Selling the home of a loved one who has passed away is extremely emotional and often a difficult decision to make, squabbles can be minimised with a clearly defined will, but often not completely avoided.
However, in many situations, there is no will and the process of working out who can administer the estate and what the beneficiaries receive is complex and stressful for everyone involved.
Even when a will is present and well defined, family members may still contest it and turn an already difficult situation into a legal nightmare.
Often, the biggest (and hence most contested) question after a loved one’s passing is deciding what to do with their property. Maintaining a deceased’s property can come at a huge cost (both monetary and emotional) and most of the time, it gets sold for that reason. In this post, we’ll explain what you need to look for when selling the property of a deceased estate and how Sellable can help you take some of the stress out of the process.
What is an estate?
An estate is the net worth of an individual in the eyes of the law. This can include their home, business, investments, land assets, superannuation, furniture and any other valuable items under their name. It also includes an individual’s financial liabilities, which the estate must take care of before any beneficiaries receive a share of the assets.
In straightforward cases where there is an executor — a person or persons named to carry out the terms of a will — they will have to apply for a legal document called a ‘Grant of Probate’ from the Supreme Court before they are allowed to administer the estate and distribute assets to beneficiaries.
How is an executor chosen?
Choosing the right executor is an important decision, and helps avoid conflict when administering an estate. The executor’s first task is to apply for probate in order to carry out the terms of the will.
The executor should be someone you trust, who will act responsibly, and who has officially agreed to take on the role.
Usually, an executor is also a major beneficiary. In cases where there is more than one executor, it should be clear whether they are to act together or if the second executor will act more as a substitute.
What is Grant of Probate?
The Grant of Probate is a Supreme Court document that authorises an executor to deal with the estate of the deceased in accordance with the deceased’s will.
It is recommended for the executor to apply for Grant of Probate as early as possible. A Grant of Probate takes at least four weeks to process and often longer for a complicated will. In NSW, if a Grant of Probate application is filed more than 6 months after the date of death of the deceased, a justification of the delay is required. Most people engage a solicitor to help them obtain the Grant of Probate.
Can an executor sell the property of a deceased estate?
Yes. Executors can sell a house after getting their Grant of Probate.
The deceased estate selling process needs a few extra steps before getting the property listed. In addition to obtaining Grant of Probate that can take months to process, the responsibility of the executor is to ensure transparency of the sales process. This includes costs (e.g. getting multiple quotes from agents or for repairs) or the valuation of the property. Many properties from deceased estates are hence sold at auction even if a private treaty may be more appropriate for the market.
As properties from deceased estates typically tend to have been lived in for a long time, extensive repairs and renovations may be necessary to achieve the best price on the market.
Finding the right agent and making the property look presentable in such a difficult time can be a costly and time-consuming process for the family.
Selling the property after probate
Once the Grant of Probate has been given, the executor is able to manage the estate. If these assets include their home, and its sale has been stipulated in the will, then the executor becomes the vendor of the property and is responsible for allocating the balance to the named beneficiaries.
If there is no sale of the estate mentioned in the will, this means it is up to the executor whether to sell the property or not after the acquiring the Grant of Probate document as they have the duty to control assets owned by the deceased. Retaining the property is often the more contentious decision as without an on-market sale its value becomes subject to dispute.
Typically, properties from an estate are being sold at auction as it is an open and transparent process leaving little room for challenging the process.
Sale by auction usually requires a four-week marketing period to attract interested buyers and generate competition. It can be a lucrative way of selling in suburbs with strong demand, but a property can be subject to multiple ‘pass ins’ (i.e. the property fails to meet its reserve) in less popular places. This can be costly, stressful and may ultimately result in a lower price than directly selling via private treaty could have achieved.
If the house does sell, settlement takes between 60–90 days — which can be a long wait if you want prompt closure on your loved one’s affairs. A successful settlement may also be delayed or fall through if the buying party has issues with their financing.
Executors have a year to distribute an estate to avoid capital gains tax implications. If the executors think that the successful sale of the estate could take longer than 12 months, then seeking additional tax and financial advice is highly recommended.
Disputes over deceased estates can stall the sale of property
At least 45 percent of Australians don’t have a valid will. This means many families may be left in the dark about the wishes of their loved ones and how they want their assets to be distributed. It’s a situation that can lead to confusion, heartache, and stressful legal battles. Getting a quick sale may be needed especially when there are multiple beneficiaries, as the longer the house is around, the more likely that different beneficiaries will have different and sometimes conflicting expectations.
When disputes occur, they can significantly delay the sale of a property, and lead to unfavourable tax implications and costs for the estate (such as ongoing expenses like council tax or mortgage payments).
How Sellable can reduce the stress of a deceased estate house sale
Whatever your particular situation — straightforward or complex — dealing with a deceased estate is a time consuming process and often fraught with sadness. If you do need to sell your loved one’s house, then we can simplify the sale and significantly speed up the process— something that could help reduce stress for you and your family.
Sellable works in an open and transparent way by offering you a Guaranteed Price on the property that’s based on an independent valuation.
This means that at a minimum, all family members can feel confident that you’re getting a fair price. After you accept our offer, we’ll manage the sale and will work to make improvements to your loved one’s property to optimise the final sale price.
We can pay out any mortgage and the named beneficiaries of the estate in as little as 7 days of accepting our offer, which is a lot faster than the 100 days a traditional sale takes on average.
If the house sells for more than the Guaranteed Price, then the beneficiaries will receive an additional 75 percent of any upside above the guaranteed price.