In real estate, a probate sale happens when a house is sold as part of the probate process — the court-supervised legal process of settling a deceased person's estate and transferring property and assets to the rightful heirs and beneficiaries.
Often, the deceased’s will or trust designates who will get which portion of their estate. The will may also name an executor of the estate, who will ensure that the estate's outstanding debts are paid and any remaining assets are distributed through the proper channels.
In that case, a court will verify the will's validity and grant the executor formal authority to handle the debts and assets.
If no executor is named — or no will exists at all — the courts will appoint an administrator (usually the closest living relative of the deceased) to handle the estate's assets and ensure they are distributed according to state inheritance laws.
Who's involved in a probate home sale?
Many people may be involved in a probate sale, and each party has a unique role and responsibilities during the probate process.
Estate executor or administrator
The executor could be a family member, close friend, or anyone else chosen to oversee a person's estate after death. If no executor is named, the court will appoint an administrator tasked with figuring out what to do with the deceased's assets, such as paying off debtors, locating next of kin, selling assets, and distributing proceeds.
Probate attorney
A probate attorney specializes in estate planning and can assist the executor in settling an estate after someone has passed away. This could involve filing documents with the probate court or providing general guidance through the probate process.
Probate court
The court includes the judge and legal system that enforces state inheritance laws. The court reviews petitions to begin the probate process and could appoint an executor if one is needed. They will also need to approve the sale of the estate's major assets, including real estate.
Probate real estate agent
As with a traditional home sale, a probate real estate agent can assist with appraising, pricing, listing, marketing, and showing a property — as well as handling negotiations, offers, and closing. A probate realtor will also ensure that you follow proper probate procedures: listing and advertising the property as a probate sale, drawing up the appropriate probate contract, and providing prospective buyers with probate-specific disclosures.
Prospective buyers
A seller will need to solicit offers from interested buyers. Depending on the condition of the home, these buyers could be regular homeowners or investors, and they could be paying with cash or borrowed funds.
How does selling a house in probate work?
In certain cases, you may need to ask the court's permission before selling a probate property — even if you've already been granted administrative authority over the estate.
"If there is a will involved, and the will specifies that the person in charge of administering the estate has the authority to deal with the property, sell it, or lease it, then oftentimes that statement will bypass the need to go through the court process for permission," says attorney Mitch Mitchell, a legal expert with Trust & Will.
Mitchell also notes that the process can vary widely by state.
In cases where court involvement is required, these are the steps commonly required to conduct a probate house sale.
1. Hire an attorney
An experienced probate attorney is key to smoothly navigating a probate sale. Their role includes:
- Petitioning the court to open probate proceedings
- Completing and filing court documents and associated paperwork
- Sending out the proper notices to potential creditors and beneficiaries
- Opening and managing a bank account for the estate
- Taking an inventory of the estate's assets and their associated values
- Settling any outstanding debts and taxes owed by the estate
- Transferring assets to the proper beneficiaries' names
- Settling disputes among beneficiaries/the trustee
- Representing the trustee and beneficiaries in court
- Disbursing final payouts and closing out the estate
Due to the sensitive nature of the probate attorney's work, estate planning attorney Rebecca Goldfarb says executors “need to find a lawyer they connect with, who's going to be a [geniune] person” while assisting in the estate administration.
2. Petition the court to open probate proceedings
Before any actions are taken to settle an estate, the estate attorney must petition the court to begin probate proceedings. The court will then need to approve an executor to handle the estate and its assets. A valid will could identify this person; or, if a will is invalid or doesn’t name someone, the court can appoint one — usually the next closest living relative.
3. Notify beneficiaries and creditors
The estate attorney and executor will need to send out notices to anyone with a stake in the estate — including heirs, beneficiaries, and any creditors to whom the estate owes outstanding debts.
Creditors may include mortgage or business lenders, credit card companies, or anyone else the deceased owed money to. Creditors will be first in line to receive what they're owed before the remaining assets or proceeds from the sale of the property can be distributed to the estate's beneficiaries.
4. Hire an experienced real estate agent
An experienced probate agent can help you maximize your sale price and minimize headaches.
"Oftentimes, particularly [with] multiple siblings, the biggest challenge is making sure that all parties are on the same page when it comes to price, timing, access to the property, etc." says New York-based real estate agent Stephen Hines. "The property may hold sentimental value, and this is a strong emotion to navigate."
