The Worst Mistake You Can Make in Probate Real Estate

Over the years in the real estate and finance business, I have heard it said over and over…”I don’t want to deal with that probate situation.” Or worse than that “I don’t want to deal with that probate because it requires court confirmation.”

This avoidance of dealing with a probate situation has caused more loss of capital, increased expenses, waste of money and reduced assets being passed to the beneficiaries than any other factor. When you dig into the details of probate real estate transactions I think you will find that it really isn’t so bad. In today’s market, many probate sales close significantly faster than Short Sales!

Whether you are the personal representative of an estate, a real estate agent, buyer of property, heir or beneficiary, it will help to have a little better understanding of the process.

PROBATE PROPERTY SALES

Court Confirmation Vs. Private Sale

Although probate property is often sold in open court (in a “confirmation hearing”), estate representatives may also elect to sell without a confirmation hearing!

The decision to sell with or without confirmation is generally made by the estate representative in consultation with her lawyer, and is usually based upon the facts of the case, the attitudes of the beneficiaries, and the state of the sales market. In every case, estate representatives and their brokers are faced with the following pros and cons. First let’s cover Court Confirmation Sales:

COURT CONFIRMATION

Pros:

• Process is well-documented and held in open court, reducing beneficiary objections
• Selling agent is “rewarded” for bringing higher offers with extra Commission
• Sellers often obtain higher prices through competitive bidding

Cons

• Process takes longer (as much as 120 days from offer to close of escrow
• Buyer must be “confirmed” by court before buying, and may have to compete with other offerors at court hearing
• Process can be difficult to explain to anxious buyers