Selling a House in Probate New Mexico
When a person dies, all of their assets will have to undergo probate. These assets include a house or several, bank accounts, vehicles, cash, stocks and bonds, and other personal property.
Selling New Mexico property while in probate can be very tricky. It is vastly different than a regular home sale, as there are:
- specific procedures and regulations that must be followed
- paperwork to file
- deadlines to comply with
- court hearings to attend to
You can easily get bogged down with all of these.
What's more, if you live in a different state, which is highly likely, you won't have time to familiarize yourself with all the different probate laws which vary widely from state to state.
So to provide you with a good grasp on the whole process, we're providing you a walkthrough to help you anticipate and prepare against roadblocks you might run into when selling probate property in New Mexico .
What happens in a probate process New Mexico?
Although a deceased person usually has a will outlining how their estate is to be distributed, this will needs to be validated. Hence, a New Mexico court-supervised, legal process called probate is needed.
Simply put, probate is a process that prevents fraud and ensures a deceased person's assets go to its intended beneficiaries, including creditors.
The Role of the Probate Court
The local court where the decedent resided will have jurisdiction over the process. To get the ball rolling, the necessary paperwork consisting of the death certificate, the will, and the petition to start probate will have to be filed in New Mexico.
The court will then appoint an executor, usually the closest living relative in case there is no one named in the will, to manage and administer the assets.
Probate proceedings typically involve the sale of probate assets in order to clear outstanding debts if there is not enough liquidity. As the entire selling is overseen from beginning to end by the New Mexico probate court, this means that probate sales can take much longer than a normal real estate transaction.
The Duties of an Executor
The executor has control, but not ownership, of probate properties.
This means that they will be responsible for mortgage payments, unpaid taxes, and creditors claiming debts from the estate--basically all of the financial decisions that need to be made. All of these expenses will be taken from the estate, so it is necessary to have the property appraised.
Afterwards, the New Mexico executor will also be the one to work with the probate attorney, real estate agents, listing agents, and potential buyers to facilitate the probate sale.
Once the house is sold and enough proceeds have been gathered, the debts owed by the estate will be cleared before finally distributing the remaining estate assets to the intended heirs in accordance with the stipulations of the will.
Are There New Mexico Probate Costs Associated with the Process?
When a property goes through the probate process, there are service fees and settlement costs that need to be paid. These include New Mexico court costs, probate taxes (depending on your state), realtor fees, and of course, the fees paid to the probate attorney and the executor or personal representative.
When Does It Become Necessary to Sell Probate Property New Mexico?
Probate property will not be transferred to the heirs until the process is completed.
However, as mentioned above, there are cases wherein the deceased person did not leave enough cash to cover their debts. In this case, the executor will have to sell a house and some other assets through probate sale.
Depending on the New Mexico estate's complexities and other factors, probate sales can take longer than selling the property the traditional way.
Traditional vs. Probate Sale New Mexico
There are some extra steps involved in probate sales compared to a traditional home sale, but otherwise the New Mexico real estate transaction will proceed as it normally would.
For probate sales, the property is usually sold as is. Therefore its condition may not be the best. Arranging an inspection is essential, so the buyer would know what they're getting into and what they need to deal with down the line. On the other hand, in a regular home sale, there is plenty of wiggle room for negotiations. For instance, a prospective New Mexico home buyer can request home improvement works or repair credits from the seller.
Another key difference between traditional and probate sale is on the subject of disclosure. The estate is not required to disclose anything to buyers, so it is up to the latter to do due diligence prior to closing the sale on the property.
While court involvement in probate sales bring in additional paperwork and can affect the selling timeline, purchasing probate real estate can have a significant upside. The as is condition of these New Mexico houses mean that they can sell for below market value. This presents an attractive opportunity for cash buyers such as house flippers and real estate investors.
Procedure in Selling Probate Property New Mexico
The executor of the New Mexico estate makes all the financial decisions regarding a property while it is still in probate. This includes taking charge in selling the property.
