Sell a House in Probate Connecticut
Probate properties are a great opportunity for real estate investors and those looking for a discount, but what does it take for a homeowner dealing with the probate process to sell? We will go in detail in this article so that you can use it as a valuable resource for if you are dealing with the probate process. It will explain what is probate and how you can navigate the often tricky process to sell a property in probate while still making a profit.
Probate is difficult. At times it can lead to family disputes, hounding creditors, and a number of fees and logical problems that can end up costing you money in the process. During an already tough time it can be challenging to try to resolve quickly and we have seen the probate process go on for years and in some cases go into foreclosure. It drags family members through stress and aggravation that can have long lasting damage to their relationships with each other. It can also cause a financial burden. Heirs might not be able to handle the financial load of maintaining an additional house that they are unprepared for. With the soaring prices we have seen in the last few years everyone is living paycheck to paycheck and the passing of a loved one is hard and adding this stress can make it worse.
What is a Probate?
Whether a person died with a will assigning their assets to one or more beneficiaries, or they passed away intestate or without a will, their assets instantly become the responsibility of the executor of their estate or the Court. There are two types of probate: formal and informal. With an informal probate sale process, there is limited court involvement due to the estate having an original will or there is no dispute regarding the identity of the Heir(s). It is likely that most people will go through this process if all affairs were in order and the deceased communicated their wishes clearly and fairly to their family. However, this is not always the case. Not all families get along or decisions changed over time and they were not clearly expressed. So many times someone passes away with out leaving a formal will. This article addresses this trickier process of the formal probate process, which can occur when the estate owes a large amount of debt, the will is contested, or the deceased left a will but the original will cannot be located. In these cases, the Court must become involved.
Can a House Be Sold While in Probate?
Yes, it can! Depending on how the estate was left when the person passes, a property in probate can be sold by three entities: the executor of the estate or a person named in the will to manage the distribution of the estate; the administrator of the estate, who is appointed by the Court to manage the estate for an intestate situation when there are Heirs/beneficiaries; and the Court when there is an intestate situation but there are no Heirs seeking administration. Once the executor of the estate, the administrator, or the Court decides who inherits the property, the Heir(s) or beneficiaries can begin the process of petitioning to sell the probate property.
We talk more about how a house in probate can be sold in Connecticut much deeper here.
What Does it Take to Sell a House in Connecticut While in Probate?
An executor’s main responsibility is to preserve the estate’s assets for distribution to any Heirs or beneficiaries, as outlined in the will. They are serving the best interested of all the parties involved. Sometimes a situation might occur where the estate owes a large amount of debt to creditors or the property has been neglected and back taxes are owed to the government. In this situation, the executor of the estate, the administrator, or the Court is allowed to sell the property to settle all debts, even if there are Heirs. Passing away with a large amount of unresolved debts can wipe away an inheritance but these are obligations that are left unresolved and everyone needs to be made whole.
A good example of this is an elderly woman who passes away with an executor for her estate to manage her affairs. She has two Heirs. By the time she dies, she has built up a lot of hospital and credit card debt to the amount of $90,000. She leaves a home worth $150,000 but no cash assets and owes $80,000 to the hospital and $10,000 in credit card debt. Despite having passed, the estate still must find a way to pay off these debts. If the Heirs are unable to cover the debt themselves, the executor will need to sell the property to pay off the $90,000 of debt. Once the house is sold, the remaining $60,000 would be divided between the two Heirs. Even if these debts are not liens on the property they will still have to be resolved by the executor. The forced sale of the house will resolve all liens on the property first and after closing costs, realtor commission any remaining equity will go towards paying the hospital and credit card debt.
A property in probate may also be sold if the person died with no will and there are no immediate Heirs. In this situation, the Courts can order the property to be sold and any profits distributed to the closest relatives.
Steps for Selling a House in Probate
If you own a property in Connecticut that is stuck in probate and you’re struggling to find a way to sell, there is hope! Depending on local and state laws, the process of selling a probate property can be completed in four steps. The first step is having an executor or administrator assigned, if there wasn’t one already assigned by the deceased.
If you are assigned as the executor (or you and the executor are in agreement on how to continue), you now have the ability 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 doesn’t make sense to keep, you can decide to sell that property and walk away. But before you put up that For Sale sign, you’ll need to have the property appraised. Once that is complete, only then can you petition the Court so that you can list the property for sale on your own (FSBO) with a trusted realtor who has experience with probate properties, or sell it directly to an investor. It’s never easy and every action you take has to be approved by the courts.
