What’s a probate sale in real estate? A helpful guide

When a homeowner dies, estate executors need to deal with the deceased’s possessions. If they haven’t written a clear will, the court needs to settle the estate in a practice called probate, which resolves debts and fairly distributes their assets to heirs. A part of this process is a probate sale, which is the sale of the deceased person’s property.

While it can be confusing for both families and buyers, understanding how probate sales in real estate work simplifies the process. Learning details like timelines and typical court procedures help those looking to resolve debts or find a home for a competitive price.

In this guide, learn the ins and outs of probate sales and how to approach them confidently.

What’s a probate sale?

A probate sale is the legal process for distributing a deceased person’s property. It helps allocate inheritance and settle the owner’s debts and taxes. 

These sales usually happen when the deceased’s will is unclear or nonexistent, requiring the court to step in and manage the process. A court-appointed executor handles the procedure, as the family usually doesn’t have a personal representative. Proceeds from the sale usually cover debts and expenses first, and anything left is passed on to the heirs. 

While a probate sale can be attractive to homebuyers looking for a deal, the process can be lengthy and complex. It’s very different from what most buyers expect, potentially involving legal complications, family disputes, and property quality issues.

How does a probate sale work?

A probate sale of property moves through a series of court-monitored stages. The exact process looks a little different depending on the location and circumstances, but most follow this pattern:

— Authorizing a real estate agent: First, the executor or administrator gets approval from the court to hire an agent who can list the house in probate sale.

— Listing the property: Once the court gives the green light, the home goes on the market. The agent usually labels it as a probate sale and offers it in as-is condition, meaning the sellers won’t conduct updates or repairs.

— Managing buyer offers: Buyers are now free to submit offers. Keep in mind that even if the executor or administrator accepts it, the sale needs formal court approval before it can move forward. With Better, you can get a pre-approval letter in as little as three minutes to strengthen your offer and streamline the approval process.

— Holding a confirmation hearing: The court schedules a hearing to review the accepted offer. Other buyers often attend this, creating a competitive auction, but the hearing can also be a straightforward sale to the initial party.

— Finalizing the sale: After the court approves the sale, the buyer proceeds with inspections, financing, and the closing process. The court then distributes the earnings to pay debts and beneficiaries.

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What makes a probate sale different from a regular sale?

A regular sale is a private transaction between a seller and buyer, typically guided by market timelines and standard disclosures. A probate sale, on the other hand, is supervised by the court, which adds extra time for due diligence. It also requires court approval rather than a simple agreement between two parties.

While conventional homebuyers may negotiate price reductions for imperfections, executors typically sell probate properties as-is. The process is also often an auction, meaning buyers may need to compete with other bidders. With standard sales, this usually only happens in strongly competitive markets. Probate sales may feel intimidating, but these careful procedures protect the estate and ensure fair distribution of assets.

Pros and cons of a probate sale

Probate sales bring unique advantages and challenges that don’t often come up in a standard home purchase. Consider the following pros and cons so you can approach the process with realistic expectations.

Pros of a probate sale

— Potential for below-market pricing: Agents usually list probate at lower prices to attract interest and compensate for the as-is condition. This provides an opportunity for buyers to purchase well-priced properties, even in competitive areas.

— Less competition: Probate sales require a longer buying process and court approval, so fewer people are willing to take them on. This can lead to less competition and more opportunities to submit a winning offer.

— Clear court process: The court oversees every decision, which keeps the sale straightforward and transparent. For example, this oversight settles all outstanding tax and mortgage debt, so the buyer won’t be responsible for any surprise expenses.

Cons of a probate sale

— Longer timelines: Court approval is required at multiple stages, and this extra oversight can slow things down. For instance, a regular home sale averages about two months, while a probate sale might take a year to complete.

— Properties might have issues: Because many probate homes are sold as-is, they may require repairs or updates after closing. This can drive up costs and negate the cash you saved buying probate real estate.

— Possibility of losing to overbids: Even if your offer is accepted, another buyer can still outbid you during the confirmation hearing.

Is buying a house that’s in probate the right choice?

For some buyers, choosing a probate property can be a great way to find a well-priced home. If you have patience for a longer timeline and the ability to handle the as-is quality, probate sales are an excellent opportunity.

These properties often appeal to investors who can handle repairs and improvements. People who are comfortable fixing and renovating homes can buy them for a low price, polish them up, and resell them later for significant profits.

First-time buyers willing to deal with extra steps and a longer timeline can benefit from the cost savings. Probate homes open the doors to larger properties in higher cost-of-living areas, which may be worth the effort.

How to buy a probate sale house: 4 steps

Buying a probate property follows a similar structure to a traditional process but with added requirements from the court. Here’s the step-by-step process from the buyer’s perspective.

1. Find a real estate agent

These properties aren’t always listed on real estate sites, so you may need to ask an agent to conduct the search. They can also walk you through the process, prepare you for court requirements, and craft a strong offer.

2. Tour the property

Next, tour your target property. The house will be sold as-is, so it’s important to discover all imperfections and make sure they’re acceptable to you. Look for HVAC issues and structural damage, as these are among the most expensive problems. It’s best to ask for an official inspection to get a professional’s opinion and make sure you don’t get hit with anything unexpected later.

4. Look for comparable homes

Compare the probate home to similar non-probate properties in the area to get an idea of the baseline market value. This helps you understand its worth and make a fair offer. Don’t be afraid to put in a competitive bid — probate houses are usually priced below-market and the court is often eager to sell them quickly.

4. Make an offer and finalize

After you make an offer, the court must consider it, accept it, and schedule a confirmation hearing. This is often an auction, where you’ll bid alongside other interested parties, but sometimes it’s a simple court date to settle the property. 

The real estate agent draws up the final paperwork, you pay closing costs, and the estate pays title fees. From here, the process is over for buyers, though sellers may still need to manage asset distribution and officially close the probate case.

Can you avoid probate?

Yes, you can avoid probate with mindful planning, whether you establish a clear will or designate a joint owner. Here are a few ways to transfer ownership without probate:

— Create a living or irrevocable trust that grants a trustee the right to distribute assets.

— Record a transfer-on-death deed, which gives the property to another person after the homeowner’s death.

— Hold property in joint tenancy, which transfers full authority to the home’s preexisting co-owner.

Families often explore these options ahead of time to simplify matters for their loved ones, as they allow property to pass directly to heirs without the delays and costs of court supervision. However, some laws differ depending on location and title details, so it’s best to consult an attorney. 

Manage complex sales simply with Better

A probate sale can feel overwhelming, but you can manage it with the right preparation, know-how, and tools. With Better, you can turn complexity into an approachable process — get pre-approved in as little as three minutes, then find a real estate agent who understands probate sales to walk you through each step.

Explore your financing options and find the best deal effortlessly with Better.

...in as little as 3 minutes – no credit impact