Here's how the process works:
Determining the List Price
First, the price would be established depending on the appraised value of the New Mexico probate real estate, with the court requiring the list price not to be less than 90% of its appraisal value.
Getting Bids In
Next, the property will be marketed aggressively in local newspapers to attract the best offers. To secure a bid, the potential buyer must give their offer and include a minimum 10% down payment. Once this initial bid is accepted, the attorney for the New Mexico estate will petition the court to schedule a hearing for auctioning off the property.
On the scheduled auction date, additional bids can be accepted from other interested parties. The bidders will offer additional amounts of money in increments specified by the probate court. This is called overbidding.
If no one else bids, the original buyer will be the winning bidder.
Once the offer is accepted, the New Mexico executor will mail a Notice of Proposed Action to all heirs informing them of the proposed sale. The heirs will then have to review the notice and pose an objection within a specified timeframe (depending on the state).
If there are no objections, the sale will proceed and the house will be sold without needing a court hearing.
Options to Sell Probate Property New Mexico
There are two options available to you. You can either sell with a...
Real Estate Agent
There are real estate agents who specialize in dealing with probate property. If the house is in relatively good condition and local New Mexico market conditions are favorable, you can consider working with them.
Keep in mind though, a real estate agent charges a commission: around 6% of the sale price. In addition to this, agents would recommend repairs so they could better position the property on the market. And then there are attorney fees, cleaning costs, staging costs, and other costs associated with the sale to worry about, which, when added up, can be significant.
If you don't want to spend money upfront before your house gets sold, then you can consider selling to a...
Cash Buyer New Mexico
Cash buyers such as we buy houses companies, house flippers, and real estate investors are constantly on the lookout for encumbered properties, such as those in probate.
When you sell to this type of buyer, you get the certainty of the deal pushing through since money is readily available. They don't have to wait for a mortgage approval or the results of a lender-mandated home inspection. No worries about backing out of a deal and scrambling to find a new buyer. In fact, you don't need to fix anything up in the property. Just sell everything as is so you can get on with your life sooner with money in your pocket.
Probably the biggest bonus when selling to New Mexico cash buyers is dealing directly with them, without the drawbacks of working with all the different agents and the commissions you have to pay at the end of it all. They also take care of all the closing costs!
Sounds good so far. Is there a catch?
Well, one thing to note when selling as is to a New Mexico cash buyer is that they would factor in all the repairs and renovations that the property needs. This means that you must be willing to accept a lower offer--usually below market value.
But hey, small price to pay for a quick and straightforward transaction right?
So, How Do You Decide?
In probate sales, time is of the essence. When a New Mexico real estate transaction is dragged out, it would take longer before the process is completed, leaving beneficiaries hanging and unable to move forward.
If you sell through a real estate agent, it will take longer than if you sell to a cash buyer. Looking at the records of houses sold, it appears that it takes around 71 days to sell a house from listing to closing when working with a realtor; whereas with cash buyers, it can only take a week to close on the sale.
Another tricky area to navigate is the repairs and renovations recommended by agents. Sometimes it can cause friction among the heirs regarding funding. Will it be paid out if pocket or from the New Mexico estate? Selling as is will eliminate this possible point of contention.
Tips & Things to Consider in a Probate Sale New Mexico
Wait for a Formal Appointment
Here's the scenario: your deceased family member left a signed will with very detailed instructions regarding the handling of their estate. They even named you as the executor in charge of everything. This means you can proceed with the New Mexico estate sale as instructed in the will, right?
Unless they took the necessary steps to be able to skip probate, you will be required to file the will, the death certificate, and the petition form in the local New Mexico court. You must then wait for a court hearing officially appointing you as the executor before you can do anything with the probate real estate.
