Selling a House in Probate Texas

Selling a House in Probate Texas

Probate properties offer a fantastic opportunity for real estate investors and buyers seeking discounts, but what does it entail for a homeowner dealing with probate to sell their property? This article serves as a valuable guide for anyone facing the probate process. It will explain what probate is and provide practical steps to navigate this often complex procedure, enabling you to sell a probate property while still making a profit.

What is a Probate?

When someone dies, their assets become the responsibility of the executor of their estate or the Court, whether they had a will assigning their assets to beneficiaries or died intestate (without a will). There are two types of probate: formal and informal. Informal probate involves limited court involvement because the estate has an original will or there is no dispute about the heirs’ identities. This article focuses on the more complex formal probate process, which occurs when the estate has significant debt, the will is contested, or the original will cannot be found. In such cases, the Court must intervene to resolve the issues.

Can a House Be Sold While in Probate?

Yes, it can be sold! A property in probate can be sold by three entities, depending on how the estate was left when the person passed away. First, the executor of the estate or a person named in the will to manage the distribution of the estate can sell it. Second, the administrator of the estate, appointed by the court to manage the estate in an intestate situation when there are heirs or beneficiaries, can also handle the sale. Third, the court can sell the property in an intestate situation where there are no heirs seeking administration. Once the executor, administrator, or court determines who inherits the property, the heir(s) or beneficiaries can begin petitioning to sell the probate property.

What Does it Take to Sell a House in Texas While in Probate?

An executor’s primary duty is to safeguard the estate’s assets for distribution to any heirs or beneficiaries named in the will. Occasionally, the estate might owe significant debts to creditors or have property with back taxes owed to the government. In such cases, the executor, administrator, or the court can sell the property to settle these debts, even if there are heirs involved.

For instance, consider an elderly woman who passes away, leaving an executor to handle her estate. She has two heirs. At the time of her death, she has accumulated $90,000 in hospital and credit card debt. She leaves behind a home valued at $150,000 but no cash assets. The estate owes $80,000 to the hospital and $10,000 in credit card debt. Despite her passing, the estate is still responsible for these debts. If the heirs cannot cover the debt themselves, the executor will need to sell the property to pay off the $90,000 debt. After the house is sold, the remaining $60,000 would be divided between the two heirs.

Additionally, a property in probate may be sold if the deceased left no will and has no immediate heirs. In this situation, the court can order the property to be sold, and any profits distributed to the closest living relatives.

Steps for Selling a House in Probate

If you own a property in Texas that’s stuck in probate and you’re having trouble selling it, don’t lose hope! Depending on local and state laws, selling a probate property can be done in four steps. The first step is appointing an executor or administrator if one wasn’t already assigned by the deceased.

If you are the assigned executor (or you and the executor agree on the next steps), you have the power to decide whether to sell the property or keep it. Whether the estate owes money to creditors or you inherited a house in another state that isn’t practical to keep, you can choose to sell the property and move on. However, before you put up that For Sale sign, you’ll need to have the property appraised. After the appraisal, you can petition the Court to list the property for sale. You can choose to sell it yourself (FSBO), work with a trusted realtor experienced in probate properties, or sell it directly to an investor.

Decide How to Sell the Property: 

  1. Valuation or Appraisal 

First up is finding out how much that property is worth. To do this you’ll need a valuation of the land by a trusted professional, or you’ll need to hire a professional appraiser that understands the law in the area as it pertains to the process of evaluating the property’s current value. In many states, the Court requires the property to be sold for at least 90% of its appraised value. That makes it even more important to find an appraiser with probate property experience that won’t balloon the worth of the land.

  1. Listing the House 

Once you have your appraisal, you, the executor, and/or your lawyer will need to file an intention to sell the house and other assets with the court. This form will include the final appraisal amount and which method you would like to use to sell the property. Methods can include auction, a traditional market sale, selling directly to an investor, and more. When the petition is approved, you are ready to list the property to let buyers know that the property is available. Whether you choose to sell the house yourself, use an experienced real estate agent, or sell directly to an investor, make sure that you have someone in your corner that has experience with probate properties.

  1. Offers

Whether offers fly in or trickle, eventually you’ll need to decide which offer is right for you. Evaluating your goals for the sale of a house is an important part of this step. Do you need a quick sale so that you can pay off the estate’s debts? Would you prefer to wait a bit longer and see if you can get more profit from the sale? Or is the property in disrepair and needs a special buyer who can handle a complete remodel? These are all things you’ll need to take into consideration when you decide when and how to list a property in probate.

