How do you sell a house in probate?
First of all, a lot of people don’t know what probate is. We’ve been getting a lot of listings from people needing to sell the home of a family member who has passed away. Most of these families have a will but, unfortunately, a will won’t necessarily keep you out of probate.
I’m not a probate attorney or real estate attorney, so I would direct you to them if you have any specific questions. That said, I have seen many people go through probate.
Probate occurs when the court needs to get involved to determine how creditors and heirs get paid out, as well as how you should sell the house if there is one involved. Probate can occur with or without a will in place.
If you or a family member has assets, especially a house, I encourage you to speak to an estate attorney and draft something more specific. That way, if you or your family member passes away, your loved ones will know what to do with the estate.
If we don’t have our ducks in a row, the court will jump in. Their job is to define what kind of assets you have, what liabilities, who gets paid, how they get paid, and if there is anything left over.
One thing you should know about is what happens with a reverse mortgage. A reverse mortgage is when someone has a large equity position in the property and they refinance their mortgage so they can take that equity as income to live on every month. The reverse mortgage gives you the opportunity to have your housing and be able to pay for other expenses.
The problem is that when you pass away, the reverse mortgage becomes due payable.
A lot of people are surprised by that. At the end of someone’s life, the mortgage company comes to you and tells you that you have a certain amount of time to sell the house. If you fail to sell the house, they will go to foreclosure proceedings because they want to make sure that the property gets sold and the amount owed gets paid back to the bank.
When people come to us needing to sell this kind of property, they are often scared by the foreclosure notices. The good news is that we are used to dealing with these properties. We know how to get extensions on those. If you or someone you know is in this situation, let them know that they need to talk to a real estate professional as soon as possible to get that extended, because there are some stipulations that most banks require.
Some banks will give you a healthy extension of six months to a year, while others will keep you on a 60- to 90-day time frame.
If you have to sell a property in probate, talk to an agent, get an evaluation on the property, and sign a listing agreement.Most banks want a copy of the listing agreement sent in so that they know you are earnest about selling the home. They also want to know what the time frame is for getting the home on the market. Just be aware that doing so won’t stop them from calling you about foreclosure proceedings.
It’s also important to work with a really good probate attorney. If you don’t know one, we can refer you to one. Your probate attorney can petition and file for the estate with the court. You want to get the court process done as soon as possible because you cannot sell the house until the court approves. This can be a lengthy process depending on the estate. It can take anywhere from 45 to 90 days to get through the system.
Your probate attorney also notifies all family members that could benefit from getting anything out of the estate. Anyone who wants to get something from the estate has to go to court.
Your probate attorney also works with creditors. Even after we pass away, we still owe our money. Your probate attorney makes sure to pay back all creditors and that all liabilities to the state are accounted for before you get approved to close on a home sale.
This is not a terrible process, but it can be very stressful. We have been through this multiple times, and we can help guide you through the process. There is usually one person in the deceased’s family who has been designated to manage this process. We work closely with that person, because it can be difficult to clear out the estates and account for assets during such an emotional time.
If you or anyone you know is going through this process, please let us know. We would be happy to guide you through this difficult time. We are here to help.