A probate sale has proved to be one of the best acquisition strategies in today's real estate market. The most important aspect of probate real estate is that investors who acquire these properties find themselves with lucrative deals and huge profits.
However, it's important to note that the entire process of dealing with a probate property is quite different from a regular real estate sale. So, if you are looking to sell or buy a probate property, you have come to the right place. This guide will cover what probate sales actually refer to and how the process works.
What are Probate Sales?
Whether you are an active investor or simply entered the real estate market to purchase a new home, you must have come across a probate or distressed property for sale. These are the properties that are often priced lower than regular real estate properties and thus, they turn out to be the most attractive deals, offering enormous profits.
Real estate probate is a legal process where a deceased homeowner's property is sold through a court. This happens when a homeowner dies without a will to direct the disposal of his property. It may also happen when a homeowner dies owing more debts than his assets or cash savings.
In probate cases, an estate executor or personal representative is appointed by the court to handle the process. The estate executor looks after the decedent's affairs and also administers the sale of the property through the probate real estate process. The proceeds from the sale are distributed to the property's heirs and beneficiaries after paying off all debts and taxes.
How does Probate Real Estate Work?
Although the probate process varies from state to state, some laws remain the same. In general, the four steps to probate sale are listed below.
Appointment of an Executor: Appointing an estate executor is the first and most important step of the probate process. In most cases, the executor's name is mentioned in the decedent's will. However, if not, the court appoints an estate administrator to oversee the entire process. The executor or administrator gets the authority to list and sell the property.
Appraisal: The next vital step to a probate sale is determining a listing price for the property. At this point, the estate executor or administrator hires a licensed real estate agent to appraise the property. Agents experienced in probate real estate are the best ones to reach out to for property appraisal. Obtaining an accurate appraisal is important to determine the ideal listing price of the property.
- Listing: Once the listing price is determined, the property is marketed on various platforms to attract potential buyers. Properties in probate are marketed just like traditional properties. The real estate agent associated with the property markets a probate property on different websites and also uses signage to attract high offers.
Sale Approval: Once a buyer makes an offer on the property, the estate executor or administrator should decide whether to proceed with the deal or not. In the meantime, the real estate agent also tries to negotiate the offer to satisfy both the buyer and the seller. Once the deal is fixed, an official notice is sent to all the beneficiaries and heirs of the probate property. If no objections are received within 15 days of the mail, the court approves the official proceedings of the sale.
How Long Does it Take to Execute a Probate?
Probate sale is a complicated and lengthy process that typically takes a few months to a year. The process involves the consideration of different assets and property laws which makes it time-consuming. Some of the common factors that can affect the timeline of the probate process are as follows:
A large number of heirs
- Issues with the Will execution
- Unpaid debts or taxes associated with the property
- State or local laws where the sale is taking place
While some probate sales are executed within 6 months, some take almost a couple of years. The completion of the probate completely depends on the legal proceedings associated with the process. Investors who have already invested in probate are aware of the probate proceedings and the timeline involved with it. However, if you are new to real estate investments and investing in probate for the first time, keep adequate patience throughout the process.
Now that you have read the entire blog, you know what a probate sale is or how it works. However, please note that probate isn't profitable for everyone. That's why it's very essential to determine whether to opt for probate or not before making any commitment.
How to decide whether to consider probate or not? To get the answer, you must pick one of two things - obtaining an attractive deal or obtaining a house quickly. If you are determined to obtain a house quickly then probate is probably not the ideal solution. The probate estate sale is a lengthy process that takes longer than traditional purchases to complete.