How to buy a home through a probate sale

Everyone likes a good deal, and probate sales can offer an opportunity to save money on a home that isn’t going through the traditional sales process. 

A probate sale occurs when a homeowner dies without a will in place and the courts take over the sale of the home. The big question is, would buying a home in this type of sale (which is known for being quite complex) be worth the potential savings?

Let’s take a closer look at what is a probate sale in real estate, why this happens, and what the advantages and disadvantages of this type of sale are. 

What is a probate sale? 

A probate sale occurs when someone dies without a will in place (you may also hear this referred to as dying intestate). When someone dies and they don’t have a will, their estate (meaning any property they leave behind) will enter a legal process called probate. 

If the deceased owned real estate, probate requires that the home sells for the best possible price in order to maximize the estate value. 

A probate court is the one to administer the probate process, and how this process plays out depends on what state the deceased resided in. Each state has a unique set of rules and regulations surrounding probate sales. 

That said, most states follow somewhat similar processes. 

It’s common for the court to appoint an administrator to represent the estate if there was no will in place. The administrator is responsible for settling the estate and guiding it through probate. They will also be responsible for identifying legitimate creditors of the deceased. If there are creditors that the deceased owed outstanding payments to, the administrator will oversee paying the creditors from the proceeds that come from selling the property. 

In most cases the administrator will hire a real estate agent to oversee the home selling process. Once they receive at least one offer on the estate, the administrator will then petition the court to receive permission to sell the home. If no relatives file an objection after receiving notification of the sale, they can then move forward with the sale. 

Any interested buyers usually need to appear in probate court to submit their offer if more than one offer ends up submitted. The highest bidder will win the property. 

Steps to the probate sale process

This is a more detailed breakdown of how the probate sale process generally unfolds:

• Step 1: The court authorizes a real estate agent to list the property for sale. During the sale, the court will retain control over the progress of the sale. 
• Step 2: The court sets a listing price after consulting the real estate agent and the estate’s representative. 
• Step 3: Now potential buyers can make an offer on the home. They will need to make a 10% down payment, and usually in the form of a cashier’s check. 
• Step 4: The estate representative will generally accept the highest bid and then the court will decide if they want to accept the offer at a confirmation hearing. Before this hearing can occur, any remaining family members of the deceased receive notification about the sale of the property and have a chance to comment on its terms. 
• Step 5. If the courts proceed with the confirmation hearing, other bidders can step in and make an offer that is better than the first offer. How this auction process unfolds depends on the state the proceedings occur in. For example, in California it’s legally required that bidders must submit bids that exceed the accepted offer by 5% plus $500.

How to find a probate sale

Finding homes going through a probate sale isn’t quite as simple as hopping onto your favorite home sale website. If you decide you want to pursue a home through a probate sale, it’s helpful to hire a real estate agent that has experience with this unique type of sale. They can help you find properties in probate to consider and make sure you take the right steps throughout the entire process. 

If your county lists probate records online, that makes it a lot easier to find probate listings in your area. You can also contact your local probate court clerk and request a list of recently filed probate cases or can buy leads from companies that sell probate real estate leads.

Are probate sales worth the effort? 

So,  is pursuing a probate sale instead of a traditional sale worth all of the effort and potential complications? Let’s look at the advantages and disadvantages of this type of sale so you can determine if it’s a path you want to go down. 

Advantages of buying through probate sales

The main advantage associated with pursuing probate sales is that these properties tend to have lower proposed prices than homes going through a more traditional sales process. Of course, if the competition is steep the price can rise during the offer or auction stage. This typically lower price occurs in part because probate sales tend to be more complicated than traditional sales. 

If you want to invest in real estate, you might also find a probate sale appealing. Real estate investors are also drawn to probate sales as they provide unique access to investment opportunities that aren’t available through more ordinary real estate channels at lower-than-standard market prices. 

Disadvantages of buying through probate sales

Of course, there are also some downsides to probate sales worth keeping in mind. To start, the complex rules surrounding probate sales is often overwhelming for buyers who aren’t familiar with the process. 

It’s a good idea to hire a real estate attorney with probate sales experience to guide you. As helpful as an attorney will be, hiring one does add an extra expense to your purchase (a purchase that may not even go through if you’re outbidded). A failure to follow court rules may lead to the sale falling through and the buyer forfeiting their down payment — so it’s a good idea to invest in hiring an attorney to make sure you don’t make unnecessary mistakes. 

Timelines can also be a concern. Probate sales are often a lengthy process as courts and bereaved family members can both slow the process down. 

The takeaway

Probate sales can provide a unique opportunity to access properties that don’t go through the traditional sales channels — often at a lower price. That being said, this is not a simple process to partake in and it’s important that you find the right real estate agent and real estate attorney to help you navigate this complex process. It’s also key to hire a home inspector to identify undisclosed problems with a property, as the deceased owner won’t be able to provide insight into the home. 

If you’re looking for a bargain, you may find the complex process and risk are worth it. It’s up to you to decide if a probate sale is a path worth pursuing.