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But don’t panic! Demand for all kinds of property is declining house sales. With roughly 1 in 10 properties on the UK market reportedly undergoing probate, they are an increasingly familiar option to prospective home buyers.
Properties sold subject to probate sale are pretty common. Probate properties are sold as they are often sold at a discount for a quick sale so the funds can be shared among the beneficiaries.
It is not uncommon for the deceased person to spend time in a nursing home in later years, incurring costs for the nursing home.
Loved ones usually pay the cost, so when the deceased person’s solicitors give the green light to sell the property belonging to the deceased, it is sold quickly. But, of course, it has to be at a discount for a quick sale to sell quickly.
Here at Probate Legal Advice, we’ve outlined everything you need to know about selling a property in probate.
What is probate?
The probate process is the legal and financial process involved in dealing with the property, money and assets of a person who has died. Before the next of kin or Executor named in the Will can claim, transfer, sell or distribute any of the deceased’s assets, they may have to apply for probate.
When applying for probate, a is an official document usually issued to the Executors of a Will or the closest family members if there is no Will, confirming their authority to administer the estate of someone who has passed away.
The process includes the legal authority to enter into and sign contracts on behalf of the estate, such as the contract to sell a house. Grant of Representation or Grant of Probate.
If there is a property in the estate, it won’t stop you from putting the property onto the market, but the Grant of Representation or Probate will be needed to complete the sale. As part of the estate administration process, you’ll need to get the property value as it forms part of the estate.
The Estate value is required to calculate whether there is to pay and for when completing the Probate application. You should obtain two or three estate agent valuations, reflecting the property’s value as when the owner died, rather than the actual selling price. Inheritance Tax
Once you’ve received an offer on the probate property, you can exchange contracts if you’re an Executor in the Will, but the property sale cannot complete until it has been provided to your solicitor. Grant of Probate
The person or company named on the Grant of Probate is under an obligation to sell the probate property for the open market value.
Therefore, if the property is sold for less than the full market price, a beneficiary can look to the person named on the grant for the difference in value.
How long does it take to get the Grant of Probate?
While there is nothing to prevent executors from instructing agents to market the property or even accepting an offer, contracts can’t be exchanged until the grant has been obtained.
Therefore, the estate agent and the potential buyers must be given a realistic timescale for getting the grant.
If the executors have accepted an offer on the property soon after the deceased’s death and before applying for the grant, the sale price can be given as the property value in the IHT account. return of estate information form
The executors must also be aware that the deceased’s property must be cleared of all its contents before it is sold – which can be quite time-consuming.
Circumstances time taken
Non-taxable estate (no Inheritance Tax due) Around 6 weeks
Taxable Estate (Inheritance Tax is due) Around 12 weeks
Urgent situations (e.g. for court cases) As little as 2 weeks
What extra costs should I be aware of?
If you’re not doing it yourself, you’ll have to pay to have the house cleaned before selling, and if it’s left unoccupied for more than 30 days, you will need to pay for unoccupied property insurance.
You’ll also need to factor in maintenance costs, particularly in winter when the house will need to be heated regularly to avoid dampness. Another cost to think about is valuations. You’ll want to commission a minimum of three independent valuations to get the correct on your property. Inheritance Tax
Proceed with caution
It is sometimes the case that third-party interests in the property of which the beneficiaries are unaware. This can be a mortgage, equity release charges, or another person is actually on the property title and entitled to the whole of the property regardless of what the Will or state. Intestacy Rules
Be careful when clearing out the contents of a probate property (even the garden shed!), as it’s common for unregistered title deeds to be thrown out with other items.
Still, the deeds are vital to proving the property’s ownership. If in doubt with any documents, keep them safe. Should there be no evidence of ownership, the estate may end up paying a solicitor or conveyancer to re-constitute the title, which can be a timely and costly process.
What is probate property?
If the deceased owned a house or flat, this would be included in the estate. And it is very often sold as part of the administration rather than being transferred directly to a beneficiary.
The executors make the decisions on how to sell the property of the estate – usually friends, family or a solicitor. And the Executor will act as the owner would have in signing the contract of sale and other legal documents.
Source: auction-link.org.uk
Selling a Probate Property?
Executors take on a lot of responsibility when administering a deceased estate, which can be especially stressful during grieving. Our useful guide offers information on how to proceed with the sale of probate property.
Selling a probate property can be more complicated than an ordinary sale. This section explains why probate properties are particularly well suited to sale at auction.
The information provided in this article is for guidance purposes only. You should always obtain your own independent legal and financial advice.
Why sell a probate property at auction?
There are 3 main reasons why probate properties are suited for sale at auction.
Firstly, there are certain responsibilities an executor has towards the beneficiaries named in the Will.
The Executor has a duty to ensure the property is marketed for sale on the open market to achieve a fair price. One way to do this is to sell the property at a public auction, which offers a transparent sale, so there is no way the Executor can be accused of underselling the property.
Why sell by auction?
✔ Sell to the highest bidder
✔ Sales don’t fall through
✔ Suitable for any property
Secondly, many probate properties we come across have not been updated in recent years. Properties in need of refurbishment, particularly those in popular areas, generate a lot of demand at auction.
As a result, it’s not uncommon to see an unmodernised property sell at auction for a lot more than the estate agents suggested asking price.
Lastly, all parties involved in probate will usually be keen to settle the estate as quickly as possible. Taxes must be paid, and the beneficiaries’ share of the estate paid out. Auction is the quickest and most reliable route to selling.
What price do probate properties sell for?
Auction is the ideal marketplace for selling probate properties, especially houses and flats in a poor state of repair. Buyers compete against each other, forcing the price upwards. As a result, probate properties typically sell for more at auction compared to any other method of sale.
How much does it cost to sell a house at auction?
The cost of selling a probate property at auction is about the same as selling through an estate agent. Auctioneers typically charge a commission of 2%+VAT only paid after the sale.
Do I need to clear out the property before selling?
When selling at auction, probate properties can be sold as they are, without needing to clear out or clean. Additionally, there’s no requirement to do any repairs when selling a probate property at auction.
How quickly can I sell a probate house?
Auction is quick and reliable; properties are sold on the day, and the buyer cannot back out. The buyer puts down a 10% deposit and legally exchanges contracts on auction day.
Completion of the sale is four weeks later. You will need to have received the grant of probate before selling a property at auction.
