Did you know the average amount of inheritance in the US is almost $177,000? Much of this is often in the form of property. But if you become designated as an executor, how can you avoid the many pitfalls of selling probate property?
That comes from knowing the mistakes well in advance. Read on as we discuss seven common mistakes to avoid when selling probate property.
When selling probate property, you can use a real estate agency or cash home buyer if you want the process to be quick and easy. You will also need and an attorney. In both instances, you must ensure that they have relevant, recent probate experience.
The agent is there to take you through the details. They will be able to tell you about documents and contracts specific to probate law. All of this requires detailed knowledge of your state’s probate regulations, which inexperienced agents may not have.
The attorney will prepare the legal documents. They will file the probate petition and speak to the judge on your behalf. Finally, any finances relating to income tax and life insurance will also be addressed by them.
When finding an attorney, ask how many probate cases they have worked on in the past. Do the same for real estate agents, but also ask them to explain the difference between probate and traditional sales. You may also check to see if they have any formal certifications related to dealing in probate real estate.
Very often the process of probate is made much harder as many people are dealing with grief. To combat this, many people can have probate properties that they choose to leave unattended for a long period of time while they process this traumatic period. In other cases, the house may be left unattended due to conflicts in the people who have a stake.
This can lead to a number of problems. A vacant property quickly accumulates problems, as no one is around to keep it maintained. This means that broken heating systems, dilapidated roofs, and overgrown gardens can devalue the property itself.
The executor is the person named by the deceased, to carry on their wishes in regard to their estate. If no executor is named, then a court will often appoint someone to do this.
Just because you are named as the executor, does not mean that you have the right to sell a property. A court has to first appoint you to this position.
Once appointed, an attorney will then help you get the many documents needed. When filed, this will result in a Letter of Administration or Testamentary, giving legal jurisdiction to oversee the estate. From here, you may begin the process of selling the property.
A real estate disclosure is a legal requirement in which you must disclose everything you know about the home before someone buys it. This protects potential property buyers in the event the home has major problems or defects.
Generally, an inspection will be done that can tell the buyer everything about the plumbing, structure, electrics, and other systems. However, in probate homes, it can get even more complicated.
Very often, the person who has passed away may not have been occupying the property. Perhaps they were in a care home or hospital, or the home may have been rented out. Owner-occupied disclosures are not applicable.
This means someone has to be liable. Luckily, as an executor, you are unlikely to be held responsible for this. You should however consult your designated, experienced agent and attorney to double-check.
Like any type of property sale, not understanding the market can cost you a lot. However, homes in probate have a few major differences compared to non-probate properties.
The first is that you really don’t have a choice about when you sell. Many people can wait for market swings, moving from buyers to seller’s markets in an attempt to maximize the income they receive. However, in probate, an empty house is one that is costing money, and most need to be sold quickly.
In addition, a lot of time can elapse between the valuation and its actually listing. At this time, you need to be aware of any up or downturns in the market to get the best deal.
Standard insurance may be enough to cover property in probate, though you should check. Many insurance companies will refuse to insure a property that is vacant for longer than sixty days. This can create even more problems and devalue the house even further.
If they are not invalid, then policies can usually be restricted. This may mean if something happens in the property while it remains vacant, no insurance is there to cover it. This then raises the question of who is legally liable for repairs, and if you are the executor, it is most probably you.
One way to keep the property well maintained is to appoint a caretaker. This is someone who maintains the property for you, doing everything from repairs to mowing the lawn.
It could be another family member who has fewer commitments, or a knack for DIY and repairs. You may even be able to get someone to stay there temporarily, though check with your attorney on the legalities of this.
If this fails, then hire a vacant property management company. It will cost you some money, but much less than if you have to do large repairs and renovations later down the line.
In summary, make sure you get assistance from an experienced attorney and estate agent when selling probate property. Do not make any moves to sell until you have the legal documents, and keep the property maintained and insured.