Why you can trust us: For this article, we spoke to attorney Mitch Mitchell of Trust & Will and estate planning attorney Travis Christiansen of Boyack Christiansen Legal Solutions in St George, Utah.
Probate sales are when a deceased person’s assets are sold to someone else. This can mean financial assets, real estate, or other private property that people are interested in buying.
In the case of real estate, probate clarifies title issues for the property in an estate, and legally distributes and transfers the title of that property. Probate also protects an estate from possible challenges to legal heirs of a will. Until a house is probated, it can't be legally sold.
Although probate sales can be lengthy and complicated, they also offer potential opportunities to get properties at a discount—if you’re patient enough.
Here, we’ll give you the lowdown on probate sales and help you decide if buying probate property is the right move for you.
Probate generally follows the same procedure from state to state, but each state has its own rules. For example, in California, an estate worth about $160,000 or less can use a simplified probate process. Compare that to Wisconsin, where a simplified process is only available for estates worth $15,000 or less.
Find your home state below to learn the specifics about how probate works there.
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What is a probate sale in real estate?
In real estate, a probate sale is a court-supervised sale of a property after the owner’s death.
If a property isn’t in a trust or protected from probate by some other means, it will go through probate until the people appointed to oversee the estate — either an executor named in the will or an administrator appointed by the courts, if there isn't a will — figure out how to pay off the deceased person’s debts and legally distribute their assets to any beneficiaries.
Additionally, buyers must be prepared to purchase a property “as is” (meaning no contingencies or requests for repairs) and submit a 10% cash deposit with their offer.
Mitchell warns that “the [probate] process can vary widely by state,” so it’s important to speak with an attorney or real estate agent in your area who has experience with probate sales.
Can a house be sold while in probate?
A property in probate cannot be legally sold until the probate process is completed.
Generally, the probate process is necessary when:
- The property owner dies without a will
- The owner's will is contested or invalid
- The will needs to be validated to properly distribute assets to heirs
The point of probate is to make sure the estate is able to pay off all of the deceased person's debts and the heirs to the estate receive their inheritance. The house cannot be sold until all of these issues are squared away.
How long does a probate sale take?
Because probate sales must be administered and approved by a probate court, they can take between 18 to 36 months before closing — much longer than the typical home sale.
Each probate sale is different. A probate sale for a simple, lower-value estate may be completed months before a probate sale for a large, complicated estate with many creditors.
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When is a property required to go to probate?
Probate is required in a variety of circumstances, but is generally necessary to:
- Validate a will and ensure assets are properly distributed
- Settle an estate with an invalid, contested, or non-existent will
“One common misconception is that [having] a will means you don’t have to go through probate, but that’s not correct,” says attorney Mitch Mitchell. "Probate gives the personal representative or executor the authority to take possession of the property, administer it, pay off claims and creditors, and then distribute the remaining assets to the named beneficiaries."
In some cases, the executor and their attorney must locate family members and send out a public notice to potential creditors before being able to distribute an estate's assets or conduct a probate sale. The process can take several months or even years.
Since the legal process of probate court can be cumbersome, some people implement these strategies to avoid it:
- Having assets or property jointly owned
- Putting assets in a living trust
- Having a beneficiary deed, if your state allows it
According to estate planning attorney Travis Christiansen, “one of the main reasons for doing trust planning is the ease of transition from one generation to the next,” so holding property in a trust can be an effective way to avoid probate courts.
How does a probate sale work?
The probate sale process varies depending on whether the deceased person dies with or without a will (i.e., testate or intestate).
Dying intestate, or without a will, means the estate will be handled according to the state’s inheritance laws, as opposed to dispersing assets per the instructions of a valid will. In that case, says Mitchell, the first step involved will be petitioning the court to open the probate case and appoint an administrator to handle the estate like a named executor would.
Either way, there will be court involvement to ensure that proper procedures are followed by the estate executor or court-appointment administrator.
