Buying a House Through Probate Court

For many first-time homebuyers with no pressing urgency or property investors, securing real estate ownership through probate court is a cost-effective way of obtaining property for less than an asking price may be through the typical seller’s market.

A probate home goes up after a homeowner passes away before absolving significant debts. Creditors who are owed large sums of unpaid money will be paid through the sale of the deceased home, and any residual money will be distributed to beneficiaries’ family members, depending on the content of the deceased’s will.

While the process is similar to the listing, negotiating, and selling of a traditional home sale cycle, a few differences make the enlisting of a specialized real estate agent or law professional an essential part of the negotiation process for buyers.


How Does a Probate Home Reach The Market

Following the passing of the homeowner, an executor will step in to oversee the distribution of the will assets and see the probate process through. In the case of no will, an “administrator” will take on the same role.

Firstly, the executor or administrator will identify the legitimate creditors to which the deceased owes significant assets. The probate process will begin if the deceased does not have the assets required to satisfy these debts.

In the United States, this begins with the IRS determining that the deceased’s estate owes no estate taxes. Without their approval, the sales process may not move past the showings and marketing on the part of the executor and any real estate agents they may choose to enlist.

After the house has been moved onto the market, anyone is welcome to make a bid. As soon as one offer has been made, the executor must petition the court for permission to sell the home. As this process begins, the deceased’s heirs and the estate’s beneficiaries are notified, and the floor is opened to objections. Should no objections arise, the sale is moved into a court for sale.

All interested buyers must appear in court to submit their bids. The highest bid from this selection will win, and the buyer must immediately hand in a cashier’s check worth at least 10% of the offer price to the estate administrator or will executor.


Pros and Cons of Probate Real Estate

The atypical nature of this cycle means that houses can often be purchased without the significant haggling or drawn-out bidding process. For many, this makes for a cost-effective way to secure the property for less than market value.

However, for every benefit, there are, of course, downsides.

Since there is no bidding process, buyers cannot negotiate repair credits or lower prices based on the “as-is” condition of houses sold through probate. Additionally, the 6-12 month waiting period (or longer) that characterizes a probate sale makes it a risky investment for prospective homeowners looking to move into a house as quickly as possible—even following an accepted offer.

Lenders also have special considerations for probate property sales that make the possibility of losing funding unexpectedly a more common outcome in this type of property acquisition.

Due to these financial and legal considerations, it is recommended that purchasers work through an experienced probate attorney or probate real estate team that can help expedite the process.


How a Specialized Lawyer Helps

Mitigating risks and ensuring a smooth title transfer requires specialized help in the case of probate court. From specialized documents to the multiple appraisals of debts and appropriate creditors, you as a purchaser mustn’t end up holding more debts than you entered the offer process with.

While the significant waiting period between offer and close can be daunting, a probate law team can help clear confusion and provide consistent updates as to the direction your purchase is headed at all times, leading to fewer costly or panicked mistakes throughout the process.


Kalicki Collier specializes in estate planning and probate law. For any and all cases in Nevada, reach out to our expert team for guidance and support.

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