Definition
A probate sale is a real estate transaction involving a property owned by a deceased person whose estate is being settled through the probate court process. These sales occur when the deceased person did not have a will or did not specify a direct transfer of the property, requiring the court to oversee the sale and distribution of proceeds to heirs or creditors.
Explanation
Probate sales differ from traditional real estate sales because they must follow legal procedures to ensure that all rightful heirs and creditors are properly addressed. The process typically involves:
- Court Approval – A probate court oversees the sale and ensures fairness to heirs and creditors.
- Real Estate Listing – The home is listed, often at a competitive price, to attract buyers.
- Offer & Court Confirmation – Once an offer is accepted, the court may require additional competitive bidding in an open hearing.
- Deposit & Sale Completion – Buyers often need to place a deposit (typically 10%), and the sale cannot close until court approval is granted.
Since probate sales require legal oversight, they often take longer than traditional sales and may be sold as-is, meaning the estate is not responsible for repairs. Buyers must conduct due diligence and understand that the process may involve delays.
Example
A homeowner passes away without a will, and their property is placed in probate. The court appoints an executor to manage the estate, and the home is listed for sale to pay off debts and distribute assets to heirs. A buyer submits an offer, but the court requires additional bidding before finalizing the sale. After legal proceedings, the sale is approved, and the buyer takes ownership.