If you feel concerned that you cannot land an affordable property in the current real estate market, there are home sales that offer opportunities for bargains. You may be able to acquire a residence for less money by buying one through a probate sale.
A probate sale occurs when a homeowner dies without leaving a clear will or with outstanding debts that require the sale of the property. Buying a home through probate differs from a traditional sale in ways that may not always work to your advantage.
Court approval
With a probate sale, you need approval from multiple parties, most notably the judge who oversees the probate case. After submitting an offer, you must wait for a particular court date, usually 30 to 45 days away. At that time, the court will hold an auction, and the highest bidder will end up with the property.
Due to court involvement, you probably cannot make the purchase contingent on selling your current home or securing financing. Also, backing out if you disagree with the home inspection results is likely impossible since probate sales are nearly always as-is.
Family input
As part of a probate sale, the executor must notify the family members of the decedent about the proposed sale price and terms. This provides the relatives with a chance to comment on these terms so they may express approval or concerns. Depending on their remarks, a judge might decide not to accept your offer.
Executor decisions
Additionally, the estate executor can accept a higher offer even if you held the original winning bid. The executor has a duty to maximize the financial outcome for the estate, not necessarily honor the first adequate bid. Another buyer could submit a larger offer that the executor accepts instead. You may need to increase your bid to secure the property.
A survey by the National Association of Realtors found that probate houses generally sell within 12 months, so you should act on a probate property as soon as possible if one catches your eye. Probate sales are not for everyone, but knowing what to expect will help you navigate the process if a probate house matches your goals.