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Disposing of a Property in Probate: A Guide for Executors
Being an executor involves handling considerable tasks while navigating the emotional challenges of a loved one’s passing. This guide seeks to alleviate some of the burdens by providing insights on how to handle the sale of a property in probate.
“Probate” typically refers to the official process of settling the estate of someone who has passed away. This procedure ensures that all the deceased’s assets, including debts, are appropriately accounted for and distributed based on their last will and testament.
When the deceased owns real estate, like a house or apartment, it’s considered part of their estate. Most often, instead of directly passing the property to a beneficiary, it’s sold during the probate process. The responsibility of making decisions regarding the sale lies with the estate’s executors. These executors could be friends, family members, or even a legal professional. They step into the shoes of the deceased, taking on the duties of finalizing the sale and signing necessary legal documents.
There are three primary reasons why selling a probate property via auction is beneficial.
To begin with, executors have specific duties towards the beneficiaries outlined in the will. One of their responsibilities is to make sure the property is showcased openly in the market to fetch a reasonable price. Public auctions provide a transparent sales platform, ensuring that executors aren’t questioned about underselling the asset.
Reasons to opt for an auction:
✔ The highest bidder wins, ensuring a competitive price.
✔ Sales are definitive and won’t collapse.
✔ Properties are auctioned “as is” without any warranties.
Secondly, many probate properties tend to be dated, having seen little to no updates over the years. Auctions are especially suitable for such homes that require renovations. In high-demand areas, these properties can garner significant attention. It’s not rare for a property that requires modernization to fetch a price at auction that far exceeds the original estimation provided by an estate agent.
Lastly, everyone involved in the probate process usually prefers a swift settlement of the estate. This is because there are taxes to be covered and beneficiaries awaiting their inheritance. Auctions offer the fastest and most dependable way to ensure a sale, facilitating a prompt settlement.
Technically, you can’t sell a home before obtaining probate. However, you can initiate the process of marketing the property. It’s common practice to start advertising a probate property while simultaneously applying for probate. Ideally, both processes align, and by the time you’re ready to finalize the sale, the probate grant is already in hand. For more insights, delve into the intricacies of selling before the probate grant is officially issued.
Probate properties, especially those in need of repairs, often find a competitive market at auctions. The competitive bidding process at auctions usually pushes the price higher, making probate properties often sell for more than through other selling methods.
The financial aspects of auctioning a probate property roughly equate to the costs of selling via an estate agent. Auction houses generally take a commission of around 2% plus VAT, which is only due post-sale.
There’s no need to. Auctions allow you to sell probate properties “as is”, meaning you don’t have to go through the process of clearing out or cleaning up. Similarly, there’s no obligation to make any repairs before auctioning a probate property.
Auctions are a fast and dependable method. Once a property is sold at auction, the deal is binding. The buyer must pay a 10% deposit immediately and contracts are legally exchanged on the same day. The sale is then finalized four weeks later. However, before auctioning a property, it’s crucial to ensure that you’ve secured the grant of probate.
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