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Key takeaways
- Probate sales can offer homes at below-market value, but they may involve delays and additional legal steps.
- Probate homes are often sold as-is and may require repairs.
- You can avoid the probate process for your estate by creating a trust or owning property jointly.
When someone dies, they leave behind an estate that includes all of their assets, such as cash, investments and real estate. The legal process used to sell these assets or divide them among heirs is called probate. If you’re looking to buy a home, you may come across probate sales, which can offer opportunities to purchase a property at a lower price.
What is a probate sale?
A probate sale is a court-supervised process in which a deceased person’s home is sold to distribute assets to their heirs and settle any outstanding debts and taxes. When someone dies without a living trust or will that transfers ownership directly, their property goes through probate. This is the legal procedure for settling their estate.
In a probate sale, the court and estate executor handle the transaction, often requiring court approval of the final sale price to ensure it’s fair to the beneficiaries. This can make buying a probate home a more lengthy and complex process than a typical real estate transaction.
Should you buy a house through probate?
Buying a house through probate can be an opportunity to purchase a property at a potentially lower price, but it also comes with unique risks and complexities. Consider the benefits and risks associated with purchasing a house through probate.
Benefits of probate sales
- Lower prices: Homes in a probate sale are often priced below market value. This helps the estate sell quicker. Buyers can save money compared to traditional home listings.
- Hidden market opportunities: Probate sale properties may not be listed through typical real estate channels. Buyers can access properties that aren’t widely marketed and might otherwise be missed.
- Less competition: Fewer people pursue probate sales because of the complex process. With less competition, buyers may have a better chance of securing the property without bidding wars.
Risks of probate sales
- Longer purchase timeline: Probate sales typically take longer to close than traditional home purchases. Court approvals and legal steps can extend the process.
- Property condition issues: Many probate-sale homes are sold as-is and may need repairs. Buyers should budget for any necessary maintenance or updates the home may require.
- More complex transaction: Probate sales involve additional regulations and paperwork. Buyers must navigate court processes and possible overbids before finalizing the purchase.
How to buy probate real estate
Buying a home through probate can be a challenging process. These properties often aren’t listed on regular real estate channels. Start by checking obituaries and local records for property owners who have passed away recently in your desired location. Also, look in local newspapers or online for notices to creditors or petitions to administer estates, which may indicate a property will soon be for sale.
Be prepared for a longer process, as probate sales can take months to finalize. You’ll likely work with the estate executor, a real estate attorney or the court to make an offer. Remember, probate homes are usually sold as-is, and the previous owner may not have kept up with maintenance. Schedule a home inspection to uncover any potential issues or unexpected costs.
Finding a probate real estate agent
Because probate sales are complex, it helps to work with a real estate agent who specializes in them. Agents may have access to off-market listings that you otherwise wouldn’t be able to see. Ask a probate attorney for recommendations, as they often work with agents experienced in these transactions. You can also contact local real estate agencies to find out if any of their agents specialize in handling probate sales.
Finding comps
Before making an offer, determine the home’s value by researching comparable sales in the area. Look for recently sold houses nearby that are similar in size, number of bedrooms and overall condition to guide your offer.
Can probate be avoided?
Yes, it’s possible to avoid probate for your own estate if you plan ahead.
One of the most common ways to avoid the probate process is by creating a trust. If you start a trust and add assets to it, the assets in the trust will skip the probate process.
Another way to avoid probate is to own real estate jointly with someone. If you and your spouse jointly own a home and one of you passes away, the surviving spouse will typically retain full ownership of the home and not have to deal with probate. However, this can depend on the intricacies of the house title, so it’s smart to consult an attorney.
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