If you’re an active real estate investor, at some point you’ll likely come across a probate sale. Properties sold through probate can be a good deal, as they’re often priced lower than other comparable homes, however, there are risks and probate sales often take longer than traditional real estate transactions.
As a result they aren’t popular with typical home buyers which is one of the reasons they tend to be priced lower.
As with short sales, probate sales entail uncertainty and as a result they aren’t popular with typical home buyers who typically prefer to know if they will in fact be able to proceed with the proposed purchase within days as opposed to weeks and months, and to have a relatively defined date they can close and take possession of the home. As a consequence of these inherent uncertainties, most real estate agents discourage their clients from considering these properties and getting their hopes up about buying a home through probate court. Thus most traditional buyers keep them at bay which is one of the reasons they tend to be more aggressively priced.
Here’s the story on real estate probate sales.
Why a home is sold through probate court
A home is sold in probate court when someone dies intestate, that is without bequeathing their property. When this happens, the state takes over and administers the property’s sale.
The court wants to be certain the property is marketed and sold at the best possible price. To ensure this, the court requires certain steps and procedures be followed.
After all the steps for selling have been taken (which we’ll explain more), the probate court will handle proceeds being split between beneficiaries.
* When a person dies owning Ohio real estate that is either titled in the name of the decedent only, or is titled as tenants in common (as opposed to being titled as joint tenants with rights of survivorship), the title to the decedent’s real estate immediately vests by operation of law in beneficiaries who are entitled to inherit the real estate under the decedent’s Last Will and Testament (a testate estate). If there is no Will, the title to the decedent’s real estate immediately vests in the decedent’s heirs at law (an intestate estate). The rights of the beneficiaries or heirs to the decedent’s real estate are subject to divestment if the real estate needs to be sold to pay the decedent’s debts, or if the real estate is otherwise sold pursuant to a procedure below.
The easiest way to sell real estate from a probate estate is pursuant to a power of sale contained in the decedent’s Will. Most Wills authorize the executor to sell the decedent’s real estate upon the terms the executor believes are in the best interest of the estate. This power gives the executor the authority to sign a deed to transfer the real estate to a purchaser without the approval of the probate court. (See Ohio Revised Code § 2127.01). It saves time and money and is one of many reasons everyone should have a valid Will.
If a decedent died intestate, that is, he or she does not have a valid Will (or if the Will does not contain a power of sale), then the decedent’s real estate can only be sold with the consent of all of the beneficiaries or heirs, or through a land sale proceeding (also known as an action to sell real estate).
Marketing a probate sale
In a probate sale, the property is marketed just like any other property. The probate attorney or the estate representative will hire a local real estate agent, sign a listing agreement, and show the property, just as they would a traditional listing.
Generally, the list price is based upon the listing agent’s suggestions as well as an independent appraisal ordered and issued by the court.
Making an offer
An interested buyer may make an offer on the property at any time. However, in the case of a probate sale, the offer must be accompanied by a 10% deposit. The estate representative will then accept or counter the offer, just like any other sale.
The offer is subject to the court’s confirmation. Even though the seller may have accepted a buyer’s offer, the seller is not committed to that buyer or their offer. The estate representative, through their probate attorney, must then petition the court to confirm the sale. If all parties agree, then a future date is set for the sale to be finalized in court.
When the property has an accepted offer, a Notice of Proposed Action is mailed to all heirs, simply stating the terms of the proposed sale. The heirs have 15 days to review the notice and pose any objections. If there are no objections, the sale may proceed without a court hearing.
Playing the waiting game
Once the sale date is determined, the parties now must wait a minimum of 30 to 45 days. During this time, the court requires that the property be properly advertised and marketed with the new accepted price. The court will take that accepted offer and raise it by 5% plus $500. The total becomes the new probate price to be marketed.
Going to court
In order for the sale to be confirmed, the court requires that the new buyer, plus any other interested party, come to probate court to confirm the sale. The property is then sold auction style with the opening bid being the accepted offer price plus the 5%, $500 increase.
Sometimes multiple buyers show up to bid on the property in increments of $5K. If nobody shows up to bid on the home, the first buyer gets the property for their original offer price. If the property is sold to one of the bidders, they must immediately hand over a deposit of 10%.
The deposit may not be refundable
There are some things for buyers to be aware of when moving forward on a probate sale. Many times, the 10% deposit that’s required with the offer is not refundable unless the original buyer isn’t the final court confirmed buyer.
Also, since the seller is deceased, there usually isn’t anyone to disclose a previously leaky window, illegal work done on the property, plans for a major change to the neighborhood, or anything else that may negatively affect the property’s value. This is yet another reason probate sales can be risky.
An early inspection is your best defense
Any serious buyer should have the property inspected from top to bottom before writing an offer. Yes, you’re gambling the $350-500 price of the home inspection without knowing if your offer will even be accepted, or if you’ll be outbid by someone else in probate court but would you rather gamble this relatively minor expense — or the cost of a major issue?
Avoid the hassles associated with listing and selling the home we have a solution. For a property in probate, or an inherited property: contact us today and we will assist by REFERRING YOU TO INVESTORS WHO WILL BID ON, AND BUY YOUR HOME “As-Is” and offer you fair market value for the property. There is NO CHARGE to you for this service, and rather we benefit when after renovating and remodeling the home, the investor that purchased your home lists, and sells it with us. Let us provide you with the best home selling service available in Columbus, Ohio.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235