Enduring the loss of a loved one is never easy. Adding the task of selling their estate property can further complicate an already challenging time by adding a dozen more responsibilities to your plate – which is the last thing you need. Despite the complexities, selling a deceased person’s property can be straightforward with the right knowledge and preparation.
Today, we’ll answer all your questions about the process and guide you through all the steps you’ll need to take to sell a deceased estate property.
An estate property, also known as a probate estate, typically refers to all assets, properties, and possessions that a person owns at the time of their death. This includes real estate, bank accounts, stocks, bonds, personal belongings, and other assets.
Probate is the legal process that takes place after someone’s death to ensure that their estate is properly managed and distributed. The process usually involves validating the deceased’s will (if one exists), appointing an executor or personal representative, identifying and inventorying the deceased’s property, paying debts and taxes, and distributing the remaining property as the will (or state law, if there’s no will) directs.
Concerning selling estate property, probate is particularly important. The executor or administrator of the estate needs to first get the court’s permission to manage the estate’s assets, which includes selling property. In some jurisdictions, a special “license to sell” needs to be obtained before proceeding with the sale.
The role of the Executor in estate property sales
Even if you’re set to inherit a part of the property, it doesn’t mean you can make all the decisions about selling it. There’s one person, known as the executor or personal representative, who’s in charge of making these big choices. They get this authority through a legal process called probate.
It’s also important to know how the ownership of the property is arranged – it could be owned by just one person (the deceased), by several people together, or by a legal agreement. This will help figure out what needs to be done to legally sell the property.
Before you can move forward, you need to settle any debt the deceased may have left behind before the house can be sold. The executor’s responsibility includes ensuring all debts are handled appropriately. In many cases, the property will need to be sold to pay off the debt. If you aren’t sure how to deal with the debt of an estate you are the executor of, speak to a probate lawyer.
In theory, an executor can sell the estate property to themselves, but certain conditions must be met. The property must be sold at fair market value, and the executor must acquire written consent from all other heirs or beneficiaries to avoid legal complications.
Disputes among heirs or beneficiaries can complicate the process of selling an estate property. If disagreements arise, the sale might be delayed until the conflict is resolved, especially if the dispute is over the legitimacy of the will, the appointed executor, or the distribution of assets.
In some cases, if the disagreement can’t be resolved through mediation or negotiation, the matter may end up in court. If the court determines that selling the property is in the best interest of all parties involved, it can order the sale despite ongoing disputes.
However, potential buyers may be wary of properties involved in legal disputes, so it’s usually in the best interest of all parties to resolve any disagreements as amicably and quickly as possible. It’s advisable to seek the guidance of an estate lawyer or professional mediator to assist in these complex situations.
If you wish to sell your share of the estate to a family member, several methods can facilitate this. You could, for instance, transfer your share to a family member who then takes out a loan to cover the cost (or pays you in cash, if they have the means). Another possibility is establishing a mutually agreed payment plan.
There are three key ways you can determine the market value of the property:
- Hire a Professional Appraiser: This is the most accurate way to get a valuation of your property. Appraisers are trained professionals who will consider the size, condition, location of the property, recent sales of similar properties in the area, and any other relevant factors to provide a formal valuation.
- Work with a Real Estate Agent: A real estate agent has knowledge of local market conditions and comparable sales and can provide a comparative market analysis (CMA). A CMA will give you an estimated value of the property based on recent sales of similar properties in the same area.
- Online Home Value Estimators: Numerous online platforms provide estimated home values using publicly available data. These can give you a rough estimate, but will not be as accurate as a professional appraisal or a CMA from a real estate agent, as they can’t account for the unique features and condition of the property.
How does the executor sell the property?
In states like Massachusetts, the initiation of probate must occur within three years of the deceased’s death for the house to be sold. It’s worth noting that potential buyers may be wary of houses under probate due to the lengthy process involved.
Before the executor can sell the property, they need to obtain a “License to Sell” through a petition to the court, unless a will explicitly waives this requirement. Ensuring other heirs agree is crucial before proceeding with the sale.