Decide How to Sell the Property:
- Valuation or Appraisal
First up is finding out how much that property is worth. To do this you’ll need a valuation of the property 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 property. You might think that a high valuation would be a good thing when selling a house in probate. However it can’t be further from the truth. A bad appraiser can get you trapped with a property that can’t be sold because its been over valued for its condition. Inexperienced appraisers who are used to working with realtors to drive up prices on property may not consider water damage, broken windows, or a sagging roof with missing shingles. When the property is listed for sale it does not attract buyers because of its high price relative to its condition. It could get stuck on the market for months building up unpaid mortgage and tax bills and going unmaintained.
- 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.
Be mindful of the type of sale you choose. Each one has its own pros and cons. For example an auction might get you a faster sales but you might get far less for the property than if you were to go with any of the other options. But listing it for sale on the MLS could take upwards around 80 days or more to sell. If you list it with a realtor they will also include their commission which reduces the equity that will be available to pay debts and distribute to Heirs. Depending on your goals for the sale of the property we can offer several recommendations. Give us a call 860-704-9513
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…
- Notice of Proposed Action
So now you found a buyer and you like the offer. You’ve gone over that major hurdle. The next step is that, 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 and decide to walk away from the purchase . 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 still has to review the bid before releasing an order to approve the sale of the property.
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. However, the Court often is the one who handles the bids for the property. There are strict rules and guidelines that must be followed for this type of sale. While auctions sound promising because of the fast sale the problems that go along with it making it only used as a last resort by most executors. 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. So while it seems like it could be fast it could end up taking longer than if you had sold to an investor.
- 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.
Congratulations, you sold the house in probate.
Mistakes to Avoid When Selling a Probate Property
Like we mentioned, that probate process is not a simple one and most executors are inexperienced in the process and maybe overwhelmed after the death of a loved one if they were close to the deceased. The process is complex but there are a few common mistakes that can be avoided to make the process go smoother and hassle-free.
- 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.
If the house is sold below the value of the debts owed there will be no inheritance to be given to the Heirs. If the Heirs were dependent on the deceased this can cause undue hardship on them. The sale of the property should be done carefully and thought through fully.
- 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!
- 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. As Connecticut Home Buyers we know a number of qualified real estate lawyers that are experts in probate sales that can help walk you through the process and help prevent any mistakes.
- 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. In some cases the property could go into foreclosure before it even completes a probate sale. THis will make the problem far worse during an already traumatic time.
- Not Getting Probate Insurance
The original homeowner’s insurance policies ends when they pass away. This can become a serious issue if something happens to the property while it is in probate. It is important as the executor of the estate that you contact a property insurance company to protect it against fore and other damage.
- Not Having A Plan For The Remaining Estate
One of the reasons a property takes so long to sell is that the executor has to handle all the property owned by the deceased. They may have an estate sale which will open the house and all its contents to buyers who will come in and offer to buy furniture, clothing, and all other household goods that are remaining in the house. This can be another difficult process to have strangers moving in and out of the house rummaging through the rooms looking through everything. There may be an alternative. A number of cash buyers like Next Door Properties will typically buy a house and all of its contents for a single cash offer. They will typically sell the furniture and other home goods at consignment or store it to use in furnished rentals. What ever they do with the property that can provide single quick solution.
Who Buys Houses in Probate?
We do! Next Door Properties is a direct house buying company that has built our reputation on buying houses for cash with less stress and less fees. Regardless of the condition of the house or the complications that go along with probate we have the knowledge and experience with the process as well as a team of real estate lawyers, appraisers and other professionals that can help. If you are looking to sell the house quickly and get a fair market offer without adding realtor fees we can get you an offer withing 24 hours. 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.
Contact us about your house in probate in Connecticut cities like Fairfield, New Haven, Milford, Norwalk, Manchester, Bridgeport, Bristol, Waterford, West Hartford, Avon, Hamden, Brookfield, Danbury, New Britain, Killingly, Enfield, Newtown, Plainville, East Windsor, Hartford, Farmington, Canton, Derby, Stafford, Watertown, Middletown, Naugatuck, Essex, Bozrah, Weston, Wolcott, New Berlin, Torrington, Portland