Selling a House in Probate Tennessee

How to Sell a House in Probate: A Guide for Homeowners

Probate properties can present a great opportunity for real estate investors or buyers seeking a deal, but for homeowners, navigating the probate process to sell a property can feel overwhelming. This guide will explain what probate is, how it works, and what steps you need to take to sell a house that is currently in probate—all while ensuring you make an informed decision.

What is Probate?

Probate is the legal process that takes place after someone passes away to ensure that their assets, including real estate, are distributed according to their will or, if there is no will, according to state law. Whether the deceased left a will or died intestate (without a will), probate ensures the proper transfer of assets to heirs or beneficiaries.

There are two types of probate processes: formal and informal.

• Informal Probate: This involves limited court involvement because there’s either an uncontested will or clear identification of the heirs. In this scenario, the probate process is straightforward.
• Formal Probate: This is a more complex situation that requires the court’s involvement, especially if there is significant debt, a contested will, or no clear documentation of inheritance. This guide focuses on the more challenging formal probate process.

Can You Sell a House While It’s in Probate?

Yes, it’s possible to sell a house while it’s in probate! However, the process will vary depending on who is responsible for managing the estate. There are typically three entities who can initiate the sale of a probate property:

1. The Executor: If the will names an executor, this person has the responsibility to manage the estate and can petition to sell the property.
2. The Administrator: If there is no will, or no executor was named, the court may appoint an administrator to handle the estate and oversee any property sales.
3. The Court: In the absence of heirs or when there are legal disputes, the court may decide to sell the property directly.

Once the property’s ownership is determined, heirs or beneficiaries can petition the court to sell the probate property to settle debts or distribute the assets.

What Does It Take to Sell a House in Chattanooga While in Probate?

Selling a probate property follows specific legal steps to ensure that the assets are preserved and that any debts owed by the estate are settled. In many cases, a property may be sold to cover debts such as unpaid mortgages, taxes, or medical bills.

For example, if someone passes away and leaves a house valued at $150,000 but has $90,000 in debt, the executor or administrator might sell the house to cover these debts. After the debts are paid, the remaining funds would be distributed to the heirs or beneficiaries.

Steps to Selling a House in Probate

If you have inherited a property in Tennessee and need to sell it while it’s in probate, here’s a basic overview of the steps involved:

1. Appointment of Executor or Administrator
   If an executor or administrator hasn’t been appointed, the first step is to have one assigned. This individual will have the authority to manage and sell the estate.
2. Decision to Sell
   Once the executor or administrator is in place, they can decide whether to keep or sell the property. If the estate has debts that need to be settled or if keeping the house isn’t practical, selling the property may be the best option.
3. Appraisal and Valuation
   Before the property can be sold, it needs to be appraised by a professional who specializes in probate properties. In many cases, the court will require the property to be sold for at least 90% of its appraised value.
4. Petition to Sell
   After the appraisal is complete, the executor or administrator must petition the court for permission to sell the property. The petition will include details like the appraised value and the proposed method of sale, such as listing it on the open market, selling at auction, or selling directly to an investor.

Methods for Selling a Probate Property

Once you have the court’s permission, you can decide how to sell the property. The options include:

• Listing with a Real Estate Agent: If you choose this route, make sure to work with an agent who has experience with probate sales.
• For Sale By Owner (FSBO): You can list the property yourself if you want more control over the sale, though this can be time-consuming.
• Selling to an Investor: Selling directly to a cash buyer or investor is often the fastest and simplest way to sell a probate property, especially if it needs repairs.

Evaluating Offers

Once the property is listed, you’ll start receiving offers. It’s important to consider your goals when evaluating these offers:

• Do you need a quick sale to settle debts?
• Are you hoping for the highest possible price?
• Is the property in poor condition and in need of major repairs?

These factors will help you determine the best offer for your situation.

Court Approval and Sale Finalization

After you’ve selected an offer, the court must approve the sale. It’s important to inform potential buyers that the sale is contingent upon court approval, as this may add some extra time to the process. Once the court gives the green light, the sale can be finalized, and the title will be transferred.

Finalizing the Sale

Once the court has approved the sale, the executor or administrator will need to file the necessary paperwork to finalize the transaction. Once this is complete, the property can be officially sold, and the proceeds distributed according to the terms of the estate.

If you’re dealing with a probate property and need assistance navigating the process, I Buy 423 LLC can help. Whether you need to sell quickly or want to explore your options, our team has experience with probate properties and can guide you through every step. Contact us today to learn how we can assist you.

Mistakes to Avoid When Selling a Probate Property 

Moving Too Quickly 

When a person passes away, their family may try to move as quickly as possible to sell the property so that they have time to grieve. Or, if there is debt that has interest that is compounding monthly, the executor or administrator will try to sell the house as quickly as possible by valuing it below market value to pay off the estate. Sometimes a too-fast sale can also happen when the house is in poor shape or needs major upgrades the beneficiaries do not want to pay for. They may undervalue the property so that they can sell it as-is.

Not Completing a Real Estate Disclosure 

Depending on what state you live in, Real Estate Disclosure laws can be almost as tricky as the probate process! These laws are a list of issues (such as lead paint or asbestos) that must be disclosed to the buyers about a home before closing on the property. 

Most states require sellers and their agents to disclose in writing “material defects” about the home. 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 agents are great at navigating these tricky waters, but what if you inherited a house that you never lived in? How would you know what to disclose? In some states, the executor, person selling the property, and/or real estate agent may be exempt from filling out local real estate disclosure forms due to the property being in probate. This is because that person does not and did not live in the property, so would have no way of knowing what to disclose.

If you are unsure of your state laws, someone who is experienced in probate real estate (whether it be a real estate agent or investor who has purchased probate properties in the past) will be able to help you navigate these legal waters. If looking into the latter option, be sure to sell your property directly to an experienced investor who doesn’t mind purchasing a property in probate and is willing to take the risk of purchasing a home from someone who is unable to give proper disclosure. You do have options!

Failing to Hire a Lawyer

We can not emphasize this enough – a knowledgeable real estate lawyer with experience in probate can help you navigate the process of probate much faster and easier than going at it alone! Not only will they know how to petition the Court so that you can finally put that property up for sale, but they’ll be able to guide you through the legal steps to sell that unwanted house or property with less hassle and tears. Even consulting will help ensure you aren’t missing the blind spots of the probate process.

Waiting Too Long to Start the Probate Process

When someone loses a loved one, grief may cause us to put everything on hold while we process the loss of the deceased in our life. But what happens to the probate property during that time? Property taxes continue to add up, utility bills continue to come in, and the bank will want its monthly mortgage payments until the property is settled. Waiting too long can cause the estate’s expenses to add up fast, eating into the estate’s assets and leaving you in a difficult situation.