Since probate laws are determined at the state level, the exact process may also vary somewhat from state to state. No matter where a probate sale takes place, certain procedures are put in place to ensure that the home is sold for the best price and the proceeds are distributed according to the decedent's wishes or state inheritance laws:
- Assure will validity: If there is a will, the probate process determines if the will is legal and valid.
- Appointment and executor: If an executor is named in the will, the court will grant them the authority to administer the estate's assets through documents called "letters of testamentary" or "letters of administration." If a will doesn’t exist or isn’t valid, the court appoints an administrator who will take on the executor's responsibilities. Generally, the administrator is the closest living relative to the late owner.
- Hire a real estate agent: The executor hires a real estate agent to help carry out the sale. Most real estate agents are capable of completing a probate sale, but it’s a good idea to find one that has specific probate experience or is a Certified Probate Real Estate Specialist (CPRES).
- Appraise the home: The executor hires an appraiser. This determines minimum sale values per state law. For example, in California, homes cannot sell for less than 90% of the property’s appraisal value.
- Market the home: The real estate agent lists the home on the MLS, utilizing their professional network and putting up signs to attract buyers. They must make it clear that the listing is for a probate sale.
- Make/receive offers: Buyers must make offers with at least a 10% earnest money deposit, which is often applied towards the down payment at closing. The seller can accept or reject the offer. If the seller accepts, the offer gets passed on to the probate judge, who will make a final decision during a petitioning session on whether to confirm the offer.
- Petition the court: After a buyer’s offer is accepted by the executor, their attorney sets a court date where they will petition the court to confirm their offer. This date is generally 30-45 days after the executor accepts the offer. The executor can raise the price of the home and continue marketing the property during this time. The court can also continue receiving and accepting offers.
- Court confirmation: When the court date rolls around, all buyers whose offers were accepted will meet at the court to petition the probate judge for approval. Court-confirmed probate sales operate in an auction format, where each buyer attempts to outbid the others until the judge confirms an offer.
- Make a deposit: The winning buyer must provide the court with a cashier’s check for 10% of their bid immediately upon winning. If they don’t, the property will go to the runner-up. The remaining balance will need to be paid at closing.
- Sign the contract: A contract is signed between the executor and the buyer. The contract cannot include any contingencies or repair requests.
- Inspections: Buyers can request an inspection of the home. However, unlike a normal real estate transaction, buyers that back out of a purchase because of issues discovered during the inspection will still lose their deposit.
- Closing: The purchase contract will identify the closing date and method of payment for the remaining balance on the home purchase. Once the buyer provides those funds, they can close on the property and complete the purchase.
What's the difference between informal and formal probate?
There are two types of probate sale processes in most states: informal and formal.
Informal probate is a less expensive and easier form of probate. In general, informal probate uses an administrative process with minimal court involvement. States may have other simplified probate procedures such as summary probate, unsupervised probate, and small estate probate for estates with values below a certain threshold set by the state.
Informal probate is appropriate when:
- An original will is available
- No one contests the validity of the will
- There is no will, but there is no dispute over the identity of the heirs
Formal probate involves petitioning the court for a hearing, often leading to continued court supervision throughout the process.
Formal probate is necessary when:
- No original will is available
- Competing wills are available
- The validity of the will is disputed
- There is no will and there is a dispute over the identity of the heirs
How much does a probate sale cost?
The average cost of a probate sale is difficult to determine because of the many variables involved from one case to another, and from one state to the next.
Cost will depend on how large and complex an estate is and whether any heirs contest the will. Probate expenses are paid from the estate, so a more expensive probate sale means less inheritance.
Here are some common expenses to expect for probate sales:
- Probate attorney fees
- Court fees
- Filing fees
- Appraiser fees
- Land surveyor fees
- Realtor commission
What is the court confirmation process in a probate sale?
In a probate sale, a home is advertised on the MLS, just like a traditional listing. However, the real estate agent must notify prospective buyers that the listing is subject to court confirmation or court approval — meaning an executor or administrator can accept a buyer's offer, but that doesn't mean the sale is official.
With an offer in hand, the executor must then petition the court to get the offer accepted and family members of the deceased must be notified and given time to comment or raise objections to the sale.
