Many times when someone dies, the major asset that they leave behind is their home. The home needs to go through probate court, unless there’s a trust in place or some other form of estate planning, whereby the house passes outside of probate. But in the normal everyday situation, if you don’t have an estate plan and you pass away and you leave your house behind, then your heirs will have to open up a case in probate court in order to get the house transferred to the heir’s name or sold, with the proceeds then transferred to your heirs.
Generally, it’s better to sell the house in probate instead of waiting until after probate. The home is generally sold in probate court because it is normally the only asset that is actually worth anything, and it has to be sold in probate court to pay off creditors and pay attorney’s fees. Many times, you might also get a better price.
When someone passes, one of the heirs petitions the court to open up probate. Once the court approves opening probate, and approves who’s going to be “the administrator” or “the personal representative” of the estate, then that person has the right to sell the home. That person then either goes through the traditional process where you hire a realtor and you list the property for sale on the MLS, or sell it on the secondary market. Either way, the personal representative gets into contract for the buyer to purchase the home, and at that point, you have to ask the judge to approve it.
After you file a document requesting that the judge approve the sale, the court then sets a hearing on this. This is important because at the hearing, anyone can come to it and bid up the price. Just because you’re in contract with the buyer for the sale of the home, does not mean that the buyer will actually get it, because the judge is going to essentially hold an auction on the day of the hearing to see if there’s anyone else who wants to buy the house for more money. The judge is going to accept the highest and best bid, just like an auction.
A lot of times you feel better because you know you’re getting the highest and best bid. If you wait until after probate and you sell it on the open market traditionally, it doesn’t mean that you won’t get the best or better deal with this house, but my point in this article is to reassure you that if you’re selling a home in probate, you’re probably getting the highest amount at that point in time. For example, Morris Law Center just had one of these recently; there were four bidders, and even though we were already in contract on it, we ended up getting $30,000 more than the original buyer was going to pay, so it worked out quite well.
The lesson of the day is: If you’re selling a home through probate, rest assured that the judge is only going to accept the highest and best bid, and there’s going to probably be investors at the hearing, trying to bid up the sale if the purchase price is too low.
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