This article walks you through the process of selling an inherited property that is part of an estate going through probate.
It will share with you nine actionable steps to guide you through the requirements and considerations.
You’ll also gain insights into the inner workings of probate proceedings and the typical timeline for completing a property sale.
Let’s delve into how to sell a house in probate.
Do You Have to Sell a House in Probate?
The simple answer is no. There is no legal requirement to sell real estate in probate.
Instead, deciding to keep or sell a house during probate is largely a matter of choice or fulfilling a fiduciary duty as the executor or administrator responsible for managing the estate.
Common reasons for selling real estate during probate proceedings include the following:
- Generating funds to pay off estate debts
- Facilitating the distribution of proceeds among multiple heirs
- Adhering to the decedent’s wishes as specified in a will
So, if you are pondering the question, “Should I sell my inherited house?” know that the estate’s financial situation, the testator’s will, and your personal preferences influence that decision.
It’s also essential to understand that the house may remain part of the estate throughout the probate process if there isn’t a pressing need to sell it.
That can be especially important in situations where the house holds sentimental value.
For example, if you inherited your grandmother’s house, you may be uncertain whether you want to sell it and need more time to decide.
If you want to put the property up for sale sometime after probate is complete, you have that option as well. A caveat: multiple heirs must all agree with this decision.
Once probate concludes, you (and any other heirs) hold legal title and have full authority to sell the house without probate court involvement.
While you can sell a house in probate, selling after it can offer several advantages, such as:
- More time for repairs if you are not selling an inherited house as is
- Flexibility in timing the sale to increase potential for a higher price
- A much simpler sale without the complexities of selling during probate
How Does Probate Work?
Probate begins with a formal request to the court. The executor files this petition when there is a will. If a person dies intestate, a relative or potential heir can initiate probate proceedings.
The specific rules and procedures vary by jurisdiction but generally include the following:
- Establishing the will’s validity: When a will is filed, the probate court examines the document to confirm its legal validity, authenticity, and compliance with state laws.
- Naming a personal representative: When the deceased left a will, the court formally appoints the executor designated in the document. It appoints an administrator in the absence of a will. That personal representative is responsible for managing the estate.
- Asset inventory and appraisal: This process involves identifying, listing, and determining the fair market value of the inherited property and all assets owned by the deceased person’s estate.
- Notifications: The personal representative must notify beneficiaries about their inheritance. Creditors must also get a probate notice and a time frame to make a claim.
- Tax and debt payments: The estate must address indebtedness before distributing assets. If there isn’t enough cash to cover these obligations, the court may permit asset liquidation, such as selling a house through probate, to fulfill the debt.
- Asset distribution: Once the financial liabilities are settled, assets can be disbursed as specified in the will or state intestate laws.
- Finalizing the estate: The personal representative must submit a court report detailing the estate’s financial transactions. After the court approves it, the estate can be closed.
While these rules typically dictate how the deceased’s assets are handled, be aware that there are scenarios where traditional probate rules can be avoided.
For example, you can sell a house without probate when property ownership is directly transferred to a designated individual upon the grantor’s death (think of a wife selling a home with her deceased husband on deed).
Several legal mechanisms and ownership structures allow that to happen.
The specifics and availability of these methods vary by state. They also require advanced planning so that they are in effect before the grantor passes away.
Selling a house before probate would be allowed with any of these methods, simplifying the sales process.
A special case is when the house has a lien on it. If this is the case, read about what happens if a house goes into foreclosure during probate.
9 Steps to Sell a Probate Property
This section details a walkthrough of how to sell a probate real estate property, breaking the process down into distinct, manageable components to make it easier to understand.
So, keep reading for a step-by-step look at what happens when you sell a house you inherited through the probate court procedure.
Step #1: Obtaining Legal Authority
Before you can sell a house you inherited, you need to file the necessary paperwork to ensure you are appointed as the executor or administrator. This appointment ensures you have the authority to handle the sale.
