Denise Knows Probate!
Buying real estate can be an exciting journey, but there are certain nuances when buying a property through the probate process. Understanding what probate real estate entails and addressing potential issues is crucial to ensuring you move forward without any unexpected delays or financial losses.
In this blog post, we'll explore the basics of how the probate process works and uncover valuable tips on navigating successfully through the steps so that your real estate closing can go as smoothly as possible. Read on for helpful insights into this complex topic.
Definition of Probate
Probate is the legal process of validating a deceased person's will and distributing their assets according to the instructions outlined in the will. This process may require court supervision and can take several months, or even years, to complete.
Probate becomes an even lengthier process if someone dies without a valid will as decisions must be made about dividing the deceased person's assets.
Regarding real estate, there are times when probate opens up opportunities for buyers to acquire properties from estates at reduced prices. However, there are unique challenges associated with purchasing a property through a probate that must be addressed to ensure a successful closing.
[Need help with probate? Join our Private Facebook group where you can ask questions and get answers, learn from others or share what you learned about the probate process. Be the first to join our new group! Join Here.]
Certified Probate Real Estate Agent
If you are looking to buy a property that is included in probate the first thing you should do is speak with a real estate agent who is trained and have a clear understanding of the probate process.
A certified probate real estate agent is a licensed professional trained in the probate process and have the knowledge to assists buyers and sellers in buying, selling, and renting properties. They know the probate laws and regulations. They also know the local real estate market and can provide useful advice on pricing, negotiating, and marketing strategies for successful transactions.
Probate Real Estate Properties
Probate real estate properties are houses and land, as will as other assets, owned by a deceased person at the time of death. These properties must be legally disposed of through probate proceedings before they can be sold.
However, in North Carolina real estate only has to be disposed of if there is not enough funds to pay the decedent's creditors.
The executor or personal representative of an estate is responsible for handling all aspects of probate, including the sale of the property. In some cases, selling through probate can be lengthy and complicated, but it also presents an opportunity for buyers to acquire desirable properties at reduced prices.
Probate Real Estate Process
Appoint an Executor or Personal Representative
The first step in the probate real estate process is to identify and appoint an executor or personal representative of the deceased person's estate. This individual will handle all probate proceedings, including selling the property.
Inventory Assets
Once appointed, the executor must inventory all assets of the deceased person's estate, including any real estate they owned at the time of their death.
Determine Property Value
The executor must then determine the current market value of each real estate asset owned by the estate. This is typically done through the help of a certified probate real estate professional or a professional appraisal.
Notify Creditors
The executor must notify all estate creditors that a probate proceeding has been initiated.
Clear Titles and Lien
Next, it is important to ensure any titles or liens associated with the property are cleared before the sale.
Issue Notices
The executor is responsible for issuing notices to anyone interested in the property, including heirs or beneficiaries named in the will and any other parties that may be affected by the sale.
File Probate Documentations
Once all required documents and notices are filed with the court, a probate hearing will take place where the judge will either approve or reject the proposed plan for the assets from the estate.
List Property for Sale
Once approved, the executor can list the property for sale with a real estate agent or broker.
Negotiate Offers
With the help of the certified probate real estate agent the executor will then review offers from potential buyers and any contingencies associated with the purchase offer. However, it is the clerk of superior court that has the final say so on the offer if the house is included in probate.
Close Escrow
Finally, once all paperwork is in order and any contingencies have been cleared, escrow can be closed, and proceeds from the sale will be distributed. First paying creditors and taxes and then according to instructions outlined in the deceased person's will.
Navigating probate real estate purchases can be complex and time-consuming, but understanding these steps can help ensure you successfully close your dream home.
Responsibilities of Real Estate Agent
Following are;
Understanding the process
A certified probate real estate agent should have a thorough understanding of the probate process and laws governing real estate transactions in their local jurisdiction.
Pricing & Negotiation
Agents should help buyers and sellers negotiate fair prices for properties being sold through probate.
Preparing contract documents
Agents should prepare the documents required to complete the sale, including purchase agreement contracts and closing paperwork.
Completing inspections
Agents can coordinate any necessary home inspections or other due diligence activities on behalf of the buyer or seller before closing the deal.
Processing payments
Agents are responsible for processing all payments related to the transaction, such as deposits from buyers and proceed from sellers.
