Probate real estate transactions can be a good deal because they are often priced lower than other homes. But probate sales often take longer than traditional real estate transactions and come with some risks.
A home is sold through probate court when someone dies intestate or without bequeathing their property. The state will take over and administer the sale of the property. The court wants to ensure the property is marketed and sold at the best possible price. This requires certain steps, processes, and procedures.
Probate properties are marketed like any other property. The probate attorney or estate representative will hire a real estate agent, sign a listing agreement, and show the property, like in a typical real estate transaction. The listing price will be based upon the listing agent’s suggestions and an independent appraisal ordered and issued by the court.
An interested buyer can make an offer on the property at any time but the offer must be accompanied by a 10 percent deposit. The estate representative will accept or counter the offer like an any other sale. The offer is subject to court confirmation. Even if the seller accepts an offer, the seller is not committed to that buyer or offer. The estate representative and probate attorney will petition the court to confirm the sale and a future date will be chosen for the sale to be confirmed in court.
Often, the 10 percent deposit required with the offer is not refundable unless the original buyer isn’t the final court confirmed buyer. Probate sales are risky because since the seller is deceased, there isn’t anyone to disclose any problems with the property or anything that will negatively affect the property value.
Serious buyers should have the property inspected before writing an offer. This is a gamble because the potential buyer may end up paying the cost of the home inspection without knowing if their offer will be accepted or if they’ll be outbid in probate court. But it is better to potentially waste the cost of a home inspection then to end up purchasing and overpaying for a house with extensive problems.