Selling property during probate: Legal requirements, timelines and common mistakes

The decision to sell property within an estate isn't always straightforward. Several circumstances might necessitate the sale of real estate during probate, including:

• Debt settlement. One of the primary responsibilities of an executor is to ensure all valid debts of the deceased are settled. When liquid assets like cash and investments aren't sufficient to cover outstanding obligations, selling property may become necessary. These obligations might include unpaid medical bills from end-of-life care, credit card debt, mortgage balances, personal loans, federal or state tax liabilities and probate and administration costs. As the executor, you have a fiduciary duty to satisfy these debts before distributing assets to beneficiaries. Failing to properly address valid creditor claims could result in personal liability.
• Multiple beneficiaries. When multiple heirs inherit a property jointly, disagreements about its management, use or value can arise. Some beneficiaries might prefer immediate liquidation while others may wish to retain the property for sentimental or investment reasons. In such situations, selling the property and dividing the proceeds often presents the most equitable solution, particularly when beneficiaries live in different geographic locations, heirs disagree about property improvements or maintenance, some beneficiaries need immediate access to their inheritance or the property cannot be easily or fairly divided physically.
• Will or trust directives. Sometimes, the deceased's estate planning documents explicitly direct the executor to sell property and distribute the proceeds. These instructions may be included to minimize potential conflicts among heirs or to ensure equitable distribution when other assets aren't easily divisible.
• Tax considerations. Strategic property sales may help minimize estate tax burdens or provide liquidity for paying estate taxes when due. As of 2025, the federal estate tax applies to estates exceeding $13.99 million, but state-level estate taxes may apply at much lower thresholds depending on your location.

The path to gaining legal authority depends on several factors:

• If named as executor in the will, you must first petition the probate court for formal appointment and receive "letters testamentary."
• If there is no will, the court will appoint an administrator who receives "letters of administration."
• If the property is held in a trust, the trustee's authority comes from the trust document itself.

Only after receiving a formal appointment can you legally act on behalf of the estate. However, even with this general authority, specific permission to sell real estate may still be required.

Whether court approval is necessary for selling probate property depends on:

• State laws and local court rules.
• The terms of the will or trust.
• Whether the executor has been granted "independent administration" powers.

In many jurisdictions, executors must file a petition specifically requesting permission to sell real property, regardless of what the will states. The court may require evidence demonstrating why the sale is necessary or beneficial to the estate.

Some states allow for independent administration, which grants executors broader powers to manage the estate with minimal court supervision. Even with independent administration authority, executors must still:

• Provide notice to heirs and beneficiaries.
• Maintain accurate records of all transactions.
• Ensure the property sells for fair market value.
• Act in the best interest of all beneficiaries.

The probate property sale process typically begins with securing the property immediately after death, ensuring it is maintained and insured to protect its value. Next, you must file the necessary paperwork to be formally appointed as executor or administrator. Once appointed, conduct a formal inventory and obtain professional appraisals to establish fair market value.

If required, file a petition with the probate court requesting permission to sell the property. With approval secured, you can list the property with a real estate agent experienced in probate sales. When offers come in, review and accept a reasonable offer that meets the estate's needs.

Some jurisdictions require court confirmation of the sale, in which case you'll need to present the offer to the court for approval in a confirmation hearing. Once approved, complete all closing documentation and receive the proceeds. Finally, document how funds were distributed to pay debts or distributed to beneficiaries, maintaining accurate records for the final accounting.

Executors commonly encounter the following pitfalls when selling estate property.

Acting without proper authority

Taking action before receiving formal appointment or specific sale authority can lead to significant legal complications. Always ensure you have proper documentation before proceeding with any property transactions.

Neglecting property maintenance

Failing to properly maintain the property during probate can significantly reduce its value. Executors should maintain regular landscaping and cleaning, address repairs promptly, ensure proper insurance coverage, secure the property against unauthorized access and continue utility services as appropriate.

Selecting inexperienced professionals

Working with real estate agents or attorneys unfamiliar with probate sales can lead to costly delays and mistakes. Seek professionals with experience in probate property sales in your state. They should be knowledgeable about managing court confirmation processes and handling potential overbidding situations that may arise during probate sales. Additionally, they should be well-versed in the unique disclosure requirements that apply specifically to estate sales, which often differ from standard real estate transactions.

Selling below market value

Executors have a fiduciary duty to obtain fair market value for estate assets. Selling property significantly below market value could constitute a breach of this duty, with serious consequences. An executor who fails to secure appropriate value may face personal liability for the difference between the actual sale price and what should have been obtained. Beneficiaries who feel shortchanged often file legal challenges, which can be costly and time-consuming to defend. In extreme cases, courts may remove an executor who demonstrates poor judgment in asset sales. Additionally, probate courts frequently reject proposed sales that appear to undervalue estate assets, forcing the executor to restart the selling process and further delaying the estate's administration.

Ignoring tax implications

Property sales can trigger various tax consequences that affect both the estate and the beneficiaries. Consider consulting with a tax professional regarding several important considerations. Potential capital gains taxes may apply depending on how long the deceased owned the property and its appreciation in value. Estate tax implications should be carefully evaluated, especially for larger estates approaching federal or state taxation thresholds. Property tax reassessments often occur after a property transfer, potentially affecting future tax obligations for heirs who retain ownership. Step-up in basis considerations can significantly impact capital gains calculations, as inheritors typically receive a cost basis equal to the property's value at the date of death. For investment properties, 1031 exchange opportunities may allow deferring capital gains taxes when proceeds are reinvested in similar properties, though specific rules and timelines must be strictly followed.

The timeline for selling probate property varies significantly based on several factors that executors should anticipate. Local court backlogs and scheduling constraints often create unavoidable delays, particularly in jurisdictions with overwhelmed probate systems. The type of probate process also affects timing — formal probate typically takes substantially longer than informal proceedings. Properties requiring court confirmation of sales face additional waiting periods for hearing dates and potential overbidding sessions.

The property's marketability and condition further impact timelines, with well-maintained, desirable properties typically selling faster than those needing extensive repairs or located in challenging markets. Perhaps most significantly, any disagreements among beneficiaries can dramatically extend the process, especially when formal objections are filed with the court.

In general, expect the process to take anywhere from three months to over a year from the time of death to closing. Planning accordingly and setting realistic expectations with beneficiaries can help manage frustrations with the timeline. Providing regular updates about progress and explaining inherent delays in the probate process can help maintain positive relationships with heirs during what is often a lengthy procedure.

Selling property during probate is among the most challenging tasks an executor will face. Though complex, understanding the legal requirements, common pitfalls and best practices outlined here can make this difficult process more manageable. As an executor, your duty is to act transparently and diligently for all beneficiaries. This means securing proper legal authority first, maintaining the property's value, partnering with experienced professionals, ensuring fair market sales and considering all tax implications. The probate process requires patience — court schedules, beneficiary concerns and administrative requirements all take time. Setting realistic timeline expectations with all parties helps prevent conflict during an already emotional period.