Managing deadlines
Agents must ensure that all paperwork is completed and all deadlines are met throughout the transaction process, including any court-mandated timelines.
Closing & distribution of proceeds
Finally, agents must coordinate with all parties to complete the closing process and distribute proceeds according to instructions outlined in the will.
How Long Does Probate Take
The amount of time it takes to complete the probate process can vary greatly depending on the complexity of the estate and any legal issues that may arise along the way. Generally, it can take anywhere from six months to two years for all assets in an estate to be distributed, including real estate holdings.
How to Sell Probate Properties
Following are the ways:
Auction
An auction is a great way to sell a property quickly and involves interested buyers.
Direct Sale
The executor can directly list the property for sale with a real estate agent or broker, who will handle all aspects of the transaction.
Short Sale
In some cases, the executor may negotiate a discounted sale price with potential buyers to expedite the sale of the home.
Lease Option
This strategy allows buyers to lease a property with an option to purchase it later after their finances are in order, and any other contingencies have been cleared.
Rent-to-Own
Under this option, tenants rent properties from the estate while saving up money to purchase the home later.
How To Buy Probate Real Estate
Following are the ways:
Bid at a Public Auction
Interested buyers can bid on properties at a public auction sponsored by the probate court.
Secure Financing
Securing financing for any real estate purchase is important before submitting an offer.
Know Your Rights & Responsibilities
When buying a property through probate, it's important to understand your rights and responsibilities as a potential seller or buyer.
Work with an Attorney or Real Estate Agent
Working with an experienced attorney or real estate agent can help buyers navigate the complex process of purchasing probate real estate.
Make Room for Contingencies/Inspections
Include contingencies in purchase offers, such as home inspections or document reviews.
Advantages of Investing in Probate Real Estate
These include:
Lower Prices
Probate properties are often sold for less than market value, making them attractive investments for buyers looking to get a good deal.
Opportunity to Negotiate
In probate sales, buyers can often negotiate prices or terms with the estate executor.
Minimized Competition
In some cases, fewer buyers are interested in purchasing probate real estate due to the added complexity of the process.
Convenience & Flexibility
The executor has more leeway when selling a property and may be willing to entertain offers that may not otherwise be accepted.
Tax Benefits
Depending on your situation and state laws, tax benefits may be associated with investing in probate real estate.
The probate process can be complicated and time-consuming. Still, with the right knowledge and preparation, it can also be a great opportunity to purchase real estate at a discounted price.
FAQs
Is buying probate real estate difficult?
Buying a property through the probate process does not have to be difficult. An experienced attorney or real estate professional can help make the process easier and can even address issues or potential delays before you make an offer. They can explain the steps involved, answer questions, and help you navigate the process.
What are court approval and joint tenancy?
Court approval is needed to transfer property ownership in the probate process. This involves filing a petition with the court, which the judge will review and approve. Joint tenancy is a form of ownership that allows multiple people to hold title over the property. When buying a probate property, you may encounter joint tenancy and need to address it with the court.
What is meant by a revocable living trust?
A revocable living trust is a legal document that specifies the terms of how a property should be transferred to another individual upon the death of the owner. This type of trust is commonly used in probate real estate transactions and must be approved by the court.
Is selling probate real estate difficult?
No, selling a property through probate does not have to be difficult. An experienced attorney or real estate professional can help make the process easier and can even address issues or potential delays before you make an offer. They can explain the steps involved, answer questions, and help you navigate the process.
Conclusion
Hopefully, this post has given you an improved understanding of the probate process and how it works when purchasing real estate. Many considerations exist from organizing paperwork to finding a qualified attorney when buying property through probate. Planning and doing your due diligence is essential for a successful real estate purchase.
If there is anything that I can help you with when it comes to the probate process please don't hesitate to reach out to me. I will do my best to answer you questions and lead you in the right direction.
[Need help with probate? Join our Private Facebook group where you can ask questions and get answers, learn from others or share what you learned about the probate process. Be the first to join our new group! Join Here.]
Denise Harper Davis Certified Probate Real Estate Specialist
Licensed Realtor
252-902-9006
* NOTE: North Carolina Probate Solutions and the author of this article is not a licensed attorney or CPA. This post should not be considered legal or tax advice. Always consult an estate attorney or tax professional when needing legal answers and legal advice.