Purchase of probate properties such as investment real estate
Probate estates involve real property titled in the name of a deceased person. Probate is the process used to liquidate the estates of the deceased and distribute inherited assets to rightful heirs. To transfer real estate to heirs, transfer documents must be registered through the court.
Probate estates are often held in court for several months and can cause financial hardship. The estates of the decedent are responsible for all expenses associated with the property throughout the probate process. Common expenses include: mortgage loan fees, insurance and property taxes, homeowners association dues, and general maintenance such as landscaping or pool maintenance.
The administrators of the estate are appointed in the last will and testament. They are responsible for all aspects of estate settlement. When real estate does not automatically transfer to a surviving spouse, administrators must insure the home and obtain an appraisal of the property. It is best to work with a probate attorney to ensure proper protocol is followed regarding real estate.
If the decedent’s heirs are financially unable to pay outstanding debts and expenses related to the property, the estate homes may be sold to reduce financial burdens. When multiple heirs are entitled to real property, each must agree to the sale unless ordered by the court.
The process for selling probate property depends on the type of estate. Some states require property sales to be supervised by a court and allow multiple bidders to bid. Others allow executors of assets to manage the sale without judicial interference.
Selling probate homes can eliminate time-consuming tasks for estate managers and can be especially helpful when homes are located in another state. Since executors must care for the property during the probate, they are often forced to hire subcontractors. These expenses can reduce the amount of inheritance money available to heirs.
When probate property is listed through a real estate agent, the estate covers the required closing costs and fees. If the property can be sold without court supervision, executors should consider selling homes to real estate investors who specialize in buying probate homes.
Probate estates can be a smart investment for both investors and individual buyers. When real estate sales are made through public courts, anyone can submit an offer to purchase. When property sales are handled by the property manager, buyers will enter into negotiation with the property or real estate agent representing them. In some cases, real estate sales are handled by the estate attorney.
To locate potential properties for sale, buyers visit local courthouses to review public records. When a person dies, his will is filed through the court. The will becomes a matter of public record and anyone can see it. Buyers research probate cases to locate real estate and obtain contact information for the executor. They then investigate property records to gather information about the house.
Property records show if a mortgage is attached. If so, information about the loan is provided. Property records also reveal if creditor judgments or tax liens are attached or if the property is in foreclosure. Buyers can also see the appraised value, lot size, square footage, number of bedrooms and how old the home is.
It is best to work with a probate attorney throughout the real estate sale process to ensure property records are properly recorded and the sale complies with state probate laws. As with any real estate transaction, buyers must perform due diligence to ensure the property is worth the purchase price.