Finally, a court confirmation hearing must be scheduled a minimum of 30–45 days out, and the hearing must be advertised to other potential buyers to ensure that estate beneficiaries can benefit from competing offers.
The actual court confirmation hearing in a probate sale resembles an auction, where interested buyers can place competing bids over and above the initial offer, usually in set increments. In California, for example, any subsequent bid on a probate property must be a minimum of 5% + $500 more than the initial offer.
If no other buyers appear in court to bid on the home, the initial buyer gets the property for their original offer price. In a probate sale, all offers must be accompanied by a 10% security deposit in the form of a cashier's check.
Dealing with probate property is way more complex than operating in an ordinary real estate channel, so it’s best to have an experienced guide to help you through the process.
Let's look at an example
Many buyers and sellers get confused about the offer process for a probate sale. To clarify, let’s look at an example:
Jane is appointed as the executor for her recently deceased uncle’s home. She hires a real estate agent who markets the home and lists it on the MLS for its appraised value of $200,000.
On June 1, Bill makes an offer for $190,000. Jane accepts this offer, collects a $10,000 deposit from Bill in the form of a cashier's check, and petitions the court for a hearing to get the offer approved. A court date is scheduled for 30 days out.
During the waiting period, Jane notifies family members and any other heirs about the offer and hearing date, which is also advertised to other potential buyers.
On the scheduled court date Jane, Jane's real estate agent, and Bill meet at the probate court and an auction is held. During this time, other potential buyers are invited to submit competing bids, which must be accompanied by a 10% security deposit. Howard enters a bid of $200,000, but Bill does not want to go any higher, so Howard wins the auction.
After the court confirmation hearing, Jane and Howard sign a sales contract, but there are no contingencies allowed. Howard may ask for inspections, but he can’t back out of the contract. If he does, he will lose his deposit. In approximately 15 days, the parties close on the property.
How is a probate sale different from a regular home sale?
The biggest differences between buying probate real estate vs. typical homes are the inventory, timeline, cost, and risks.
Probate properties are not as readily available as homes found through ordinary real estate channels and the purchase process will likely take much longer. Probate sales can also involve the risk of being outbid or having to pay for major repairs after closing.
That said, investors and other home buyers can often get homes for less than market value by looking into probate properties. But while probate listings may get you a house at a bargain price, you should be prepared for a long, drawn-out process filled with bureaucratic hoops.
Pros of Probate Sale
Probate sales have a couple of key benefits:
- Reduced prices: In many cases, estate beneficiaries want to avoid putting money into a property and would prefer simply to get the house off their hands as fast as possible. Often, they're willing to entertain offers well below market value. Probate sales may be a good way to find fixer-upper properties that you can resell for a big profit. .
- Less competition: Since many buyers are intimidated by the probate process, you may face far less competition when placing an offer. Investors with a keen eye can find incredible bargains dealing in undervalued properties sold through probate.
Cons of Probate Sale
Despite the opportunity to find a home for below market value, you should be prepared to encounter certain tradeoffs with a probate sale:
- Properties sold "as is": Homes sold in probate may sit vacant for a long time, and since the property owner is deceased, they won't be able to disclose any known issues with the home. Additionally, executors may not fix up or even maintain the home if the estate doesn't have the funds to maintain it, so buyers need to be ready to put in some work and money to make it livable. If you’re serious about making an offer, you should have the house inspected. Just keep in mind that you won't be able to request repairs. And if you back out after your offer is accepted, you may lose your 10% deposit.
- Long, complicated process: Probate sales can take years to reach completion. With so much bureaucracy involved, buyers need to expect a purchasing process many times longer than normal. Buyers should also be prepared to participate in certain legal proceedings, such as appearing in court to confirm the sale of the home.
- No contingencies allowed: Although most purchase agreements have some contingencies, probate sale purchasing contracts do not. Even if a major issue is discovered during an inspection, buyers only have two options: leave the agreement and lose their deposit, or go through with the purchase.
How do I find probate listings?
