How Does a Probate Sale Work?
For people unfamiliar with the topic of probates, it may be useful to learn more about them, as sometimes you’re able to score a great deal while purchasing a property through probate sales. You may have stumbled upon the term once or twice but have never really gotten yourself into ultimately discovering what it is all about; that’s why we’re here to give you all the Ins and outs of how a probate sale works.
A probate sale is generally speaking the process of selling a property of which the owner died without a valid will in place. It is the personal representative’s responsibility to sell off the home and distribute the proceeds of it to the beneficiaries.
Sometimes you may stumble upon a good deal on a property, and it might just be one that is being sold through a probate proceeding; that’s why it’s essential to know how to go about it and if it’s worth purchasing a probate home.
So How Does a Probate Sale Work Exactly?
A probate sale operates similarly to any other listing, being sold by an agent or through an agency. However, what is distinctive about probate sales is that it is the government that sells the property; that’s why you may sometimes get a slightly better deal than if an individual sold it.
Typically during a probate case, a court will appoint an estate executor, who will be responsible for finding an agent to market and sell the home. This step is done similarly to any other sale; however, the difference here is on the price it will be marketed for. A court will appoint their own qualified individual, appraise the home, and decide on its market value. Depending on various factors, the price is suggested, and the home will most likely be marketed for the price the court-appointed individual has given. This may sometimes mean that the house will be valued at a bit less than other homes in the neighborhood.
Purchasing a Home at Probate
Advantages
The most significant advantage of purchasing a home through a probate sale is its price. Real estate can be an excellent, safe investment, as home prices generally tend to grow rather than decline. Homes sold through probate court tend to go for a much lower price than other properties nearby, so you might just be getting a deal that is too good to pass on. This comes as a result of the home being sold to pay off any liabilities of the deceased person and pay the rest off to the beneficiaries.
If you find a home being sold on probate, be sure to investigate the neighborhood and compare the prices that other homes in the area go for. The price for square footage in a probate home might be significantly lower than in one that is being sold by an individual.
What’s more, in the future, you might be able to sell it with a much higher price tag you bought it for. Properties prices tend to rise in some neighborhoods more than others, so before placing an offer, make sure to do your fair bit of research and decide if a probate home is what you may be looking for.
Disadvantages
Although purchasing a home through a probate sale may substantially decrease the price you’d otherwise have to pay, there are some things you should take into consideration before you make that decision.
As a general rule of thumb, a person who has died might have been of an older age, and therefore, the house they have lived in has most likely simultaneously aged with them. A probate home might have defects that are very costly to fix and will require extensive repairs. In addition to that, some of the flaws, due to their age, might sustain you from getting a loan for such a property.
As hard as it is sometimes to get a loan, it may be even more difficult with a probate home, as banks are unwilling to lend money to properties that they might deem as “unsellable” in the future. That’s why if you’re purchasing a home on probate, you might have to have cash in hand prepared for the purchase.
In addition to that, the process of acquiring a home through probate can be a very timely one and require a lot of extra paperwork that wouldn’t be needed if it was a typical purchase. So, make sure that you are prepared to go through a potentially lengthy process to acquire the property.
Conclusion
Before purchasing a property through a probate sale, you should do a fair share of research and educate yourself on how it looks, and how it is different from a regular real estate sale. You should also keep in mind that, like most things, buying a probate home has its pros and cons.
It may seem like a great deal at first, but you should remember that there may be undisclosed problems with the property that you haven’t had the chance to discover at first glance. Always consult qualified professionals for the most accurate advice, and weigh all the advantages and disadvantages of such a purchase before making any final decisions.
