What you Need to Know about Probate Sales?
Real estate investors are frequently on the lookout for great deals and
one of the best places to find one is at probate sales. Properties that
are sold through a court-ordered probate sale can oftentimes be an
excellent source for a property that is priced below market value, but
there are a few things you should be aware of before you jump at such a deal.
First, there are potential risks that are associated with this type of
deal. Probate sales may take longer to
close than would normally be the case with a traditional sale.
Probate sales occur whenever an individual dies in what is referred to
as intestate. This means they do not have a will and have not bequeathed
their property. When this occurs, it becomes necessary for the court to
step in and administer the sale of the property. The court will
naturally want to ensure the property is sold in a way that will obtain
the highest possible price. In order to meet that goal, the court will
often hire a real estate agent to handle the sale of the property.
Probate sales will be marketed in the same manner as any other home or
property. The estate or probate representative will sign a listing
agreement with the real estate broker and the broker's agents will show
that property to prospective buyers. The court may require an
independent appraisal to be performed.
Interested buyers may make an offer on a probate property at any time,
but it should be understood that this is where probate properties differ
from traditional properties. Any offer that is made on a probate
property must typically include a deposit of at least 10%. Despite the
deposit, the representative handling the property may elect to counter
the offer, if they so choose. In addition, even if the estate
representative chooses to accept the offer, that offer must still be
approved by the court. The estate representative can petition the court,
through their attorney, for the sale to be confirmed. The sale of the
property will have to be confirmed in court. This is where the process
can become time-intensive.
At a minimum, it can take at least 30 days for the sale date to be set.
During this period of time, the property can still be marketed. In fact,
the court will usually require that the property be advertised. Even
worse, the property will be advertised at the accepted sales price. The
buyer that has made the offer on the property will need to appear in
court for the sale to be confirmed. Any other interested party in the
matter will also need to appear. While it might seem as though it would
be a simple matter, what actually happens is that during the
confirmation, the property will actually be sold in what is similar to
an auction style arrangement. In many states, the opening bid will be
the price that has previously been accepted, in addition to 5%. It is
not uncommon for several buyers to appear in order to bid on the
property. Of course, if no one else appears, the original buyer is able
to get the property at the price they offered. If other buyers show up;
however, there is a strong chance that you will either lose the property
or need to pay more than you originally offered.
Keep in mind that the deposit which was made when the
offer was made may not be refundable. The only circumstance in which the
deposit may be refunded is if you are not ultimately the confirmed
buyer. In other words, if you make an offer and then change your mind
later, there is a good chance you will not be able to get back the
deposit. You should also be aware that there will likely be no one who
can provide you with a valid seller's disclosure on the property due to
the fact that the original owner is deceased. This could mean that there
are serious problems with the property which you may not become aware of
until after you have purchased the property. This is just one more
reason why it can be quite risky to purchase a probate property. The
best way to defend yourself against this type of problem is to have an
inspection performed on the property as early as possible. Ideally, this
should be done prior to even writing an offer on the property. While you
will need to pay for the inspection, it can be a worthy investment to
avoid possible costly repairs.