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Probate Real Estate Sale Process

Probate Real Estate Sale

The process of selling real estate (real property) through probate or trust is a series of court-regulated steps that must be carefully monitored and managed. Deadlines are unforgiving, documentation is specialized and the court’s oversight must be honored throughout the marketing, offers, negotiations and sale of the property.

About the Probate Real Estate Sale Process

1)Besides the court personnel, a probate or trust property sale typically involves several key players: the Executor or Administrator managing the estate, the estate’s legal representative, a real estate agent for the estate (acting as the seller), one or more buyers who make court bids, and the buyers’ real estate agents. Each participant must adhere to specific court guidelines and deadlines.

2) Due to court involvement, probate and trust sales have their own terminology (refer to glossary) and require unique disclosure documents and contracts not commonly used in standard real estate transactions. When engaging in a probate or trust sale, it’s essential that your real estate agent is experienced in this field to help explain the specific terms, paperwork, and procedural steps involved. Clear communication is critical.

3) Here is an outline of the probate and trust sale process to help you understand the general steps: First, the court appoints an Executor or Administrator of the estate. Often, the deceased’s will names an Executor responsible for distributing assets, including property. If no Executor is named, is unwilling to serve, or if there is no will, the court designates an Administrator. The Executor or Administrator must be appointed to authorize the sale of the property, which cannot proceed until they are officially in place.

4) Under the Independent Administration of Estates Act (IAEA), the Executor sets a list price for the property. This price considers the Probate Referee’s appraisal and is generally established with input from a real estate agent familiar with probate and trust sales. The property is then marketed by the agent, employing strategies such as signage, newspaper listings, real estate website postings, and open houses for agents and potential buyers. The agent also arranges showings for interested individuals.

5) Although probate and trust property buyers might seek discounted prices, their offers must meet court guidelines. An acceptable offer must be at least 90% of the Probate Referee’s appraised value. When a buyer is found, the real estate agent helps negotiate terms suitable to both parties. Upon agreement, a Notice of Proposed Action is sent to all heirs, outlining the terms. Heirs have 15 days to review and raise objections; if there are none, the sale can proceed without a court hearing.

6) If the Executor or Administrator lacks full independent authority under the IAEA, or if an heir raises an objection, the sale must be publicly announced in a widely distributed local newspaper (unless the will states otherwise). The estate’s attorney then requests a court date, or “confirmation hearing,” where the sale will be finalized, typically set 30 to 45 days after the application. Relevant sale details are shared with all interested parties.

7) Once a buyer’s offer has been accepted, a Notice of Proposed Action is sent to heirs, listing the sale terms. They have 15 days to review it and voice any objections. If there are none, the sale may move forward without court involvement. If the Executor/Administrator lacks full powers or an heir objects, the sale must be advertised locally unless the will specifies otherwise.

8) The estate’s attorney then schedules a court date for the confirmation hearing to complete the sale. Generally set within 30 to 45 days, a copy of the application and sale details is mailed to interested parties. Even after a court date is confirmed, the agent may continue marketing the property to attract a higher “overbidder” to increase the sale price.

9) At the confirmation hearing, any interested buyer may submit an overbid. In this case, the overbidding party must bring a cashier’s check (personal checks are not accepted) for at least 10% of the minimum overbid amount to qualify. The minimum overbid amount is determined as follows: 10% of the first $10,000 of the offer, plus 5% of the remaining balance.

EXAMPLE: A property is listed at $400,000, and the accepted offer is $360,000. The minimum overbid is calculated as follows:

Accepted Offer: $360,000

10% of the first $10,000 = $1,000

5% of the remaining balance ($360,000 – $10,000 = $350,000) = $17,500

Minimum Overbid = $360,000 + $1,000 + $17,500 = $378,500

Required Cashier’s Check Amount: 10% of $378,500 = $37,850

10) If there is more than one overbidder, the highest bid ‘wins.’ The winning bidder gives a cashier’s check to the Executor/Administrator and escrow is opened. Escrow will close approximately 30 to 45 days from the court hearing. If you need assistance selling real property through probate, trust or conservatorship, call us at (855) SOLD-911 today.