Step #2: Determining Property Value
The first step in selling a house after probate is granted is determining its value.
As the person in charge of the estate, you’ll need to have the house professionally appraised to find out its current market value.
That helps you set a sale price and supports your request to the court (your next step) to sell the property by showing that you’re aiming for a price that benefits the estate.
Step #3: Getting Court Approval
You usually need the court’s permission to sell. That requires submitting a petition explaining why you want to sell and providing the asking price.
The court may hold a hearing to review your petition and supporting documents.
Step #4: Marketing the Home
If you inherited a house that needs work, you must decide whether to make repairs and improvements, or sell the property in its present condition.
Either way, the house can go on the market once the court gives the green light. Listing with a real estate agent is common practice but not always required when selling a home in probate.
Step #5: Reviewing Offers and Negotiating
Your role as a personal representative includes carefully reviewing all offers received on the property for suitability. That includes evaluating the price and any contingencies on the sale.
You are also empowered to negotiate terms with buyers to get the best deal for the estate.
Although it’s not always required, consulting with any other beneficiaries on offers is a good idea to avoid future disputes.
Step #6: Obtaining Court Agreement
Once you pick the most favorable offer, you must submit it to the court for approval.
That calls for another petition laying out the offer’s specifics and why it’s in the estate’s best interest to accept it.
Step #7: Closing the Deal
After getting court approval, you can accept the offer and close the sale. Using a probate lawyer can help ensure that all legal requirements are met and the closing process is properly handled.
Step #8: Dividing the Proceeds
Distributing proceeds to beneficiaries is one of the last steps in selling a house under probate. It involves apportioning remaining funds after outstanding debts and taxes are addressed.
The court also requires a final accounting of the transaction.
Step #9: Paying Taxes on the Sale
Capital gains tax is an important financial consideration that may arise after closing the sale.
As a case in point, let’s say the house you sold belonged to your mom and dad, and the sale price was higher than the property’s value when you inherited it.
Since you profited, you may owe taxes on selling your deceased parents’ home. That depends on factors like your tax bracket and whether you qualify for exclusions that can reduce the gain.
If you’re interested, take a few minutes to learn more about how to avoid capital gains tax on an inherited house. Additionally, it helps to know how to report the sale of inherited home.
How Long Does It Take to Sell a House in Probate?
The probate process differs for everyone. So, if you’re selling the family home after your parents’ death, know that it can have varying timelines as it goes through the process.
The shortest time frame when selling a house you inherited under this process generally ranges from 3 to 6 months.
That typically occurs in straightforward probate cases with no significant snags or disagreements.
The sale can take up to a year or longer in more complex situations.
What can impact the time it takes to complete the sale?
- Beneficiary dynamics: When all inheritors are in consensus, it can make for a quicker sale. Disagreements can slow down the process. Imagine you inherited a house, and your brother won’t move out.
- Appraisal speed: Appraising higher-value real estate can take longer than lower-value properties. Delays or disputes in valuation can also stretch out the timeline.
- Legal issues: If there are active legal disputes involving the estate, those may need to be resolved before proceeding with the sale.
- Court processes: Court backlogs can contribute to delays, and court schedules can shorten or extend the overall timeline for selling a probate property.
- Property condition: If you forgo repairs or need to do a few or none, you can speed up the process. If you inherited a hoarder’s house, its poor condition will prolong preparing the property for sale.
- Market conditions: The time required to find a buyer can depend on the local real estate market status and the effectiveness of the property’s marketing campaign.
- State laws: Some states have bureaucratic and complex requirements, while others use a more simplified framework, which affects how quickly the sale can proceed.
Selling to professional inherited property buyers can expedite this process. They are well-versed in the requirements of probate sales and can handle them quickly and with minimal hassle.
So, to sell your probate house fast, reach out to these buyers to get a cash offer and to further explore the benefits of their expertise.
