What Is a Probate Sale?

What Is a Probate Sale?

A probate sale is a court-regulated home sale that may happen if someone dies without a will or passes away with more debt than cash savings. Proceeds from probate sales may be passed on to beneficiaries or heirs, or used to satisfy creditors.

If the Homeowner Had a Will

The executor of their will is tasked with managing their estate according to their wishes. These duties can include:

• Distributing assets to beneficiaries
• Paying creditors
• Selling a home if a probate sale is in order

If the Homeowner Didn't Have a Will

The court will appoint an administrator to handle the estate, which may involve a probate sale. In this case, a real estate agent may be brought in to show the property and help coordinate the sale.

How a Probate Sale Works

Probate laws vary by state, which means that no two probate sales are alike. In California, for example, the court may still have to confirm probate sales—even if the decedent had a will and an executor has been named. But in most cases, the process begins with the executor or court-appointed administrator petitioning the court to open a probate case.

Once approved, they'll likely work with a real estate agent to list the property, arrange viewings and collect offers. If an offer is approved, they will likely need confirmation from the court to move forward and close the deal. This process can take considerable time to complete.

Pros and Cons of Buying a Probate House

Buying a home through a probate sale has benefits and drawbacks. Below are some important things to consider before moving forward.

Should I Buy a Probate House?

Probate sales aren't for everyone, but there are situations that can make them more attractive.

• You're a patient buyer who wants a below-market price. If you're in this boat, you may not mind delays if it ultimately gets you a great deal.
• You have substantial cash reserves. That means you can easily cover a 10% deposit, plus closing costs and potential repairs and renovations.
• You're looking for an investment property. A probate sale could be a great opportunity if you're looking for fix-and-flip properties at below-market prices.

How to Buy a Probate House

Here's a step-by-step guide for buying a home through a probate sale.

1. Get preapproved for a mortgage. Preapproval can clarify your buying power and show sellers that you're a legitimate buyer. Start by comparing mortgage lenders and loan offers.
2. Look for probate properties. When searching online, look for property descriptions that include the words "probate sale" or indicate that court confirmation is required. A real estate agent who specializes in probate sales can find properties for you and arrange viewings.
3. Make an offer. Your agent can use real estate comps to help you craft a competitive offer. But depending on your state, the home may still go to auction after your offer is accepted. If someone outbids you, the deal could fall through.
4. Get court approval. If things move forward, the attorney for the estate will need to petition the court for approval. This could take 30 to 45 days or longer, according to the National Association of Realtors (NAR).
5. Arrange a home inspection. This is an important step since probate homes are generally sold in their current condition. A home inspection could reveal that the property needs costly repairs.
6. Close on your home. This is when you'll pay closing costs, cover your down payment and sign the necessary paperwork. Closing costs generally add up to 2% to 5% of the sale price.

Learn more: The Complete Guide to Closing on a House

Frequently Asked Questions

The Bottom Line

Buying a home through a probate sale could save you money, but it comes with unique challenges. You'll want to weigh the pros and cons and work with a skilled real estate agent. Adding a real estate attorney to your homebuying team might be another good idea.