Selling Real Property in a Probate Estate
Most wills contain a clause which nominates one of the heirs (or a trusted non-heir) to administer the estate. Even if no will was left, the court must appoint someone to handle the affairs of the decedent after death. That person might be referred to by many different terms: Executor, Executrix, Administrator or Administratix. However, to simplify things, the more modern term Personal Representative [PR] is commonly used.
If you have been named in a will to serve as the PR, you should realize that serving as the PR can require a significant time commitment and can be very complex, depending on the assets in the estate. You should also know that you are in no way legally obliged to accept this appointment! You can always say “no” and the court will appoint someone else! However, if you choose to accept the court’s appointment, here are some hints that might help you through this complex process.
Given that the largest asset in most probate estates these days is real property, the PR’s biggest duty is to make sure that the property is sold at an acceptable price. The current state of the real estate market is sure to complicate this process even more. While you may be tempted to put a “For Sale: Estate Property” sign in the front yard and handle the sale yourself, there are several reasons why this may not be your best course of action.
The first reason is that the biggest decision you’ll face is the Listing Price. As the PR, you will certainly know what the court’s appraiser thought the property was worth. However, this value might be so dated that it no longer represents the “market value” of the property. Depending on the location of the property, the court’s appraisal might be off by as much as 10% by the time you are granted the authority to sell the property! To avoid listing the property at an unrealistic price, you need to engage the services of a real estate professional.
As with the sale of any piece of real property, knowledge of the market and how that given market is trending is an integral part of listing the property at a salable price. The last thing you want is to appear before the court to explain to the Judge why you haven’t had any offers in the previous six months! A real estate professional will have access to all sorts of information needed to arrive at a viable listing price, such as:
- The number of foreclosures in the neighborhood
- The number of properties that are currently in “default”
- The recent sales prices of comparable properties
- Other variables which might enhance or detract from the market value
The second reason for hiring a real estate professional is that the sale of probate property is not exactly the same as selling any other piece of real property. Depending on the degree of authority that you were granted by the court, you may be required to present each offer you receive to the court for approval. If this step is required, the listing agent will need to draft sales contracts that contemplate this contingency.
In sum, the court’s mandate in the probate process is to move the process along. As the PR, it is wise to understand this or the other heirs may petition the court to have you removed. Sitting on real property is by far the most common grounds for removal. You can avoid most, if not all, of these problems by hiring a real estate professional the day that you are granted the authority to sell the real property. At the very least, you’ll have someone else to blame if the sale takes longer than expected! And given the current state of the market, that might be worth its weight in gold!
