Dealing With a Probate Sale? Here’s What You Need To Know!
Perhaps you must have little idea about probate properties. As you are already dealing with or planning to invest in one. But, are you aware of the intricacies of probate sales? Having complete knowledge of probate can be incredibly beneficial for both a probate buyer and a probate seller. Understanding the probate house sale process can help you determine if you should really consider buying or selling a probate property.
Hopefully, reading this blog will help you understand what exactly a probate sale is, how the process works, the features of a probate sale, and whether you should consider investing in probate property.
What is probate?
In legal terms, probate is the process of managing a deceased person’s estate. A probate sale can take place when a homeowner dies without leaving a will to direct the disposal of the property. Probate properties are listed and marketed exactly like traditional properties. A law representative or estate attorney is appointed to list the property in the market and get potential buyers. Any interested investor or individual buyer can make an offer on the property. However, the process might be a little complicated and take more time to settle than usual.
How does probate sale work?
Although the process of probate sale varies from state to state, the court appoints a personal law representative known as the “executor” in the presence of a will or an “administrator” in the absence of a will. The estate executor or administrator is charged to guide through the entire probate process as well as settle the property. A part of the probate process also involves identifying the legitimate creditors of the deceased homeowner.
The estate executor will be solely responsible for selling the property if the asset needs to be liquidated to pay the creditors. The executor will also need to submit an appraisal in court to set a listing price. The executor may hire real estate agents to list and market the probate property. Once a potential buyer makes an offer on the property, the executor needs to file a petition to the court for receiving permission to sell the property.
A notification is sent to all the heirs and estate beneficiaries. The probate house sale process further proceeds if no one files an objection.
However, all buyers need to be present in court if there is more than one buyer. They need to submit their bids in court. The highest bid wins and the winner needs to immediately hand over a cashier’s cheque to the estate administrator or executor for a minimum of 10% of the offer price.
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What are the features of probate sales?
Probate sales have several unique features that set them apart from traditional real estate sales. Here are some of the common features of a probate sale.
- Properties sold in as-is condition: One of the distinctive features of a probate sale is that a probate property is sold in as-is condition. Usually, the estate executor or legitimate heirs stay away from paying for any upgrades or repairs as the estate may fail to have enough funds to afford those costs.
- Upfront Deposit: As already stated, probate sales require potential buyers to pay a deposit while making an offer on the property. This deposit amount is an addition to the down payment.
- Continues to remain listed: Some state laws allow the probate to remain listed even after a potential buyer makes an offer and pays a deposit amount. Other buyers can make offers on the property. The first buyer can get the deposit amount back by outbidding the property.
- Lengthy Process: A probate sale usually takes much longer to settle than a traditional house sale. That’s because a probate property closing can only complete when the court approves the sale.
Should you invest in probate properties?
Individuals and real estate investors usually consider investing in probate properties or flipping in California to earn a good profit. But, not everyone can make money from probate sales or flipping houses. It requires a determination as to what’s more important – getting a house quickly or cracking a good deal. Probate properties are mainly preferred for their below-the-market value price. Most often buyers are aware of the complication and timeline of probate sales. Thus, you should gather all the necessary information about probate sales to finally decide if you should actually invest in probate properties.
Now that you have read the entire blog, you know what is probate and how a probate house sale works. A probate sale can be a viable option if you want to get rid of a property owned by a deceased homeowner without a will. Working with an experienced estate administrator or attorney can help you deal with this complicated process efficiently. You just need to be patient and be prepared to undergo a lengthy waiting period.