No chain above, keenly priced to sell and bags of potential – sellers of a probate property may think they have the perfect proposition, so why can there be little to no interest on the open market?
Unlike buying a property from an owner-occupier, buying a probate property can be a complex and convoluted process. Although you can sell probate property as soon as the death certificate has been issued, it is strongly advised that contracts aren’t exchanged until probate/letters of administration has been granted.
Currently, there is a backlog of probate applications at HM Courts and Tribunals Service (HMCTS). Although the Government states that grant of probate/letters of administration should be received within 16 weeks of the application, the reality can be far worse.
The mainstream media has reported that bereaved families have waited up to a year for probate to be granted - some much longer. Delays can happen when the probate registry office contacts the estate for further information, while other situations are made more complex if a Will is contested or the estate complicated. As a result, more than 1 in 4 probate applications are not issued on the first attempt, reports thisismoney.co.uk.
It's good to be aware of the common reasons purchasers dismiss probate properties so you can take action to avoid them.
While many probate properties are attractively priced to sell, the length of time between an offer being made and completion could be problematic. Buyers who are on a deadline, perhaps for a job relocation or a school application, will be pressing for exchange but this can only happen as fast as probate/letters of administration is granted.
If this is months, and not weeks, the buyers may have no choice but to back out of a purchase. Other buyers may simply lose interest or have their head turned by an alternative property while they wait for progress.
If the buyer is using a mortgage to purchase a property, their offer will typically last between 3 and 6 months. If exchange hasn’t happened in that timeframe, the buyer will have to go back to their lender and renegotiate a new offer.
There is always a risk that the mortgage rates available during the renegotiation phase will be higher than that secured at the very beginning. A higher mortgage rate could make the purchase unaffordable and leave the buyer with no option than to abort the purchase.
The property sector is full of highs and lows, and it only takes one political decision to spook financial markets and knock confidence. Probate sales can run into trouble when an offer is accepted at the very beginning of the process.
If, in the ensuing weeks and months, the property market crashes, the dwelling may drop in value. If a buyer can’t renegotiate a lower asking to match current conditions, they risk a surveyor acting on behalf of a mortgage lender down valuing the property. This is when the surveyor concludes that the home is worth significantly less than the price agreed between the seller and the buyer.
In the majority of cases, a property held by an estate will have to be sold to pay off debts and any inheritance tax bill, so buyers can engage with those involved knowing there is a degree of certainty.
Like all property purchases, however, a seller - which is the estate and its beneficiaries in probate sales – can change their mind right up until the point of exchange. As probate properties are often family homes full of sentimental memories, it’s not unheard of for the family to suddenly want to retain possession of the property or live in it themselves.
It takes a certain type of buyer to take on a project and probate properties are often that. If a dwelling hasn’t been modernised or maintained, it can put buyers off. If the property is seriously dilapidated, it could even be classed as unmortgageable, which will narrow down the purchasing audience to cash buyers only.
Probate Move specialises in the purchase of properties that are part of an estate. Executors or administrators should know that:
If you’re looking for a property buyer that will work to your schedule and timings – and one used to the probate process – please contact Probate Move.
*only legal fees pertaining to the property sale will be covered