In his book Asset Protection 101 – J.J. Childers wrote “There’s hell, and then there’s probate.”
Probate is a government process administered through the courts that helps the orderly distribution of a person’s assets after they have passed away (of course making sure that creditors and various governmental agencies get paid, too). The probate plan works if the person does not have an estate plan, but it even controls estates where the decedent left only a will as their main estate planning document. The court appoints an executor to oversee the distribution and/or disposition of a deceased’s assets.
If you are named as an executor of an estate, you may have to sell off real estate held by the estate not directly willed to a specific beneficiary. The probate court handling the estate will then split the proceeds from the sale among the beneficiaries. Each county has strict sales procedures for making a valid sale of the property.
The basic process goes like this:
- Have the property appraised
- Petition the court to sell the house
- Place it up for sale and accept an offer from a buyer
- Escrow the buyer’s deposit
- Petition the court for a hearing confirming the sale
- Complete the sale by closing the contract
The first step is to have the property that you wish to sell appraised by a certified appraiser. You can find an appraiser in the local phone book or by asking an area real estate agent or real estate attorney for a recommendation.
The next step can get a little tricky. You have to submit a petition to sell real estate to the court. The petition needs to include all information pertaining to the property sale, including sale methods (whether by auction or by an open market sale). You must file the petition along with the independent appraisal with the court and await approval from the probate court allowing the sale. What’s so tricky about this step? Unless you have experience in the real estate business, you might not know exactly how you’re going to sell this property. Can you actually list it in the MLS? Are there back taxes owed? Often, the deceased has had other priorities than home maintenance; are there significant repairs that need to be made? Are there any liens that could cloud the title? This process becomes all the more troublesome when the executor lives in a different city or state than the actual property.
If you find yourself in the position of executor of an estate involving a property, you have a number of choices. Whatever you decide to do, be sure to continue paying the property taxes (and/or make arrangements to pay any back taxes).
- You might choose to attempt the repairs yourself or with family members. If you have the resources and the inclination, this can be an interesting project. People do this all the time.
- You might try to sell the house yourself. The condition of the house is what will often drive your ability to finalize this. It’s not that people don’t want to buy it – it’s the lenders who refuse to fund purchase if the house is in poor condition.
If that’s the case, you now have another choice – do you try to pay for the renovations yourself to get the house sale-worthy? If not, how are you going to sell it? Retail buyers can’t get a loan on such a house, and you can’t afford the time and money to renovate it.
That’s where it helps to know real estate investors like Hermit Haus. In these situations, investors are the only real option. We buy distressed properties, renovate them, and then resell them or rent them out. We can close quickly (or as quickly as the probate process allows). If you or someone you know falls into this situation, call us at 512-807-8777 as soon as possible!