellent realtor is sensitive to the realities of dealing with a loved one’s home and possessions. He or she manages the process of getting the house ready for sale, setting a smart price, marketing effectively, negotiating offers, and pulling paperwork together for a successful close.
How does a realtor sell a probate property?
Realtors experienced in probate and trust sales help determine the list price for probate properties. They market properties in various ways to try to get the highest offer. Probate courts stipulate that accepted offers must fall above a certain percentage (usually 90%) of the appraised value.
An accepted offer does not guarantee a deal. The offer must be disclosed to all beneficiaries, who have a set number of days (usually 15) to look over the offer and register objections. If there are no objections, the sale can go forward. If there are objections, a court confirmation hearing is scheduled to allow other parties to submit higher bids. Precise formulas are in place for what constitutes acceptable overbids. Once an overbid is accepted, escrow opens and closes 30-45 days after the hearing.
Can you live in a house during probate?
Yes, usually. Check your state laws to be sure. In most states, it is legal to live in a house while it is in probate. It can be a good idea as the house may be difficult to insure if it is vacant. Important insurance coverages can be revoked if a house sits empty for more than 60 days. Living in a home in probate can ensure the home is kept up well until the sale. Tasks such as maintaining lawn care, monitoring irrigation, keeping a pool clean, and making emergency repairs on broken pipes or malfunctioning HVAC units will save headaches and expense in the long run.
Can you empty a house before probate is ended?
Check with the probate court in the state where the house is located. Laws vary by state on this question. There may be special requirements regarding notifying beneficiaries before the contents are removed. An executor may also be required to inventory house contents before possessions are taken out of the house.
Yes and no. The executor is the court-approved individual tasked with settling the deceased’s estate and authorized to sell a house that is in probate. However, the court may require the executor to notify heirs before putting the house on the market. Some stipulations may be in place that keep the executor from acting on his or her own.
What about taxes on probate property sales?
The sale of a probate property incurs capital gains taxes, just as the sale of an ordinary property does. Capital gains taxes are imposed on the amount of money that constitutes the difference between what a house was bought for and what it was sold for. If a house was purchased for $100,000 and sold for $150,000, capital gains tax must be paid on the $50,000 difference.
If the house was owned for longer than one year, the seller is assessed a long-term capital gains tax at a rate that corresponds to his or her tax bracket. If the house was owned for less than one year, the seller is assessed a short-term capital gains tax, and the difference between the bought and sold price is taxed as regular income. In a market where housing prices are increasing, the general advice is to sell a probate property as soon as possible.
Any increase in value while the home is in probate will be taxed, meaning less money to distribute among beneficiaries.
I just want to get rid of the house. Is there an easier way to sell it?
Selling a Home with a Realtor
The traditional way to sell a house usually involves a realtor. Realtors are valuable professionals to have on one’s team as they understand the real estate market and are motivated to get houses sold. They recommend repairs and improvements that will give a home the best chance of selling quickly. They arrange showings, handle negotiations, deal with paperwork, and generally oversee the sale process from beginning to end. With a realtor helming the selling process, expect to:
Pay the realtor a 5-7% commission on the sale price of the house
Pay for and make repairs and improvements to ready the property for sale
Keep the house clean for showings
Have potential buyers visiting the house
Deal with offers and make counteroffers
Entertain offers with contingencies (buyers who must sell their homes before they can buy yours)
Wait for results of buyers’ home inspections and possibly make additional repairs
Endure an indefinite sale timeline as some contracts may fall through
Selling a Home to an Investor
Advantages of an Investor Sale
Often, the executor and heirs of a deceased person’s estate desire an expedited sale of the home. The house may be in a different part of the country from where they live, and managing a long-distance sale is difficult. They may be dealing with grief over the loss of their loved one and find it tough to prolong the home sale process. There is a faster and easier way to get rid of a property: sell it to an investor. While this option is not for everyone, it is the best route to a quick and hassle-free sale. Selling a home to an investor eliminates the complexity of the traditional realtor-managed sale process. If you choose to sell to an investor, expect to:
Pay no realtor fees (a savings of 5-7% of the home’s sale price)
Pay no closing costs (a savings of 2% of the home’s sale price)
Make no repairs or improvements, since investors buy houses as-is
Not have to deal with showings
Receive a cash offer with no appraisal required
Close in as few as seven days
Houston Capital Home Buyers (HCHB) is an investor that buys properties, including properties in probate.
Houston Capital Home Buyers is a Texas-based home investor that purchases properties everywhere in the United States. We have experience working with probate properties, understanding that certain court requirements govern the sale process, and we will need to comply with probate deadlines. HCHB is an established investor with a 12-year track record of successful real estate transactions. We have purchased over $41 million in homes, allowing more than 420 families to make rapid sales, collect their checks, and move on to the next chapter of their lives. Many of these have been probate situations. We are a U.S.-veteran-owned company. We served our country with integrity, honor, and respect, and we help our customers the same way. As you navigate grief and loss over your family member’s passing, you will only encounter kindness and helpfulness from our company as we seek to assist you in the rapid sale of your loved one’s property.
How does the sale process work with HCHB?
Reach out to us and request a quote. Do this through a phone call or email us using the form on our contact page.
We will visit your property and do a basic inspection to make you the best offer possible.
We will contact you with a generous cash offer. If you accept, we will sign a contract and arrange to close in as few as seven days. You can set the closing date to suit your schedule.
Can investors purchase probate properties?
HCHB understands the special circumstances of probate property sales. Our staff is experienced in working with clients who must sell inherited properties in probate. We work with clients and probate courts to comply with all requirements and deadlines.
Wrapping It Up
Selling a probate property is not a walk in the park. It can be complicated, time-consuming, and expensive. If you are the court-appointed estate executor, hire a competent probate attorney and experienced realtor to help you navigate the probate landscape. An alternative to selling the probate property through a realtor is selling it to an investor. This can bypass much emotional strain and effort. An investor such as Houston Capital Home Buyers with experience purchasing probate properties can take the house as-is and close in as few as seven days.
Don’t Make Another Payment! We’ll Buy It & CLOSE It!