If you want to find probate listings, you can speak with your local court’s clerk and ask for a list of all recently filed probate cases. You can then identify the cases that are still open and request their inventories. If a property is listed in the inventory, contact the administrator or executor for each case that you’re interested in.
Probate sales are also usually listed in the MLS and advertised in local papers, so you will naturally come across them when looking at real estate listings.
Should I hire a probate agent?
Probate sales provide opportunities for buyers to snag a great deal on an undervalued home. However, the long, drawn-out purchase process and lack of buyer protection in the form of contingencies make probate sales a better option for investors and those experienced in real estate, not first-time home buyers. Real estate is complicated as it is, but probate sales take it to a whole new level.
If you’re considering buying a house in probate, don’t go it alone. The guidance of an experienced probate real estate agent is invaluable when navigating the complex bureaucracy involved in probate sales.
FAQs about probate sales
What does "subject to court approval" mean in real estate?
The phrase “subject to court approval” means that the sale of a probate property must be evaluated and approved by a judge of the court before the sale can be finalized. This process protects potential heirs and debtors, but also ensures the property is being sold for a fair price.
Are probate sales cash only?
No, probate sales do not always have to be made in cash. A down payment of at least 10% is required and a cash offer may be more appealing to a seller, but whether cash is required depends on the seller and their circumstances. Usually property that must be confirmed in court requires cash, though.[1]
Can a house in probate be sold?
Houses in probate can be sold in a probate sale. Compared to a regular real estate sale, the process is far more in-depth and takes a long time because of the bureaucracy involved. However, buyers willing to deal with the long waiting times and lack of protection in the form of contingencies may benefit from lower prices and less competition.
Why would a house go to probate?
Houses go to probate when the owner dies without specifying who will inherit their property. In these cases, the property will be transferred to a probate court, which will then appoint the closest living relative as the executor of the home sale. The executor will then hire a real estate agent and go on with the sale like they would any other. However, unlike normal real estate transactions, a probate judge will have to review and approve any offers at a confirmation hearing.
How do I find probate listings?
You can find probate listings by going to your local court and asking the clerk for a list of all open probate cases. The clerk will provide you with a list, and you can ask for the inventories of each listing. If properties are included in the inventory, you can contact the executor of the case.
Are probate records public?
All probate records are public. You can speak with your local court’s clerk to get a list of all open probate cases along with their inventories. You can then use this list to get in contact with the executors of the sales.
How long does a probate sale take?
A probate sale can last anywhere from three months to several years depending on the complexities of the estate, state laws, and any legal complications involved with the title, beneficiaries, or bureaucratic process. Probate sales take time and patience. They are not the place to try to pick up a piece of property quickly.
Can the executor sell a house in probate?
Yes, in a probate sale, an executor is responsible for selling the property and distributing the proceeds to the beneficiaries. Probate sales are similar to regular real estate sales, but they take longer and involve the local probate court. The probate judge has the final say whether an offer is accepted or rejected.
Can a house in probate be sold?
A house in probate can be sold by the executor, or the court-appointed administrator of the estate, once the notice of probate is published. But the executor must have the probate court’s approval to sell the property and make sure that all the beneficiaries, if any, are informed and in agreement with the sale of the home. The executor should be working with an experienced probate realtor and probate attorney.
What is a probate sale without court confirmation?
If a probate property is part of a trust sale, or if the executor or administrator of the estate has full independent powers, they can list the property for sale without court confirmation. If a buyer’s offer is accepted, then the estate’s attorney will need to send a Notice of Proposed Action describing the terms of the proposed sale to all the beneficiaries. If the beneficiaries do not object to the sale within 15 days, the sale can be completed without any court hearing.
Can you live in a house during probate?
You can live in a house during probate but keep in mind that the house now belongs to the estate. The estate acts as the landlord and you could be asked by the executor or administrator to pay rent, or at the very least, maintain the household expenses including the homeowner’s insurance policy. If you’re a beneficiary, be aware that rent and/or other expenses paid by the estate for the house while you live in it could be deducted from your portion of the proceeds of the house sale before you get your inheritance.