Being Probate Certified has allowed me to work with clients who are selling or buying a property that is going through the court in a probate process following the death of the owner. This happens for various reasons. The best way to avoid going through a costly probate is to put your property in a trust but I will save that for another article!
If you are selling in probate there are two paths forward. The first is when the seller is given "full authority" by the court to sell. This is the shorter of the two paths and to a buyer the process is very similar to a regular sale. The only noticeable difference from a regular sale is the court involvement and that a "notice of proposed action" is sent to each known heir that could be impacted by the sale. They can protest the sale and then the property is subject to overbid. This very rarely happens when the seller has already been given full authority by the court but can happen.
The second path is when a seller is given "limited authority." This is a longer process for the seller and has a few more rules for the buyer. For the buyer a 10 percent deposit is required and all of these sales are subject to overbid. So what is overbid? This is the process by which other buyers can make an offer higher than the contracted price the existing buyers have agreed to pay for the house. There is a formula that addresses how much the overbid amount must be. Basically, it is 10 percent of the first $10,000 of the agreed upon purchase price plus 5 percent of the balance of the purchase price after you subtract the first $10,000. Yes, it is confusing. If you use this example it is a bit clearer:
Contracted purchase price = $526,000
10 percent of first $10,000 = $ 1,000
5 percent of $516,000 = $ 25,800
Overbid offer = $552,800
Also, all probate properties receive an appraisal by a probate referee who ensures they aren't being sold at an unfair price. This is just a small overview of all that happens in probate but these are the questions I get the most. If you have non-real estate questions about probate contact an attorney. If you want more information on selling a property in probate give me a call. It can be overwhelming to navigate this without help.
