Laws can vary from county to county when it comes to property sales during probate.
State law requires that buyers put down at least 10%, and the top must also be approved by the court before it is accepted.
Once a bid is accepted, the court will set a date and time for the sale. However, the other bids can be submitted up to the day of the sale.
A bid of 5% plus $500 or more above the original bid is enough to outbid the prospective buyer.
When a loved one passes away, there may be a probate sale that will follow. Reasons for a probate sale can vary from having to cover debts that are owed to creditors or, if there are no debts, the family may choose to sell the real estate or property of their loved one so the beneficiaries can divide the profits.
When it comes to probate sales in the state of New York, the first thing to know is that rules vary from county to county. While this is the case, there are still some things that remain the same on a state level.
First, probate needs to be initiated by petitioning the Surrogate's Court in the county where your loved one lived. Only after the court issues letters testamentary, the document that officially empowers the executor to act on behalf of the estate, can any properties be sold.
How the property is sold is based on what the executor was granted by the court: absolute discretion or limited management of the estate. Absolute discretion means the executor can sell the house as they see fit without any input from the court, but it does leave the door open for the other beneficiaries to object to what the executor chooses to do.
Even if an executor is granted absolute discretion, depending on the county in which the property is being sold, they may still have to run the sales contract past the court for approval to protect all parties who have something to gain or lose from the sale.
Before there can be any sort of sale, an appraisal is a necessary step to determine the value of the property. This can be done by the executor making an estimation based on researching the area and similar properties or by hiring a professional agent to evaluate it.
Although in some states the property will be listed at the market value, in New York, the listing price of a probate property tends to be below the area’s market value since the property is often sold “as is.” When selling a probate property, buyers are required to put down a 10% deposit to make sure it’s going to the highest offer.
Once the executor has accepted the highest offer, they take that number to the court for approval. If the amount is approved, then a date and location is set up by the court for the sale of the property. At this time, the judge will allow others to bid on the property. This gives family members who, perhaps the executor didn’t let bid originally, get their chance to buy the property.
If someone makes a bid of 5% plus $500 or more above the original bid, and isn’t outbid during the auction, then the property will be sold to them. The 10% deposit made by the original highest bidder is returned and the new highest bidder will now have to make a 10% deposit on the final agreed-upon amount.
When an amount is accepted by the court and the executor (or whomever was the designated seller), all the beneficiaries who have something to gain from the outcome are sent a Notice of Planned Action of the sale. From that date, they have 15 days to either agree with the sale or object to it. If no one objects, the sale will proceed.
Because New York State doesn’t have a deadline as to when a will of a loved one has to be filed to start the probate process, that also means there’s not really a strict deadline as to how soon after someone passes away their home must be sold.
While having such leeway might initially feel like it’s taking some of the burden off you during such a difficult time, from a financial standpoint, it’s best to not only get the will filed as soon as possible, but get the property sold, if that’s the option you choose, as quickly as possible too.
As long as the property remains part of the estate, the mortgage and utilities will have to be paid. So, getting the house on the market as soon as the court allows it, is the best option for everyone involved ●
Probate is often a long and complex process, but it is also completely manageable if you stay organized and follow the instructions of the court. It’s definitely still a good idea to avoid the full probate process, if you can. We’ll walk you through whichever scenario applies to your loved one’s estate.