In addition to laying out different options — such as selling as-is to an investor vs. making repairs — a good agent will serve as a mediator and problem solver during an emotional and complicated probate process.
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5. Get the property appraised and the title cleared
In a formal probate process, the court will typically require that a property be sold for no less than 90% of its appraised value. Getting a professional appraisal early on will help you determine a fair list price and decide if improvements would be a good investment before listing.
Your lawyer or title company will also need to ensure that the property has a clear title — meaning there are no outstanding liens, disputes, or legal battles over the property's ownership.
6. List the property
If you’re working with a full-service real estate agent, they will help you list and market the property on the MLS and possibly shop it around to investors, if it's in less-than-ideal condition. The executor should work with their agent to compare offers and decide if they want to accept or reject each one.
7. Petition the court to confirm the final offer
Unless an executor has already been granted administrative authority to sell a probate property, the court must approve a purchase offer before it can be accepted. In that case, the executor and their attorney will petition the court for another hearing to have the offer accepted and confirmed.
A court date will be set a minimum of 30–45 days out. During that time, the executor and their agent will continue marketing the home to potential buyers. Interested buyers can submit competing either ahead of time or at the court hearing.
8. Court confirmation hearing and auction
If multiple buyers show up at the confirmation hearing, the court will hold an auction allowing them to place competing bids. The bidding process for probate properties usually requires a 10% earnest money deposit, to be applied to the purchase at closing. Some states require that buyers exceed the previous bid by a minimum amount (e.g., $5,000).
9. Execute the contract
At the end of the auction, the contract will be drawn up and signed by both parties. The buyer can decide if they want to exercise their right to an inspection or not, but the contract cannot include any contingencies or repair requests. After the closing and transfer of funds from the buyer to the estate, there will be a final waiting period before the court officially declares the property sold.
10. Distribute the proceeds
Proceeds from the sale of the property will first go to paying off any outstanding taxes or debts owed by the estate. Any remaining proceeds will then be distributed to the estate's beneficiaries, who may be responsible for paying capital gains tax on their portion.
According to probate attorney Rebecca Goldfarb, capital gains are determined by the difference between the current fair market value of an inherited home and the sale price.
“If you inherit [a home valued] at a million dollars and you sell it at a million dollars, there's no capital gains,” says Goldfarb, even if the deceased person bought it for a lower price. However, you'll be taxed on any additional value added to the appraisal price at the time of inheritance, the lawyer points out.
How long does a probate home sale take?
It can take anywhere from three months to a couple of years to sell a house in probate. The timeline can vary greatly depending on:
- How the will was set up (if there is a will at all)
- The financial health of the estate (and whether creditors can call in debts)
- The state laws governing the probate process
- The number of heirs or beneficiaries involved (and how cooperative they are)
Generally, the more people that are involved, the greater the risk of delays, says attorney Rebecca Goldfarb.
In some cases, a beneficiary may be difficult to locate or refuse to sign off on paperwork. Or unknown creditors will call in debts, which must be settled before the remaining assets are disbursed.
"Time and good communication is of the essence," continues Michalakos. "If the courts require documentation, or if the lawyers need to confirm personal details, the clients absolutely need to be reachable and cooperative."
The estate's original owner can shorten the probate process and minimize court involvement by having a clear will, readily available documentation regarding the estate's assets and debts, and detailed instructions for how to access accounts and get in touch with beneficiaries.
Working with a good legal team can also greatly influence the efficiency of the probate process.
"The probate process will only be as good as your attorney is," says Michalakos. "Invest the time and money into a proven legal team that can speed your probate through the courts."
What's the difference between formal probate and informal probate?
Informal probate occurs when someone has a well-drafted will with clear instructions, or when all beneficiaries are in agreement as to how to handle the estate — basically, “if everybody gets along,” says Mitchell.
Formal probate is required if the estate has “way more creditors than assets” or there are “uncertain claims” to the deceased’s assets, says Mitchell.
As a general rule, you probably want to avoid formal probate unless you anticipate difficulties with creditors or competing claims on an estate's assets. "The formal process is designed to handle situations where there's some reason to have a little more oversight, but it's actually more expensive and takes more time to go through formal administration,” says Mitchell.
That said, if the beneficiaries disagree on how to handle the estate, you’ll probably end up going through the formal process whether you want to or not.
Can you avoid the probate process?
Yes, there are a variety of strategies for people to avoid probate. The simplest methods are for the person who sets up the estate to:
- Put their assets in a living trust
- Hold real estate jointly
- Use a beneficiary deed or transfer-on-death (TOD) deed if the state allows
- Designate beneficiaries in a 401(k), life insurance policies, IRAs, etc.
