What is Probate in Real Estate?
When a person dies, their property must be distributed according to the instructions in the will. Much of the time this will happen through probate. Probate is the legal process, which involves the courts, to ensure the wishes of the deceased person are followed as outlined in the will. Understanding how probate works and what it is can make a complex process easier to handle. Real estate owned by the decedent is part of probate, but it is often a more complicated process than with the personal items and other assets that are subject to probate.
If you are involved in probate real estate, you need to know how the process works and how long probate process takes to complete. Depending on your role, you also must know how to find probate property, how to buy or how to sell probate real estate, how much probate cost, and the steps involved for various situations. If you are an heir or beneficiary, you may want to consider an estate loan that allows you to bypass the delays of probate.
What is Probate for Real Estate Property?
How real estate is handled in probate will depend partially on the stipulations of the will. If the decedent provided for a property to go directly to an heir, it can simplify the process. On the other hand, if no specific instructions were given about the real estate property, how it will be handled depends on other factors. For instance, the property may need to be sold to pay off debts. One heir may want to keep the property while others may want to sell, and each may want to empty house before probate takes place.
In most states, real estate property doesn’t usually go through probate when someone dies if it was jointly owned with a surviving owner. Some states allow for a quit claim deed, which provides for heirs to automatically receive the property without going through probate. Other states don’t acknowledge this type of deed.
How Does the Probate Real Estate Process Work?
While each state has its own statutes on how real estate is to be handled in probate, the basic process is overseen by the courts. The court must generally approve the sale of any real estate before a transaction is made. The personal administrator or executor who oversees the estate during this time must follow any provisions made by the court.
If one heir wants to keep the property and the other heirs wish to sell or if multiple heirs want to keep the property but not share with each other, the court will decide on what happens to the property. In most cases, the decision will be to sell the property and divide the profits between the heirs.
Steps for Probate Real Estate
While the probate process for real estate can vary based on individual situations, certain steps must be followed in most cases.
- An executor or personal representative must be appointed or approved by the court.
- The property may need to be appraised before it can be sold to determine a listing price.
- The property will be put on the market, usually through a real estate agent, who will advertise it as with any property for sale.
- Once an offer is made on the property, the agent may accept the offer or negotiate for a price that is acceptable to both parties.
- A notice is mailed to the heirs of the estate with a deadline for response if they don’t accept the terms of the offer. The court may also need to approve the offer before the sale can take place.
- Once the sale is completed, the money is added to the estate for payment of debts or to be distributed to the heirs.
How to Find Probate Real Estate?
You can find companies that sell listings of real estate in probate. You can also check the county records which are public for viewing. Some may be published online while others will only be available at the courthouse. The records will tell you the address of the property, the name of the deceased owner and their heirs, as well as the representative.
Buying Probate Real Estate
If you’re interested in buying a probate property, you need to understand the unique process. Your first step is to find a property you want to buy. You can do this through a list or by checking public records. You may also hear about it through referrals of people you know.
The next step is to make an offer on a property you want to buy. You can offer less than the listing price as with any property for sale. The real estate agent and estate representative will either accept your offer, reject it, or make a counteroffer. Once an offer is approved by both parties, the process doesn’t end there. The representative or their attorney must file a petition with the court to approve the sale. This step could take an extra 30 to 45 days or longer for the offer to be approved.
Selling Probate Real Estate
If you’re on the other end of the process and trying to sell a probate property, you need to know how it works. While many states don’t require a probate attorney to handle the process, you may want to hire one for the real estate sale because they will be more familiar with the required steps to ensure it goes smoothly.
The first step is to file a petition to open probate. You may also need to petition for approval of the sale beforehand, depending on the statutes in the state where the property is located. You may need to have an inspection of the real estate and appraisal to determine the value.
The next step is to hire a real estate agent to market the property. It’s usually best to look for an agent with experience in probate properties or one who is certified because they will understand the details of selling such a property.
Once you receive an offer, you’ll decide to accept the offer or negotiate. After you and the buyer agree on an offer, the attorney will need to submit it to the court for approval. Plan on this taking at least 30 to 45 days, but it may take longer. A court date will be necessary to finalize the sale.
Some states require buyers to bid on probate homes. The buyer with the highest bid may get the property. Each state’s laws are unique on how the bidding is done.
Depending on the state, you may be able to use the informal probate process. In this case, the executor may sell the real estate without supervision from the court. The property is sold as normal without all the restrictions and lengthy timelines of formal probate.
Buying or selling real estate in probate can be a complicated, long process. Each state has its own laws on how the process is to be handled. Because of the complexity of probate laws, the best thing you can do is to work with a probate attorney who will help you through the process.
Sources:
Get the Basics of Probate Real Estate and How to Sell a Home in Probate (homelight.com)
Probate Real Estate Guide For Buyers And Sellers | FortuneBuilders
How To Become A Probate Real Estate Agent | Big Block Realty (100commissionrealestate.com)