Probate real estate sales can be the perfect way to get into real estate at an affordable, competitive rate. The process may be a bit daunting, and you should be prepared for a long haul to seal the deal, but it can really pay off in the end. Going in knowing what to expect can help you navigate the process.
Learn everything you need to know about how to find probate properties and what the process will be like, here. Read on for our guide to probate in real estate.
What is probate in real estate?
When a person passes away, most often their property, including any real estate, will go through probate. If an heir is designated to receive any asset, home or other property, the process will go rather smoothly. If no heirs are listed to be beneficiaries, property may be sold to the highest bidder so that the proceeds can pay off any leftover debt the estate owes. If any proceeds are left, the money will be divided up between the living relatives according to intestate laws.
If the real estate was owned by two or more people and one of them dies, it may not have to go through probate. Quit claim deeds are used in some states to pass property rights from one person to another when someone dies. While some states will honor a quit claim deed, others do not.
A guide to the probate real estate process
The probate real estate process has four primary steps that must be followed. The court proceedings may be slightly different from state to state, but for the most part, they’ll be fairly similar. The same is true for any legal documents that may be used. The following points will show you the process for selling a probate property, and then how to find probate properties you may be interested in purchasing.
An executor of the estate will Be Chosen: In most cases, an executor will be named in a person's Will. If not, the court will appoint an Administrator. The Will should state the fate of the property. It will either be left to an heir, donated to a charity or sold.
Appraisal of the property: If it’s determined that the property will be put up for sale, it is up to the executor to establish a listing price. An appraisal will be performed and a real estate agent who’s familiar with probate properties can help set the sale price.
Listing the property: Once the price has been set, the property will be listed for sale. As soon as it’s on the market, it’ll be treated just like any other listing the agent may have. Most agents will market the home to get the best possible price.
Approval of an offer and the finalization of the sale: When an offer is submitted, it may be countered or negotiated until both parties agree on a final price. As soon as an agreement is reached, official notices will be sent to each heir to the estate. The heirs then have 15 days to voice any objection. If no objections are made, a court date will be set and the house will be officially sold.
How to find probate properties
Probate properties are unique in that the real estate might need to be sold in order to close the estate. Since there is a definite time frame to be looked at, often a property will sell for well below fair market value. If the home can be sold quickly, it may be a win/win situation for everyone. If the probate process is lengthy, the buyer may need to be prepared to receive a poorly kept home that needs a little work.
If you’re interested in purchasing a piece of probate real estate, you want to work with a real estate agent who has experience with this type of sale.
Look in local newspapers and online listings
The newspaper is one of the best places for finding probate property that’s been put up for sale. An executor will market the home in any way possible. Some people will put a listing in the local newspaper, which can be a good way to get people's attention. They also may advertise on social media. Online bulletins can also be used to post probate listings.
Reach out to local real estate agents
Reach out to real estate agents who work in the area. Most know about any probate real estate properties that have been listed locally. They also have access to the Multiple Listing Service (MLS) and can also utilize their own personal network to locate new properties that are being listed. In order to be good at what they do, realtors have to know as much as they can about hot properties in their area.
Contact your local probate court
You also have the option to get in touch with your local probate court. The clerk can offer you a list of newly filed cases that have gone through probate court. Once you have the list, you can look for cases that are still open. If a case includes real estate that hasn't been posted on the market, you may be able to get in touch with the executor and express your interest.
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