Probate property refers to financial and real estate assets owned by a person who has died. Probate is required within each of the 50 states unless inheritance property has been placed inside a trust. The process involves paying outstanding debts, obtaining property appraisals, tying up loose ends, and distributing inheritance property to designated heirs.
Probate property can depreciate in value when held in probate for extended periods of time. On average, the probate process extends for six months. If a person dies without a legal will or if heirs contest a will, the process can drag on for months or years.
When real estate is held in probate the estate administrator is responsible for paying related expenses. Common costs include home loan payments, property insurance, taxes, and maintenance. If the real estate does not transfer to a surviving spouse, or if the estate does not have sufficient funds to cover expenses, the administrator can request court authorization to sell the property.
Probated real estate can create financial hardship for decedent estates. If property is bequeathed to more than one heir, they must all agree to the sale unless a court order is issued. Lack of money is the primary reason for selling probate real estate. However, estate administrators can elect to sell the property to eliminate expenses or duties associated with it. This is especially true when estate executors live out of town.
Probate executors often must hire outside contractors for maintenance and landscape care. If property is listed for sale through a realtor, the estate is financially responsible for agent commissions and closing costs. Since real estate expenses are absorbed by the estate there will be less inheritance money available to heirs.
Estate executors act as the estate’s fiduciary and must make financial decisions based on what is best for the heirs. If probate costs outweigh financial assets, the best decision is to sell the real estate.
Buying probate property can be a smart way to buy a house priced well below market value. This can be a good choice for individuals looking for discounted homes for sale or real estate investors who want to enhance their investment portfolios.
Investing in probated real estate requires a little more effort than purchasing houses through realtors or banks. However, the savings are usually worth the time involved. In order to locate probate properties, interested parties must review court documents.
When a person dies their last will is submitted to probate court. If no will exists, an intestate case is opened. These documents are a matter of public record and include pertinent information regarding the estate administrator and inheritance property involved.
Buyers must review last wills and take note of contact information and property addresses. Afterward, buyers review property records to determine if mortgage notes, creditor or tax liens are attached, along with the appraised value.
Buyers must contact the estate executor or representing lawyer to discuss the sale of the property. It is best to contact administrators by phone or mail and express condolences before asking about buying the decedent’s real estate.
The majority of estate administrators are unaware they can sell probated inheritance property. Buyers who make a reasonable offer improve their chances of a successful outcome. Oftentimes, heirs are eager to sell probate real estate for less than its appraised value in order to obtain a lump sum cash offer.
Many states require buyers to submit offers to purchase probate property through the court. It is not uncommon to compete with multiple buyers. Once a bid is accepted, buyers must obtain court confirmation and complete property transfers with 30 to 45 days. It is best to work with a real estate lawyer who possesses experience in probated inheritance assets.