Every once in a while I get asked about probate sales so I figured I should address the basics in a blog post. A probate sale is not something you want to have and should be avoided at all costs. A probate sale is when the court supervises a real estate sale upon the death of an heir. There are ways to skip the probate process, including having a living trust.
The main issues with a probate sale are the time it takes and the costs involved. A bunch of forms and documents must be filed and each step of the process is supervised by the courts. There is no predetermined time-line but the average length of a probate sale is anywhere from 6 months to YEARS! To make things even more complicated and stressful, the court must approve all of the terms of sale (in most cases). A frustrating aspect of this whole process is that important funds and accounts will probably be tied up for a very long time.
Aside from the time issues pertaining to a probate sale, there are major costs involved. Both the executor and the attorney for the estate have to be paid for their work and in most cases are very unreasonable and unnecessary. A ball park estimate of fees for a $200,000 estate would be around $15,000.
When you are looking for a home to buy and you come across a probate sale there are a few things to keep in mind. Some probate sales do not require court approval and can close just as quickly as a standard sale once the offer is accepted. In this case the tough part is getting the executor to sign the acceptance. If there are a lot of heirs involved they all have to agree! This can sometimes be a problem. The executor must get “consents” (legal documents) from all of the heirs before they can sign. Of course each situation varies depending on the relationship of the heirs and or the ease of communication. If you are trying to buy a probate sale you have to be patient and will most likely have to accept a longer acceptance period as requested by the sellers.
One last thing on probate sales is that BY LAW, no matter if court approval is required or not, the sales are AS-IS.