Selling a House in Probate Texas

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While probate properties represent valuable opportunities for investors seeking discounted properties, selling a house in probate presents unique challenges for homeowners. This comprehensive guide serves as an essential resource for anyone navigating the probate process. We’ll explain what probate entails and provide practical strategies to successfully sell a probate property while still securing a fair profit.

What is a Probate?

Whether someone passes with a will designating beneficiaries or dies intestate (without a will), their assets immediately become the responsibility of either the estate executor or the Court. Probate comes in two forms: informal and formal. Informal probate involves limited court oversight, typically when an original will exists or there’s no dispute about heir identity. This article focuses on the more complex formal probate process, which occurs when the estate faces substantial debt, the will is contested, or the original will is missing. In these situations, Court involvement becomes necessary.

Can a House Be Sold While in Probate?

Yes, it can! Depending on the estate’s condition at the time of death, a probate property can be sold by three entities: the executor named in the will to manage the estate distribution; the administrator appointed by the Court to handle an intestate estate with identifiable heirs/beneficiaries; or the Court itself when handling an intestate situation without heirs seeking administration. Once the proper authority determines property inheritance, the heir(s) or beneficiaries can begin petitioning to sell the probate property.

What Does it Take to Sell a House in Texas While in Probate?

An executor’s primary duty is preserving estate assets for distribution to heirs or beneficiaries as specified in the will. However, situations arise where the estate owes significant debt to creditors or the property has deteriorated with back taxes owed. In these circumstances, the executor, administrator, or Court has authority to sell the property to settle outstanding debts, regardless of heir preferences.

Consider this example: an elderly woman passes away with an appointed executor and two heirs. By her death, she has accumulated $90,000 in combined hospital bills and credit card debt. She leaves behind a home valued at $150,000 but no liquid assets, owing $80,000 to the hospital and $10,000 in credit card debt. Despite her passing, these debts must still be settled. If the heirs cannot cover these obligations themselves, the executor must sell the property to clear the $90,000 debt. After the sale, the remaining $60,000 would be divided equally between the two heirs.

A probate property may also be sold when someone dies without a will and leaves no immediate heirs. In such cases, the Courts can order the property sold with proceeds distributed to the closest living relatives.

Steps for Selling a House in Probate

If you own a Texas property stuck in probate and are struggling to find a selling solution, there’s good news! Depending on local and state regulations, selling a probate property typically involves four key steps. First, an executor or administrator must be assigned if one wasn’t already designated by the deceased.

Once you’re appointed as executor (or you and the executor agree on next steps), you gain the authority to decide whether to sell or keep the property. Whether the estate faces creditor obligations or you’ve inherited a distant property that’s impractical to maintain, you can choose to sell and move forward. However, before listing the property, you’ll need a professional appraisal. Only after completing this valuation can you petition the Court for permission to list the property yourself (FSBO), work with a probate-experienced realtor, or sell directly to a cash buyer like Electrum Properties.

Decide How to Sell the Property:

Mistakes to Avoid When Selling a Probate Property 

Moving Too Quickly

Following a loved one’s passing, family members might rush to sell the property to create space for grieving. Alternatively, when an estate faces mounting interest-bearing debt, the executor or administrator may attempt to sell quickly by pricing below market value to settle obligations. Hasty sales can also occur when properties require significant repairs that beneficiaries are unwilling to fund. In these cases, they might undervalue the property to facilitate an as-is sale.

Not Completing a Real Estate Disclosure

Depending on your state, Real Estate Disclosure laws can be nearly as complex as the probate process itself! These regulations specify issues (such as lead paint or asbestos) that must be disclosed to buyers before property closing.

Most states require sellers and their agents to disclose “material defects” about the home in writing. According to the National Association of Certified Home Inspectors, material defects are “…a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people. The fact that a system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect.”

Experienced real estate professionals excel at navigating these complex requirements, but what if you inherited a house you never occupied? How would you know what needs disclosure? In some states, the executor, seller, and/or real estate agent may be exempt from completing local real estate disclosure forms for probate properties. This exemption exists because someone who never lived in the property would have no reasonable way to know what to disclose.

If you’re uncertain about your state’s requirements, someone experienced in probate real estate (whether a specialized agent or investor with probate property experience) can help navigate these legal complexities. Consider selling directly to an experienced investor like Electrum Properties who understands probate properties and willingly accepts the risks of purchasing from someone unable to provide complete disclosure. You have viable options!

Failing to Hire a Lawyer

We cannot emphasize this enough – a knowledgeable real estate attorney with probate experience can help you navigate the process significantly faster and more efficiently than attempting it alone! They’ll know precisely how to petition the Court to list your property for sale and can guide you through the legal steps to sell that unwanted property with minimal hassle and emotional stress. Even a consultation can help identify blind spots in the probate process you might otherwise miss.

Waiting Too Long to Start the Probate Process

When losing a loved one, grief may prompt us to pause everything while processing our loss. But what happens to the probate property during this delay? Property taxes continue accumulating, utility bills keep arriving, and mortgage payments remain due until the property situation is resolved. Excessive delays can rapidly increase the estate’s expenses, depleting assets and creating difficult financial circumstances.