There are many ways you can purchase real estate for less than market value. These homes can be bargains that you can turn around for a quick profit or hang onto so the value can grow.
You can buy a probate home. This is a transaction unlike a standard real estate sale. There are many legalities involved, and you need to understand them to have a successful sale.
If you want to make a smart real estate purchase, a probate sale is a way to go. Keep reading to learn everything to understanding probate property.
What Is Probate?
The process starts with the death of a person. They should have a will and testament, which is sent to probate court for a judge to prove its validity. Provided that the will isn’t contested, this is usually a simple step.
The judge will also appoint an executor of the estate. The executor is responsible for organizing the assets and debts left by the deceased and then following the instructions in the will.
They have to research to find what all of the assets are and where they are. They need to notify all of the creditors, make sure they get paid, and handle taxes as well.
What’s left is what gets distributed to the heirs.
Probate laws are challenging to follow because they’re different from state to state. Some states allow you to sell real estate property once the executor has been named. Others wait until the probate process has been completed, and then the real estate sale can occur.
You want to make sure that you do all that you can to learn the laws in your particular state. You can learn more about probate in North Carolina.
Understanding Probate Sales
There are a few things beyond the legalities of a probate sale that you need to understand. These tips will help you navigate a probate sale like a pro.
Probate Homes Are As-Is
Probate homes are often priced less than market value for a reason. They’re priced as is. There will be no negotiations, no room for repairs, or any improvements.
You need to do your homework before you put an offer down. You’re going to be responsible for repairs and improvements. You have to ask yourself if the lower price will be worth it.
There are also disclosure documents that are attached to the sale. These documents cannot be overlooked. They’ll outline everything that’s wrong with the house. Again, do your homework before making an offer.
You could wind up buying a money pit. The property that you’re buying has a lot of unknowns. The person who lived in the home passed away, so they can’t tell you about repairs and maintenance.
The best thing you can do for yourself is to get a very thorough inspector to go over every part of the home before you make an offer.
Many buyers are reluctant to spend the money because they’re afraid that they’re going to lose it in the bidding stage of the sale. When you take this step, you’ll be grateful you did because you will have a real idea as to what the house is worth.
In most real estate sales, the sale is contingent upon your ability to get a home loan approved. Most probate sales have no such contingencies.
They are really meant for fast, quick sales. Cash buyers are usually favored before a buyer that’s working with a lender.
You can put yourself to the front of the line by having a pre-approval letter from your lender. That’s almost as good as having a briefcase full of cash.
The Bidding Process
In most real estate sales, the buyer will work with an agent to market the sale of the home. They’ll also accept offer contracts then evaluate the best contract to accept.
In probate sales, the process is a little different.
The executor of the estate or the probate attorney will ask the probate judge to review the case and confirm the sale of the property. A judge will then set a sale date.
The date is given by the court, which is anywhere from 30 to 60 days. The buyers have to prove that they did everything they could to market the sale of the home.
The next step for you is to show up in court. You and possibly several other people will bid on the probate home.
It’s kind of like an auction, with the bidders going toe to toe to get the highest bid.
This is why doing the legwork before you start bidding is so important. Without doing an inspection or research, you could spend way too much money for the home and spend much more to fix it up.
You Need a Deposit With Your Offer
Since probate sales are meant to be closed as soon as possible, the court wants to take offers from serious buyers only.
It’s highly unusual to put a deposit down when you make an offer on a home. Yet, many probate sales require a 10% deposit when you make the offer.
The only way you will get your money back is if your offer is rejected by the court.
Understanding Probate Property
Whether you’re an investor or a residential buyer, a probate sale can provide a way to get more value out of your home.
Understanding probate property and how it works is necessary if you want to make a sound financial decision. The two most important things you can do are to know the probate laws in your state and inspect the property before making an offer.
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