Are you faced with selling an inherited property through a probate sale?
In case you don’t already know, probate is the legal process that involves the transfer of property from an estate to the property holder’s beneficiaries.
You may now be faced with the job of selling off real estate which hasn’t been willed to a specific beneficiary. This is where a probate court steps in to handle the selling of the estate.
Once the property is sold, the court is responsible for splitting the proceeds from the sale among all of the beneficiaries. With this sort of sale, there are strict sale procedures that you must follow.
To find out what they are, here are:
10 Facts You Need to Know About a Probate Sale
1. Make an Agreement with All Parties Involved
If the inheritance is going to more than one person, then you need to decide if selling it is the best idea.
Your sibling may want to keep the property and agree to buy out the other shares. Or perhaps the property will be sold in order to settle any outstanding debts the estate may have.
Whatever the case, if the property is to be sold, then every person involved with the inheritance will need to agree to the sale.
2. Be Aware of the Tax Implications
If you’re selling a home that you’ve inherited, it’s important to understand that the tax basis is the value of the property on the day the previous owner died.
That means you’ll owe taxes on whatever the difference is between what the home was valued for when you inherited it and the amount for which you sell it.
In other words, if the home was valued at $120,000 on the day the previous owner died and you sell it for $180,000, you’ll need to report the $60,000 for tax purposes.
If you’re splitting the inheritance with others, that $60,000 will have to be split. For example, if you have two siblings, then you’ll each report $20,000.
However, if the selling price is less than the value, this won’t be an issue.
3. Prepare to Sell the Property
If everyone is good with selling the property in probate sale, the next step is to prepare it to go to market.
If the home needs extensive cleaning and clearing, you may need to hold an estate sale. The person designated to handle any transactions in this situation is usually the executor – if there is one – though it may also be the trustee if the property was held in a trust.
This would be a good time to enlist the help of professionals who can handle the details of an estate sale to minimize the stress for you.
4. Appraise the Property and Obtain a Petition
You’ll need to find an independent certified appraiser to appraise the property that you wish to sell during probate. Check the internet or ask a local real estate agent or attorney to recommend one to you.
In addition, you’ll have to obtain a petition to sell real estate from the court.
Be sure to include all the information pertaining to the property sale, including whether it’s to be sold by auction or open market. Then file the petition along with the appraisal with the probate court.
5. Place the Home for Sale and Accept an Offer
Once you place the home for sale, you’ll start getting offers.
Upon accepting an offer from an interested and motivated buyer, you’ll need to inform the buyer that the acceptance is conditional on court confirmation.
Then you have to petition the court for a hearing to confirm the sale and then wait for it to go through probate before you can get a hearing.
6. Expect to Wait
The wait to get everything through probate usually takes less than a year. But that depends on the state of affairs.
Once that wait is over, you’ll have to then wait between 20 and 40 days for the hearing. This will depend on the current load on the court calendar where you live.
In some states, this could be an expedited process if the value of the estate is on the smaller side of a set threshold. But most estates that include property usually exceed this threshold.
7. Advertise the Sale and the Offer
Once you know the date of your court hearing, you can advertise the sale along with the offered price from the buyer with your local newspaper.
By doing this, you inform the public of the sale in order to allow for open bidding among other interested parties at the court hearing. The open bidding process aims toward getting the best price for the estate.
8. Attend the Court Hearing
There’s a good chance there will be a crowd. Probate properties can be a great deal.
Wait for the bidding process to begin. The bids will start at $500 above the intended buyer’s original offer and then proceed in $500 increments.
All bids are unconditional and the original buyer is also permitted to bid.
The winning bidder must present a cashier’s check to the court for a deposit after confirming the bid.
Once the probate sale has ended, the executor will then be given permission to distribute assets and settle debts.
9. Refund or Apply the Deposit
If there is a confirmation of a new buyer’s bid, then you’ll need to refund the deposit given to you by the original buyer.
On the other hand, if the original buyer’s bid is the winning one and the court confirms the price, then you’ll apply the deposit to the purchase price of the property.
10. Complete the Probate Sale
The probate sale is completed by closing the contract.
Be sure that all financing is sufficient to cover the cost of the property and that the full amount goes into the estate fund.
And that’s about it. There is one more thing to do, though:
Take Care of Yourself
Handling a probate sale takes time and patience. And if you’ve obtained the property due to the death of a loved one, it can take an emotional toll.
So remember to take time out to care for yourself through this trying process.
And if you’re interested in a fair, all-cash offer on your house or property in probate, contact us! We could make the process even easier.