Probate is the legal process of sorting and distributing someone’s personal property when they die. The last will and testament is taken into account and executed according to the deceased’s wishes. This often includes real estate, as well as other high-ticket items like cars or valuable jewelry.
But what happens when the deceased didn’t bequeath a home to an heir? Typically, this prompts a probate sale in which an estate attorney or family representative must sell the property to liquidate the asset and distribute the money from the sale to the family.
“A probate sale is the sale of a property after the owner’s death when the late owner did not specify an heir to inherit the property,” says David Reischer, a real estate attorney and CEO of LegalAdvice.com. “A property is relinquished to the court, which then appoints the closest living relative as the executor who will sell the house.”
How much does probate cost?
The overall cost of probate will vary depending on the estate’s value.
“Typically the cost will be from 3% to 7% of the estate plus various fees. I’ve seen estate costs from as little as $5,000 to as much as $50,000,” Reischer says.
If you’ve just been appointed executor of a home that’s going through a probate sale, here are the fees you should be aware of.
Attorneys fees
According to Chris McDermott, a broker at McDermott Realty in Jacksonville, FL, the biggest costs in a probate sale are usually the attorneys fees. However, these fees can vary greatly depending on the state in which you live and the cost of the asset going through probate.
According to Nolo, a legal website, the state of Florida, as one example, uses the following fees:
- Value of estate up to $40,000: $1,500
- $40,000 to $70,000: $2,250
- $70,000 to $100,000: $3,000
- $100,000 to $1 million: $3,000, plus 3% of the value over $100,000
- $1 million to $3 million: $3,000, plus 2.5% of the value over $1 million
- $3 million to $5 million: $3,000, plus 2% of the value above $3 million
- $5 million to $10 million: $3,000, plus 1.5% on the value above $5 million
- More than $10 million: $3,000, plus 1% of the value above $10 million
Court costs
Court fees are usually set by state law and will vary based on location.
“Typically, court fees range between a couple hundred dollars to a couple thousand dollars,” Reischer says. “A more complicated estate will require more paperwork to be filed and will thus be on the higher end of the range.”
Costs to secure the real estate/insurance premium
One of the first things the executor needs to do is keep all easily movable valuables—such as cash and jewelry—safe until they can be turned over to the people who inherit them.
To do this, they will need to secure the property with new locks or alarm codes, according to Matthew F. Erskine, managing partner of Worcester, MA–based Erskine & Erskine, which handles estate planning and trust administration.
“Also, call the insurance agent and add the estate as a named insured to the policy, both for the property and for any motor vehicles,” says Erskine, who estimates that this process will cost between $500 to $1,000.
Cost to make required repairs
If someone in the family wants to purchase the property, they’d typically buy it from the estate.
“This is less expensive than selling it to a third party,” Erskine says, “since they will be taking the property as is, and there will be no broker’s commission on the transaction.”
However, if no one wants the property, he says it will need to be prepared for sale. The cost to make repairs—both cosmetic or mandatory—could range from $1,000 to $50,000.
There are certain building and zoning code-based upgrades that are triggered by the sale.
“For example, an older house may have 40-amp or 60-amp electrical service, which is a fire hazard when you have a lot of electrical appliances, and will need to be upgraded to 100-amp service—and that may cost several thousand dollars,” adds Erskine.
Other considerations include removing hazardous materials like lead paint or asbestos insulation.
Cost of getting the property appraised
The executor will also be responsible for arranging an appraisal of the property which will determine the minimum price for listing the property. This can cost anywhere from $0 to $5,000.
“When there is a sale to family member, charities as beneficiaries, or the potential for a dispute on the value of the home, getting an appraisal is a must,” says Erskine.
Cost to have property cleaned out
If the house is going to go up for sale, the furniture and other tangible property will need to be removed.
“Often the family will assist with this, but there is always some stuff no one wants, so they’ll need to hire a service to remove the remainder and either buy it, donate it, or dump it,” Erskine says.
He estimates this cost to be between $750 to $1,500. Sometimes more.
“I once had an estate with a two-bedroom ranch where we had five full-size dumpsters worth of trash,” he says.
Carrying costs
It can take a significant amount of time to complete a probate sale.
“A probate sale can take up to six to 12 months to finalize, depending on the complexity of the situation and the size of the assets,” says Mike Hills, vice president of investment brokerage at Denver-based Atlas Real Estate. That’s why carrying costs like mortgage payments, real estate taxes, and utilities should be taken into account— they’ll all need to be paid during the probate sale.
Other fees
McDermott says you should also expect to pay 5% to 6% of the sale price in real estate broker fees. However, Erskine warns this amount could go as high as 10%. The executor may also receive a fee, which is usually set by the court.
“Also, title fees will cost 1% to 2% to conduct closing and issue title insurance,” McDermott says.