Knowing what goals you need to meet with the sale of the property will help you decide which offer to accept so that you can move on to the next step…

  1. Notice of Proposed Action

Once a buyer makes an offer, they need to be informed that the sale can only be completed after the court’s confirmation. Due to disclosure law, this should not come as a surprise but a buyer inexperienced in probate may balk at the added time needed for the sale. This is often one of the reasons why a probate house is skipped over for another property, even if the probate property is priced to sell fast. The delayed timeline may cause a buyer to decide it’s not worth the wait. But if a buyer has come forward with an offer and doesn’t mind the wait, the Court will review the bid before releasing an order to approve the sale of the property.

  1. Bidding

In the case of auctions, a property in probate can be marketed as ready to sell before the Court finalizes an Approval to Sale to help draw in more interested parties to bid. In the case of auctions, the Court often is the one who handles the bids. There are strict rules and guidelines that must be followed for this type of sale, making it only used as a last resort. Once someone has won the bidding the executor will petition the court to authorize the sale of the property, but if any of the Heirs object the sale can be canceled and the property put on hold as the Court decides the next steps.

  1. Finalization of Sale

Hopefully, the sale of that house, condo, rental property, or piece of land is a smooth and straightforward experience. Even if you experienced a few hitches along the way, once you have an offer that the Court accepts it’s time to finalize the sale. The executor or lawyer will need to file a final account and petition for the final distribution but once the Court approves this, title documents can be signed to make the house sale official.

Mistakes to Avoid When Selling a Probate Property 

  1. Moving Too Quickly 

When a person passes away, their family may try to move as quickly as possible to sell the property so that they have time to grieve. Or, if there is debt that has interest that is compounding monthly, the executor or administrator will try to sell the house as quickly as possible by valuing it below market value to pay off the estate. Sometimes a too-fast sale can also happen when the house is in poor shape or needs major upgrades the beneficiaries do not want to pay for. They may undervalue the property so that they can sell it as-is.

  1. Not Completing a Real Estate Disclosure 

Depending on what state you live in, Real Estate Disclosure laws can be almost as tricky as the probate process! These laws are a list of issues (such as lead paint or asbestos) that must be disclosed to the buyers about a home before closing on the property. 

Most states require sellers and their agents to disclose in writing “material defects” about the home. According to the National Association of Certified Home Inspectors, material defects are “…a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people. The fact that a system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect.”

Experienced real estate agents are great at navigating these tricky waters, but what if you inherited a house that you never lived in? How would you know what to disclose? In some states, the executor, person selling the property, and/or real estate agent may be exempt from filling out local real estate disclosure forms due to the property being in probate. This is because that person does not and did not live in the property, so would have no way of knowing what to disclose.

If you are unsure of your state laws, someone who is experienced in probate real estate (whether it be a real estate agent or investor who has purchased probate properties in the past) will be able to help you navigate these legal waters. If looking into the latter option, be sure to sell your property directly to an experienced investor who doesn’t mind purchasing a property in probate and is willing to take the risk of purchasing a home from someone who is unable to give proper disclosure. You do have options!

  1. Failing to Hire a Lawyer

We can not emphasize this enough – a knowledgeable real estate lawyer with experience in probate can help you navigate the process of probate much faster and easier than going at it alone! Not only will they know how to petition the Court so that you can finally put that property up for sale, but they’ll be able to guide you through the legal steps to sell that unwanted house or property with less hassle and tears. Even consulting will help ensure you aren’t missing the blind spots of the probate process.

  1. Waiting Too Long to Start the Probate Process

When someone loses a loved one, grief may cause us to put everything on hold while we process the loss of the deceased in our life. But what happens to the probate property during that time? Property taxes continue to add up, utility bills continue to come in, and the bank will want its monthly mortgage payments until the property is settled. Waiting too long can cause the estate’s expenses to add up fast, eating into the estate’s assets and leaving you in a difficult situation.

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Who Buys Houses in Probate? 

We do! Oak Summit Group is a direct house buying company that has built our reputation on buying houses for cash with less stress and less fees. Contact us today and get a competitive cash offer for that house or property that’s stuck in probate. We buy homes in any condition. We can help you with the convoluted process of selling a house in probate, making the process faster and as stress-free as possible.