An estate sale usually consists of an open house for many people to attend and choose items they want to purchase. Sometimes, however, the house itself becomes an item for sale.
When a person dies intestate, they do not have a will, and so a probate sale is arranged by the probate court. An executor can also sell a house if there are not enough financial assets to cover the debts of a deceased person.
Evaluating the Property
First of all, you need to take a closer look at the property itself and decide whether it is the right one you want to buy. The first thing to check is whether there are any violations or code complaints that could cost you money in the future. If there are any such issues, you might be able to negotiate with the estate sale agent to get them fixed first.
Among things to evaluate is the condition of the house itself, including roofing, flooring, and foundation, electrical and plumbing systems, as well as appliances. If possible, hire an inspector to do this evaluation for you. If you are buying a house with problems, make sure that they are not unsolvable. Otherwise, you might end up paying a lot more than you expect.
Finding Financing for the House
Once you have determined the house is worth buying and there are no violations, it is time to look for financing options. The following options are available for financing your estate sale purchase:
- Get a loan from a bank. There are two types of loans you can get: a mortgage loan and an equity loan. Using your home as collateral, the bank loans you money and you repay the loan principal plus interest. Equity loans, or home equity loans, do not require collateral (such as your home), but they usually carry higher interest rates and fees than mortgage loans.
- Use your savings. If you have enough savings to cover the purchase yourself, you will save money on interest and origination fees. Alternatively, if you know someone who can lend you money, you can get a loan from your friends or family members.
- Pay cash. You can pay cash for your new house, but it’s risky. Cash buyers may spend more because there are no closing cost or fee discounts available. In any case, you should check any suitable options and take advantage of any discounts available for paying in cash.
Making the Offer
You now need to make an offer to the person whose job it is to handle the estate sale – this is typically an executor or an agent. Here are some tips for making an offer during an estate sale:
- Prepare a competitive offer that is good for both parties. Both you and the seller should be satisfied with your offer. Ensure that the properties you will be purchasing are being offered at a reasonable price.
- Include everything in your offer. As an example, if you need to do any repairs before moving in, mention this in your offer. If your offer is accepted, the estate sale agent or executor will be aware that these tasks must be completed prior to closing.
- Negotiate. There is a possibility that people are willing to negotiate on the price of their home before accepting your offer. You may be able to negotiate a lower price with both parties if it makes sense. It never hurts to try.
- Be patient. No worries if your offer was accepted, but no one has contacted you about scheduling an inspection. Keep in mind that other offers may compete with yours, and you might not hear from the estate sale agent right after you submit your offer. You need not be too impatient at this stage of the process; just wait until they call.
Arranging an Inspection and Home Appraisal
As soon as your offer is accepted by the estate sale agent or executor, things can get moving quickly. A home appraisal & property inspection will be arranged by both parties before closing the deal and you take possession of the property:
- Home appraisal. Your new property will be appraised by an appraiser based on similar properties in its neighborhood. This report will tell you how much the seller estimates this property is worth (the estimated market value) and what factors influenced that estimate (like recent sales of similar houses nearby).
- Home inspection. An inspector will visit a property and inspect it thoroughly, looking at every aspect of its structure and systems. They will prepare a report detailing what they found while inspecting the house and whether there is anything wrong with it that needs repair or replacement before you move in.
In most cases, home appraisals and home inspections are optional, but many buyers request them nonetheless. If you are a buyer, this information can help you determine whether this particular house is financially sound and if it makes sense to buy it compared with other properties in the neighborhood.
Attending the Hearing
Following the appraisal and the inspection report, you will attend a hearing with the estate sale agent and the executor or personal representative of the estate in order to close the deal. In this hearing, a judge will do two things:
- Close probate. As soon as probate is closed, a Certificate of Sale or a Certificate of Distribution will be issued by the judge. Executors are entitled to request a Certificate of Distribution if they are neither in debt nor in debt to creditors.
- Set a hearing date. On the day of the final hearing, the judge will set a date to finalize the sale in front of all parties. If you don’t attend this hearing, you may lose your chance to buy the property. The estate sale agent should be informed in advance if you cannot attend the hearing and another way to communicate should be arranged.
Finalizing Your Purchase
After the hearing, you will have everything you need to become a property owner. Estate sale agents will provide you with a statement that includes all fees and costs associated with the estate sale. Fees and expenses include things such as:
- real estate commission
- title insurance fee
- transfer tax
- loan fees
- credit check fee
- home inspection fee
- appraisal fee
Depending on the case, there may also be other charges. It is also necessary to pay for any repairs that were necessary.
It is important to know the steps you must take in order to complete the purchase of a house you found at an estate sale. You will also need to evaluate the property yourself and determine if any significant repairs or improvements need to be done.
Do not overlook the importance of arranging a home inspection and appraisal – these are optional steps, but they will help you understand what house you are going to own. You may also want to negotiate the price to get the best deal possible, depending on the situation.