Buyer Tips for Deceased Estates
If you’ve been out house hunting for any length of time there is a good chance you’ll come across a property being sold as a deceased estate. Understanding the rules and norms of how a deceased estate transaction is conducted may well put you in a better position to secure the property, and at a more favourable price too.
There are three types of deceased estate sales.
The most common is a sale by the executors or beneficiaries of the deceased. An executor is the person who was officially appointed by the deceased to deal with their affairs, and may have specific instructions, or deploy their power of attorney to sell the deceased’s assets. Beneficiaries are those that have inherited the property, such as children, relatives or close friends. Whoever sells the property must be granted probate- that’s the legal right to sell the property. These sales can be by private treaty but are more often sold at auction as this is a transparent way to demonstrate market value to all parties involved. This is important as it is common for a number of beneficiaries to be involved or vocal in the background of a transaction, all with different ideas of what the property is worth.
With this type of deceased estate sale you may be able to negotiate a price prior to auction but if there’s a number of direct and indirect “decision makers” in the background negotiations may be challenging.
Another type of deceased estate sale is a ‘mortgagee in possession’ sale which is when there is still money owed on the deceased’s property and the bank exercises its right to sell to recoup their money. The sale may be by private treaty or at auction, and the bank is simply looking to sell for fair market value. Because there is no emotional attachment on behalf of the seller, this type of deceased estate may be an opportunity to purchase at a good price, especially If the property has been on the market for some time.
The third type of deceased estate sale is a sale by the Public Trustee. When there’s no mortgage on the property, and the deceased has no beneficiaries, the Public Trustee which is a state government entity, takes custody of the property and sells it, with proceeds going into the public coffers. Property sold by the Public trustee must be sold at auction and prior offers cannot be accepted. However auction reserves are usually set low, and again as there is no emotional attachment on behalf of the seller there may be an opportunity to purchase at a very fair price. Should you ever attend a property auction by the Public Trustee you’ll certainly see some opportunistic bidders hoping to pick up a bargain.
So as you can see, not all deceased estates are the same and it is good to know what you’re dealing with, because depending on who is selling on behalf of the deceased each scenario presents it’s own challenges and opportunities.
Asking the sales agent what type of deceased estate you’re dealing with can help you assess whether there may be a buying opportunity at hand.
As always if you have any comments or questions please do get in touch: Dan@UnicornBuyersAgents.com.au