Check the Condition of the Property From Time to Time
When a house sits unoccupied for a long time, issues can go undetected such that when the process is completed, you'd be dealing with an unexpected problem on your hands. Repairing it can be expensive too; or, if you choose to sell as is, that can take a huge chunk off the market value.
Therefore, it can be worthwhile to check on the New Mexico property periodically, so little problems are addressed early on and not allowed to progress any further.
Get a Probate Property Insurance
The original homeowner's insurance policy expires when they pass away. That's why it is advisable to get insurance for probate properties to protect against fire and other damage.
Disclose Any Known Material Defects
Real estate disclosure laws vary significantly from state to state. There are even states wherein no disclosure is required at all when selling probate property. This is because if you're inheriting the house from a deceased relative, it's possible that you haven't lived in the New Mexico property and therefore can't be expected to have personal knowledge of material defects.
Still, it is in your best interest to fill out a seller's disclosure form. Major problems can easily be seen anyway, such as roofing that is in dire need of replacement, or a failed septic system. It's better to play it safe than open yourself up to litigation later on.
If you're unsure what to disclose, you can consult a New Mexico real estate agent or your attorney.
Frequently Asked Questions New Mexico
Will There Be Probate if There Is No will?
In case there is no will, the person is said to have died intestate, and probate is absolutely necessary. Since no one knows who gets what, the court will have to step in.
The probate court will be in charge of divvying up the estate's assets according to local New Mexico law, which includes having a person appointed to administer the assets.
The absence of a will can present some legal challenges to the family members as they will have to prove to the probate courts why they have a claim to the estate.
The intestacy procedure will also be applied in case the original will is found to be invalid.
Are There Ways to Avoid Probate?
The only way to insulate an asset from the probate process is through proper estate planning while the original owner is still alive.
This can be done through any of the following:
A trust can be established while an individual (called a trustee) is still alive. They can then load it up with different types of assets--money, real estate, stocks and bonds, and so on. This shields it from the probate process and automatically transfers ownership to the heir (beneficiary) at the moment death.
Joint ownership or Community Property
In a joint ownership, when one of the co-owners dies, the New Mexico property and the full legal rights over it is automatically passed on to the surviving co-owner.
On the other hand, community property means jointly-owned property by married couples. This is known as tenancy by entirety in other states. Ownership is transferred to the surviving spouse upon the death of the other.
Also known as the beneficiary deed, it is a legal document that automatically transfers the property to the intended heir without the lengthy proceedings and additional costs of going through probate.
As always, planning ahead is worthwhile as long as you are doing it correctly. You can consult with a New Mexico real estate attorney for guidance on these matters.
Do You Need a Probate Attorney New Mexico?
Yes. Probate laws can be complex and differ from state to state. The whole process can even be overwhelming since you're dealing with the death of a family member.
Having a New Mexico attorney on retainer can seem like an expensive option to some. But when you have someone handling things on your behalf and saving you precious time, you may find that they're definitely worth the money.
How Long Until Probate Property Gets Sold?
It depends on who you are selling it to. With New Mexico real estate agents, it takes an average of 71 days, whereas with cash buying companies, you can close in just a week.
Final Thoughts: Selling Property While in Probate New Mexico
If you're dealing with New Mexico probate property which has languished in neglect and disrepair, you don't have to worry about repairs, inspections, and whatnot before selling. We buy houses in absolutely any condition!
Here at House Buyer Network, we buy houses for cash--fast! We connect you with our vast network of buyers all across the United States and Canada. These are buyers familiar with the local real estate market so you get an offer that's reflective of real time market dynamics wherever you are! You get a cash offer better than what you'd get from national real estate investors or iBuyer.
You don't have to disclose anything, just fill in our form with your phone, email, and the property address and you're good to go. You'll receive our free, no obligation cash offer within 24 hours! We shoulder all closing costs and close on the date you choose!
So, if you have any questions, don't hesitate to call us at (855) 835-2544, and we'd love to walk you through our process!
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