If you’re handling an estate after someone has already passed, it may be out of your hands whether probate is necessary or not. That said, you can take steps to minimize the burden of probate, such as:
- Pick the right legal team
- Determine what debts are owed by the estate early on
- Communicate early and often with beneficiaries
- Try to avoid conflict or disputed claims on assets
- Have beneficiaries sign an agreement to create an informal administration (only available in some states)
Ultimately, an executor only has so much control over how an estate is handled, so it’s best to address these concerns and make a plan BEFORE a person passes away.
Do you need a probate realtor?
Though it’s not required, hiring a real estate agent with experience handling probate real estate is probably a good idea. Trying to sell a house without a realtor is a big task with lots of risk, and this is only magnified when it’s a probate home.
In addition to helping you navigate the probate process, a probate realtor can help with:
- Determining the home’s fair market value based on comparable home sales
- Explaining how much money beneficiaries could net from different listing options, such as selling as-is vs. renovating the home
- Determining which home improvements will offer the best return on investment
- Hiring vendorsls, such as cleaners and junk removal companies
- Securing contractors to complete desired repairs or improvements
- Taking photos and prepping the listing
- Marketing the home to prospective buyers
- Facilitating showings, inspections, and negotiations
- Evaluating and presenting offers
- Working with the other parties involved (including the buyer's agent and your attorney and title company) to ensure the sale closes according to schedule
"Inheritors will have different motivators — some want to get rid of the property ASAP, others have a sentimental attachment and wish to see it brought back to its glory days, and others just want to maximize their inheritance value," says Michalakos. "Often, I'll create a cost-benefit analysis to illustrate what any extra work could be worth."
In Michalakos’s experience, clients who are willing to put in the time and money to fix up the house vs. selling as is can as much as double their inheritance proceeds. Where siblings prefer to keep the work to a minimum, they can market the home to various investors willing to purchase the property as is.
A great way to benefit from an agent’s expertise while keeping down costs is working with a brokerage offering lower-than-average commissions. This helps you maximize proceeds and keep more money in your pocket.
When navigating a complex home sale, your choice of agent matters.
Get hand-picked agent matches sent straight to your inbox and compare their experience to find the best fit. Take advantage of pre-negotiated commission discounts — with no added fees or obligation to move forward. Find a top agent.
FAQs about selling a house in probate
Can the executor sell a house that is 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 on whether an offer is accepted or rejected.
Can an executor sell a house for below market value?
An estate's executor or personal representative is obligated to sell any property at the best price. However, beneficiaries may contest the home sale when the price doesn't match their expectations. In situations where multiple heirs stand to gain from the sale, hiring a good probate real estate agent to verify that the home is properly appraised, act as a mediator between the executor and heirs, and ensure the sale proceeds according to state laws is a must.
Are probate sales cash only?
No, probate sales do not necessarily have to be paid for 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.
Who owns a house in probate?
A house in probate belongs to the estate. This means the executor will decide who is allowed to reside there and whether they should pay rent, or if the home should be sold and for how much. If the home is sold, the executor will need the court to confirm the sale and ensure that all beneficiaries are informed and approve the sale.
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.
Do all heirs have to agree to sell a property?
It depends on the way the will is set up. If the distribution of property is clearly defined — and an executor is given full administrative oversight to distribute an estate's assets according to the deceased's wishes — they can proceed without the beneficiaries' approval. If the will is less than clear as to the way property should be distributed, and there is a dispute over how to proceed with the sale of an inherited property, the formal probate process will be enacted. In that case, the court will step in to determine how to resolve the situation.
Can you avoid capital gains on an inherited property?
Yes, there are strategies to minimize or completely avoid capital gains on inherited property. One way to avoid capital gains taxes is having the home appraised at the time it is inherited and selling it for that amount or less. Another way is to simply not sell the property. States have different rules regarding inheritance taxes, so it’s best to consult with a tax professional before making a decision.
Why trust us
The Clever Real Estate team consulted with industry experts to bring you the most accurate and reliable information.
- Travis Christiansen, estate and family law attorney
- Rebecca Goldfarb, trust and probate attorney
- Stephen Hines, New York–based real estate agent
- Stephen Michalakos, lead real estate adviser with Engel & Völkers
- Mitch Mitchell, attorney and legal expert with Trust & Will
