Understanding Probate Sales
If you ‘re in the market for a new house, you may have heard about probate sales. A probate sale is held when a homeowner passes away without naming the person who should receive their property in a will. In this situation, the bank that provided the mortgage for the property will put it on the market, typically at a discount.
For homebuyers, probate sales can offer a unique opportunity. Homes sold in probate sales are often listed well below the usual market rate. If there’s a probate sale in your area, you might be able to find your dream home for an attractive price. However, there are a few things that you should know about probate sales before making your decision.
Some Assembly May Be Required
When a bank puts a home on the market in a probate sale, they are usually only concerned with making a sale to recoup the mortgage. They will not likely be interested in renovating or upgrading the property to attract buyers. In most cases, the reduced price of the property will attract plenty of interested home shoppers.
With that in mind, don’t expect a probate sale property to be free of problems. Many of these properties can have issues ranging from unkempt landscaping to foundation issues. If you buy the property, those problems will be yours to fix. You might be able to offset the costs of improvements by saving on the house price but it’s important to crunch the numbers.
Upfront Costs
Unlike a standard home sale, the company selling a probate property will accept bids until they reach an agreeable price. In order to deter buyers who aren’t serious about the purchase, the bank will ask for a deposit of 10% of the home price with your bid. If you win the property, that money can be applied to your down payment. If you don’t get the sale, you should be able to get your deposit back.
Patience Is Key
If you’re interested in a quick purchase process for a home, probate sales may not be the choice for you. Bidding on a property can take a long time and all of the paperwork that must be filed with the city and the bank can drag things out.
Even if you’re the top bidder, the process can still take quite awhile to resolve. If the property manager accepts your bid, the lawyer in charge of the estate will have to get approval from the court to complete the sale. This can take anywhere from 30 to 45 days to complete, although it may run longer in some cases.
Also, in certain states, other interested buyers are still allowed to enter bids on the property while your bid is being processed. They may even show up to the court proceedings to try to outbid you.
Despite these circumstances, you may still want to find a great deal by seeking out a probate sale. If you are tenacious and willing to wait, you might be able to find the perfect home with this method. Be sure to talk to your real estate agent or attorney to be clear on local laws regarding probate sales.