A few days ago we shared an article about Probate. We talked about what it is and the basics of how it works in Kansas and Missouri and shared some links to a few additional resources. You can click here to review that article.
One of the big questions a lot of people have is around a house in the probate process and if it is possible to sell the house BEFORE probate is complete. Most people realize that proceeds from a sale sitting in a bank is way easier to keep track of and maintain than a vacant house that needs to be checked up on regularly and is racking up taxes, insurance, utility, mowing and other bills every day.
Now we are not here to take the place of legal advise from a good attorney. We are simply providing some basic information so our sellers have a basic idea of their options when it comes to selling a house in the middle or after the probate process. And as all the legal advisors we have consulted tell us, every probate process is different and it could be as short as a couple of months and a more complicated estate make take a lot longer.
If you are considering selling a house during the probate process there are some basic steps to follow.
First: Hire an Attorney
Before you do anything about selling the house, hire an attorney to provide guidance and counsel through the probate and sale process. If it is a low value house you may be able to sell it with out a lot of hoops. And if it is a bit higher priced, you might have to do more. And some sellers need extra help from an attorney if for example there is a traditional mortgage or a reverse mortgage to deal with.
Second: Determine the Home’s Value
After consulting with an attorney and determining that selling the house or investment property right now is the best option, your next step is going to be to determine what the property is worth.
To find out value you may be able to hire a Realtor that knows the area to complete what they call a Comparative Market Analysis. As Realtors ourselves, we have done a few of these for small value estates at the request of attorney friends. Other times you may want to hire an appraiser to determine value. You will want to determine if a CMA or an appraisal is required with the advice of your attorney and they may even had a person to recommend for this valuation.
Third: Get the Court’s Permission
Armed with a valuation on the property, the next step is to get permission from the court. Depending on the type of estate in probate there are different forms and petitions. Consult with your attorney on the right form to be filed. And note in some cases, the court may want you to already have a sale contract from a valid purchaser already in place so step 3 and step 4 in this guide may need to be flipped.
Fourth: Find a Buyer
There are many options for finding a buyer. You might list it for sale with a real estate agent, but a traditional buyer might not be overly excited to wait for you to then get through step # 5 – Approval. You might list it for Auction – but again, your end buyer may not be willing to wait for the necessary approval. However, if you were to reach out to a direct buyer, like kcmoHomeBuyer, we can write you a valid contract that you can present to the court for their approval and in most cases we will be willing to wait out the process.
Fifth: Get Approval of the Sale Contract
Depending on the type of estate, the court may approve the contract you present them if it is roughly 75% or 3/4ths the value of the property as it was valued in the initial inventory. And in other cases the court may want to offer it up for auction to see if they might be able to get a higher value that what was in the initial contract. So you can see why most traditional buyers may not want to make an offer.
Finalize the Sale
If you are able to find a buyer that will offer a sufficient amount to satisfy the court, you can then proceed to closing.
Issues that May Come Up
- Owe to Much: In some cases, there may be underlying debt on the property in the form of mortgages or other liens that exceed the value of the property, often in those cases, your attorney and the court may advise the property be abandon to foreclosure by the lien holders.
- Contract Price not High Enough: It may be that a buyer cannot be found at a high enough price to satisfy the court. In which case you should seek the advice of your attorney that may advise to just wait for the probate process to complete and then proceed with the sale.
If you have an inherited property in the Kansas City Metro area and are seeking a valid buyer, the Tuckers here at kcmoHomeBuyer.com are would love to work with you and your attorney. Please give us a call or submit your property information on line.