Documentation required to sell an Estate property
When selling an estate property, several documents will be needed for the process. While this can vary by location and specific circumstances, common documents often include:
- Death Certificate: This certifies the death of the property owner.
- Will: The will provides instructions about who should inherit the property.
- Letters of Administration/ Letters Testamentary: These are court-issued documents that provide the executor or personal representative with the legal authority to manage and distribute the deceased’s estate.
- Property Deed: This document proves ownership of the property.
- Probate Court Authorization: If the property is in probate, court authorization may be required before the property can be sold.
- Appraisal or Valuation Report: This document provides a professional estimate of the property’s value.
- Real Estate Transfer Disclosure Statement: This is a document in which the seller discloses known information about the condition of the property.
- Final Settlement Statement: This document outlines the financial transactions of the sale, including closing costs, taxes, and the final amount due to the estate.
It’s recommended to consult with a real estate attorney or agent experienced in probate sales to ensure all necessary documentation is correctly prepared and filed.
Strategies when selling an estate property to consider
When it comes to selling, you have several options: engage a real estate agent, market the house yourself, or sell to a professional home buyer. While a real estate agent can provide expert advice, selling to a professional home buyer can simplify the process, expedite the sale, and apply the proceeds towards debt or heirs.
To learn more about each of the above, see the below resources:
Navigating the complexities of selling an estate property can be overwhelming, especially if the house needs work. This is where selling to a professional home buyer comes in. With a professional buyer, there’s no need to do repairs, prepare for showings, or even worry about how long it’ll take.
If you’re in Massachusetts, we can offer you a fair price for your property right away, and help you navigate the difficult process of selling a probate home. To get a no-obligation offer on your Massachusetts property, simply reach out to us with a few details and we’ll contact you with our offer. To learn more or to get an offer on your property, click here.
Yes, selling an estate property can have tax implications. The estate might owe estate taxes if the value of the total estate exceeds the federal estate tax exemption. Additionally, capital gains tax may apply if the property is sold for more than its “stepped-up” basis, which is the property’s market value at the time of the owner’s death. However, tax laws can be complex and vary by location, so it’s recommended to consult with a tax professional or estate attorney to understand the specific tax implications in your case.
Generally, you cannot sell an estate property before probate is complete because the executor or personal representative needs the court’s permission to manage and distribute the estate’s assets, which includes selling property. However, rules can vary by jurisdiction and the specific terms of the will. There are instances where probate assets can be sold without waiting for the entire probate process to be completed. It is advisable to consult with a probate attorney or legal advisor for guidance based on your unique situation.
Selling an estate property held in a trust usually bypasses the probate process, which can make things faster and more private. However, the trustee is responsible for managing the property and must act in the best interest of the beneficiaries. Trust assets may also be subject to taxes. Trust property sales must follow the terms of the trust, and potentially get consent from the beneficiaries or the court. Additionally, the type of trust (revocable or irrevocable) can influence the process. Always consult with a legal advisor for accurate advice tailored to the specific trust conditions.
If an estate property has outstanding debts or liens, these must be settled before the property can be sold. The executor is responsible for using the estate’s assets to pay off any debts. If the estate lacks sufficient funds to cover the debts, the property may need to be sold to generate the necessary funds. Unresolved liens or debts can complicate the sale process and might deter potential buyers.
Yes, hiring a real estate agent experienced in probate sales can prove incredibly beneficial. They can guide you through the complex process, help determine the property’s market value, and effectively market the property to potential buyers, making the overall process smoother and less stressful.
Sellers must provide a Real Estate Transfer Disclosure Statement, which discloses known property conditions. Local laws may also require specific inspections. As estate properties may have unique issues, it’s recommended to consult with a real estate professional to ensure compliance with all requirements.
Yes, you can sell an estate property directly to a family member or beneficiary. However, the sale must be at fair market value and receive approval from the executor and, in some cases, the probate court, to ensure fairness to all beneficiaries.