Whether you are a first time home buyer looking for an affordable starter home, a bargain hunter trying to save money on your next home purchase, or a real estate investor looking to optimize your ROI, probate real estate may check off all of the items on your wishlist.
You may be wondering, What is a probate listing? How can I find probate properties? What is the process like for purchase? We’re here to answer all of your questions and introduce you to Dwellful’s agent finder to help you find the perfect probate property for your needs.
What Is Probate Property?
Probate is the process through which the ownership of a property is settled after the death of its owner. Probate can involve either
- the administration of the terms of an existing will by the executor or
- the search for an heir in the event of a death where there is no will, also known as intestate succession.
Probate property, then, is the real estate holding involved within the larger estate of someone who has died.
Many real estate investing professionals and bargain hunters are attracted to probate property because of the potential it offers for a reduced sale price, which is typically much lower than market value. Often, heirs are living in other parts of the country or are eager to monetize the value of their inherited property. They may have been paying for the upkeep of the property throughout the probate process and are looking for a sale as soon as possible. In this case, ready, willing, and well-qualified home buyers may have a strong negotiating position for a probate home.
How Long Does It Take To Buy a House in Probate?
Buying a house that’s in probate can take months or even years depending on a number of factors. These include:
- Whether or not there is a valid will
- Whether or not there is conflict among the heirs
- Probate laws and procedures in the property jurisdiction.
For example, there may be a valid will in place that leaves the property to all of the adult children in a family. However, if one of the heirs is unwilling to sell, this could create further delays in the administration of the probate process. That’s because the court will need to ensure that any disputes are resolved before approving a probate property purchase.
5 Ways to Find Probate Property
Wondering how to find probate properties? Here are some of the most popular strategies for finding probate homes.
- Contact the clerk of court or the Probate division of your local or county jurisdiction. Ask for information regarding probates filed in the prior six months and narrow them down by those that remain open and those that include real estate among the inventory. Contact the estate representative or executor to find out the status of the real estate holdings and to begin a dialogue regarding the sale of the property.
- Contact a real estate agent in your target market. One of the best first time home buyer tips is to look for real estate agents who work with probate properties or with senior clients. You can also identify agents who work with real estate investors. Any of these should have experience working with probate properties, along with a professional network that is more focused on this market niche.
- Local and online publications may offer information about probate filings and probate estate sales so that you can find properties as they move through the probate process. In addition, obituaries may provide an early indication of properties that will soon be going through probate.
- Probate auctions are commonly held, especially in cases where there is no readily identifiable heir. Keep an eye out for these probate proceedings or work with a real estate advisor who specializes in auctions to develop a strategy for optimizing your chances of submitting a winning bid.
- In some cases, you may be able to buy leads for probate properties in your chosen market. This is especially common in jurisdictions where the public records are difficult to access. Make sure that you are purchasing leads from a trusted source and that they are up-to-date.
How to Buy a Probate Property
Once you have identified a probate property, it’s time to start formulating a plan for your purchase. If you haven’t already, you’ll probably want to find a buyer’s agent who can work with you throughout the process.
How long is the home buying process? To answer that question, you’ll need to develop a positive, yet patient, mindset. Probate can take up to three years in some cases, and the ins and outs of government bureaucracy can make the process feel even longer. In addition, because you may be working with multiple stakeholders, including a variety of heirs and their representatives, it is essential to go into the process expecting the unexpected.
Make an Offer
In contrast to a standard home sale on the open market, you’ll need to be prepared to put down 10% of the agreed-upon sale price once you have reached a consensus with the property executor. Once you have done so, the offer will be submitted to the court for validation. If there are no objections, the offer will be considered along with any other viable offers at a subsequent court hearing.
Request an Inspection
Once your offer has been accepted, you can request an inspection at your expense. Remember that probate properties may have been owned by an elderly or absentee owner for some time before they become available. That could mean that there’s deferred maintenance that needs to be addressed once you take possession of the property.
Keep in mind, there are no contingencies allowed when purchasing a probate property. You have already put down the 10% and committed to the home purchase. This home inspection is for your own peace of mind and is not a means for reopening negotiations or allowing you to back out of the purchase and get your down payment back. To learn more, visit our post addressing the question, “what does contingent mean when buying a house?"
If the inspection turns up significant problems that would cost you far more than your 10% down payment, you may want to forfeit the money and move on to another property. These may include:
- Structural and foundation problems
- A need for whole-house replumbing and rewiring
- Asbestos, lead paint, or toxic mold
- Extensive water intrusion or termite damage
Any of these may make it cost-prohibitive to proceed with the purchase and bring the property up to a livable condition.
Closing on Your Probate Property Purchase
Once you have agreed to the terms of the sale and you have obtained an acceptable home inspection, it’s time to look at the closing process for a probate property purchase.
Even after your offer has been accepted, the executor can continue accepting new qualified offers for approximately 30 to 45 days. These offers will undergo the same validation process in court, and a court date will be set for hearing all of the accepted offers.
At this point, the probate judge will need to agree to the price and terms and determine which of the accepted offers will win out. If there are multiple competing offers, the judge will conduct a petitioning process that’s similar to an auction, with bidders offering increasing bids and counters.
The Bidding Process
The highest bid will be accepted and the winning bidder will need to put down 10% of the agreed-upon sale price on the spot. You will want to decide ahead of time how high you are willing to bid, then bring a cashier’s check with you to court and be prepared to put down 10% of your maximum purchase price in case you come out ahead in the bidding process.
If you’re ready to begin your search for a probate property, Dwellful is ready to help you find a stellar real estate professional to assist you. Whether you need a first time home buyer real estate agent or a probate specialist, our agent finder offers reliable, objective options. Your Dwellful-referred agent knows how to find probate properties and how to help you navigate the probate process.