What is a Probate Sale in Real Estate?
A probate sale in real estate is when a house belonging to a deceased person is being sold; ‘probate’ being the legal process after someone dies.
In probate, courts distribute the deceased’s property in accordance with their will. You will come across one of two people at this stage, the executor and the administrator.
- An Executor is the person who is responsible for distributing the property of the deceased person.
- An Administrator has the same job as an executor and is assigned by a court to carry out the same tasks if there is nobody listed as the executor in the deceased person’s will.
And that is what a probate sale in real estate is. But what about taxes, legalities and even buying probate houses for real estate investing? Below you’ll find some of the questions people ask about probate sales and the answers.
When do probate sales happen?
Probate sales in real estate happen following death. Each state has different laws regarding probate, so probate sales may happen for different reasons and at different intervals of time.
For example, if you live in Virginia probate sales can only occur to pay off debts or if the deceased put it into their will. Let’s pretend you lived in Virginia and owed a mortgage on your house. When you passed away your house would go to probate sale to be paid off. Your house might also go into probate if you elected to have it sold to send money to your heirs.
How do I find probate sales?
You can find probate house sales by watching for roadside signs, using a listing site, or through an agent. Real estate agents list houses for probate sale like any other house.
Are probate homes cheaper to buy?
Yes, probate homes are often cheaper to buy or are listed for lower prices than others in the area. This is especially true if the probate house needs substantial repairs and the heirs just want their money. They’ll sell the house “as-is” to move it more quickly and move on with their life. That’s one of the reasons “we buy houses” companies (real estate investors) like to purchase probate houses.
Does a probate house sale take longer?
Yes, a probate house sale takes significantly longer to close as there are more chances for delays. Delays can come from court bureaucracy, objections from heirs, and multiple bids on the property. If you want to avoid delays, and there are no heirs making objections, you could always try selling your house for cash to a “we buy houses” company.
Many of the we buy houses companies, including ours, can get you a cash offer within a few days.
Is there risk involved in buying probate homes?
You have several risks to be aware of when buying real estate in probate sales. These risks include:
- Home sold as-is, possibly needing expensive repairs.
- Losing your deposit if financing falls through.
- Significant delays due to legal requirements.
- Possibility of debts on property which you may become responsible for.
If you can handle these there is nothing to worry about in buying a probate house.
And now you know what probate is in real estate, how it can impact you if you’re shopping for a home and come across a probate house listing, or you are inheriting a probate house from a recently deceased friend or family member.
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