When searching for homes for sale, you may come across listings that note the home is “an estate sale” or is “being sold by a personal representative.” What does this mean for you and what should you look out for when buying an estate?
What is an Estate Property?
An estate property is where the owner has died and the home is now being sold by the estate’s executor or representative.
The process to buy estate properties is very similar to buying any other resale home but there are a few key differences.
1. How Title is Conveyed | Type of Deed
When buyers purchase an estate in Olympia (or in Washington State), title will be conveyed by a Bargain and Sale Deed. This is different than in a typical home sale where title is conveyed by a Statutory Warranty Deed.
What is the difference between these two deeds?
A statuary warranty deed comes with certain promises or guarantees to the buyer which includes:
- The seller is the owner and has the right to sell the property.
- No one else owns the property.
- There are no encumbrances against the property.
- No one with a better claim to the property will interfere with the new owner.
- The seller will defend certain claims regarding title to the property.
A bargain and sale deed has fewer promises to the new owner.
- The seller is the owner of the property.
- There are no encumbrances against the property during the time the seller owned it.
- The seller will not interfere with the buyer’s rights to the property.
A bargain and sale deed is common to see when banks are selling a foreclosed property, but this is also the type of deed used to convey title when the owner has passed away and the home is being sold as an estate. In both of these cases, these sellers have little knowledge about the property and can’t make these same guarantees or promises as a typical seller.
With a warranty deed, the seller guarantees title for the entire lifetime of the property whereas, with a bargain and sale deed, the seller is only guaranteeing for the period they owned the property. This type of deed does not offer guarantees to the buyer against liens or other claims to the property.
How to protect yourself when buying an estate home
When buying an estate, you’ll have a title company involved that will run a search to look for title defects, liens, or other issues, and will provide a title insurance policy that will help settle any claims that may come up. This is the same process you’d go through with a typical home purchase.
2. No Seller Disclosure Statement
A seller disclosure statement is a document completed by the seller about the property. The purpose of the document is for the seller to disclose any material facts or defects to the buyer based on the seller’s actual knowledge of the property.
For example, the seller is asked if there are any defects with the components of the home, has the roof leaked within the last 5 years, is there a homeowner association and what are the dues, are there any assessments, has there been any flooding, etc.
With an estate sale, the seller is exempt from providing buyers a Seller Disclosure Statement.
Even though an estate does not have to complete a seller disclosure statement, they have the obligation to disclose known material facts. They may learn of defects if the estate seller conducts a home inspection prior to listing the home, or maybe the estate seller becomes aware of defects through a failed transaction.
How to protect yourself?
As with any other typical home purchase, it is certainly my recommendation that buyers have professional home inspections conducted for any property they want to purchase. This is the same case with an estate – have the home inspected.
In a typical sale where the seller provides the buyer with the seller disclosure statement (which can be good information for a buyer), many times after the buyer has an inspection, the buyer knows more about the home than the seller!
3. “Did the seller die in the home?”
Some buyers may be curious if the homeowner died in the home. Here in Washington, this is not considered a material fact and is not something that is required to be disclosed.
Furthermore,
The fact or suspicion that the property, or any neighboring property, is or was the site of a murder, suicide or other death, rape or other sex crime, assault or other violent crime, robbery or burglary, illegal drug activity, gang-related activity, political or religious activity, or other act, occurrence, or use not adversely affecting the physical condition of or title to the property is not a material fact that a licensee must disclose.
Some of my clients have been adamant that they will not buy a home if a death has occurred. It will be very difficult to find that information if the seller can’t or won’t provide it. In that case, maybe new construction might be a better option.
4. As-Is (but this is a myth)
Most of the estate listings I see will say the home is being sold as-is. Technically here in Olympia, ALL properties are sold as-is because repairs to a home are negotiated. There is no legal or any other lawful requirement that a seller must make any type of repairs for a buyer or for a home sale.
Depending upon the issue, the seller may not be able to sell the property, but the seller does not have to do any repairs or corrections for a buyer.
How to protect yourself?
I would recommend buyers conduct their own professional home inspection to have a further understanding of the home and its condition. From here, the estate seller may not want to conduct repairs but maybe would be open to offering a credit or a price reduction in lieu of the buyer’s requested repairs.
5. Slower Transaction Process / Delays in Closing
With estates, there could be different scenarios that may delay the closing or it may take extra time for the estate seller to review the offer or to respond to buyer inquiries. This could lead to the transaction taking a little bit of extra time. Common instances that could slow the transaction include:
- There could be multiple heirs who are selling the property and all need to come to an agreement.
- The estate seller may be out of the area, in another time zone, or in another country.
- The probate process has not been completed before the property was listed.
How to protect yourself?
Ask about the person or persons who are handling the estate and if the probate process has been completed. Also plan your move in case the transaction is delayed.
In Conclusion
The process of buying an estate is not much different from buying any other resale home but there are a few variances. Most buyers will experience a very smooth transaction and buyers shouldn’t shy away from estate sales. With diligent inspections and a title report, buyers can be confident with their estate purchase.
P.S. One more note, estate sales are sold at market value for their location, size, and condition just like any other property. Some buyers look for estates thinking they are getting a great deal. Most of the time, that is not the case.
If you are interested in buying an estate, a resale home, or new construction, call me and let’s discuss your housing options and what you can expect.