Probate real estate is never a pleasant topic, but it’s important to discuss. When a homeowner passes away, the property must be dispersed following the terms of their will. Most frequently in real estate, probate will be used to accomplish this process.
Understanding how the probate process functions and how long it takes to complete will help alleviate unnecessary stress if you find yourself in a situation in which it is needed. Depending on your position, you may need to be familiar with many details, such as how to locate probate property, how to buy or sell probate real estate, how much probate costs, and procedures for different scenarios. If you are an heir or beneficiary of a property, you might want to think about applying for an estate loan to avoid the delays associated with probate.
Read on to learn the ins and outs of probate real estate.
What is probate real estate?
Probate is the legal procedure that ensures the deceased wishes — as stated in the will — are carried out. While the process usually involves the courts, this can be a simple way to legally manage a complicated process on your own. Probate real estate is the legal process of handling a property after someone dies. It involves reviewing the will and assets of the deceased (often called a decedent) and determining how those assets are distributed.
The terms of the decedent have to play a role in how real estate is handled during the probate process. If the decedent specified for a property to go to an heir immediately, the process can be shortened, but if these terms are not laid out, it can get complicated.
How the real estate property is handled depends on other circumstances, especially if no particular instructions were provided by the deceased. For instance, selling the property can be necessary to settle debts on behalf of the deceased. If real estate was jointly owned with a surviving owner, most states don't require probate when one owner passes away. Additionally, a “quit claim deed” — which ensures the heirs automatically obtain the property without having to go through probate — is permissible in certain states, while others don’t recognize the action.
How does probate real estate work?
Probate real estate is ultimately determined by the court. Even though each state has its own regulations about how real estate is to be handled in probate, the courts are in charge of the process. Before a deal is made, a real estate sale typically needs legal permission. The personal administrator (or executor) is in charge of the estate during this time and is subject to court directives.
In the case of multiple heirs, it’s possible for one heir to want to keep the property while the other heirs want to sell. If multiple heirs want to keep the property but not share it, the court will decide what happens to the property.
Steps for probate real estate
While the probate procedure for real estate can vary depending on the specifics of each case and the location of the property, these are generally the steps that need to be taken:
- A court must appoint or approve a personal representative or executor
- Before the real estate property can be sold, it will be evaluated to set a fair listing price
- A real estate agent will list the property for sale and publicize it like any other listing
- Once an offer is made, the agent can accept the offer or try to reach an agreement on a price that works better for all sides
- If the estate's heirs reject the terms of the offer, a notice with a deadline for a response is mailed to the potential buyers. In some cases, the court may need to see and approve the offer before it can be accepted and the sale proceeds
- Once the offer is accepted, the sale may be completed and the money will be used as payments on debts or distributed to the heirs
How to sell probate real estate
If you’re on the side of the equation where you’re selling probate real estate rather than seeking a probate real estate property to purchase, there are a few things you need to know.
While it’s not a necessity to partner with a probate attorney, you may benefit by doing so to help ease your peace of mind throughout the transaction process. A probate attorney will have all the necessary knowledge to navigate the process and ensure it goes smoothly and you get the deal you deserve on the property sale. Working with an experienced, local real estate agent like the Babbington Team
can also help make your probate real estate sale much more successful.
Once you’re working with your team of professionals, you must submit a petition to open probate. Depending on your area and the laws of your state, you may need to apply for approval in advance to complete the sale. As mentioned above, you may also need to get the property inspected and appraised to determine a fair listing price.
Once this is complete, your real estate agent can start to list and market the property. Working with a real estate agent versed in probate is a good idea if you’re hoping to get the most for your property.
Once you’ve received an offer on your home, you have the choice to accept, refuse, or counter. Keep in mind that your probate attorney likely needs to submit your offer to the court for full approval before you can legally accept. This process should be no longer than 45 days, though some circumstances can take longer. Some states require probate real estate to be sold in a bidding situation and award the property to the highest bidder.
How to buy probate real estate
One benefit of purchasing probate real estate is that the heirs may be willing to sell the property for a lower price in order to move through the process quickly. This is often due to the heirs lacking any desire to own the property or care for it, so they’re hoping to sell as quickly as possible.
If you’re in the market for probate real estate, check county records, which are always available for public inspection. Some may be accessible in the courts or published online. They will include the property address as well as the names of the deceased and the heirs. You should also see the name of the property representative included in public documents.
If you’re in the market for probate real estate, it won’t be an easy ride. Finding the property
is the only first step, and you need to know about the requirements and procedures of your state.
Once you find the property, you can make an offer to purchase it. Just like any property, you are free to offer less than the listing price in the hopes of purchasing the home at a deal. However, the heirs are also free to reject your offer or make a counteroffer. If your offer is accepted, it must be approved by the courts before you can officially purchase the home.
Can probate be avoided for real estate?
Some heirs make advance plans to bypass probate. This can help by avoiding the open court process that probate entails. There are three choices if you’re hoping to avoid a situation of probate real estate.
Unrestricted living trust
An unrestricted living trust is one of the simplest ways to avoid real estate probate. A living trust is a trust created while you’re alive. It happens when the creator names themselves as the trustee until death and designates a successor and beneficiary to oversee their property upon death. Essentially, the property belongs to the owner’s trust and not the heirs specifically, but the heirs are free to use the property or sell it.
Shared (or joint) tenancy
A shared tenancy is another simple way to avoid probate real estate. This can occur only if you are the sole owner of the property. You may add a joint tenant to the deed of the property, in which case the ownership will automatically transfer to them upon your death.
Transfer on death deed
This type of deed is a simple way of designating a beneficiary to receive your real estate property upon your death. A Transfer On Death (TOD) deed can bypass the probate process. Throughout your lifetime, you will maintain full ownership of your property, but upon death, the TOD deed allows your property to seamlessly pass to your beneficiary. Keep in mind that you can withdraw the TOD deed at any time while living.
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The Babbington Team
is ready and able to help you achieve success in your real estate journey. We are the premier real estate team in the D.C., Virginia, and Maryland areas, so reach out if you’re in need of probate real estate services or for any other real estate needs.