Inheriting a property in Hawaii after losing a family member or close friend can be an overwhelming experience, both emotionally and mentally – possibly even financially (keep reading). With or without a will, estates must go through the process of probate (unless there’s a trust or similar document dictating otherwise). As you can imagine, this process is much easier if there’s an established will in place (and not hiding under a floorboard in the back bedroom). In a perfect situation, the home is free of defects and deferred maintenance, has no mortgages or liens, has perfect tenants who always pay the rent on time, and has wide views of both Diamond Head and the Pacific Ocean. It’s no surprise that most properties fall short of this lofty ideal.
What you may not know is that the financial obligations attached to the property carry over to the beneficiaries (heirs), including all mortgages, judgments, HOA dues, insurance policies, property taxes, and other monthly bills. The expenses which accumulate during the probate process can be a heavy financial burden, especially since probate can drag on for months (we know how to avoid this). Often, selling your Hawaii probate property as quickly as possible is the best solution for everybody involved. Read on as we explore five tips for selling a probate property in HI.
Probate Timeline
In essence, probate is the process of the prooving of the will; the courts ensure that the deceased’s instruction for the disbursement of their property is completed and require that a judge oversee the process. Because of the legalities involved, our first tip for selling a probate property in HI is to understand that when a property is in probate, you will need to prepare for a lengthy period before the beneficiaries can sell the property. You will also need to keep a close eye on deadlines, carefully complete any paperwork, and follow the rules and order of operations set out by the probate court.
FSBO (For Sale By Owner)
Let’s assume you don’t want to — or don’t have the funds to — fix up the property and bring it up to today’s market and Hawaii’s buyers’ standards (that’s usually no small sum in Hawaii). In that case, our next tip for selling a probate property in HI is to consider selling it as an FSBO or “for sale by the owner”.
Should you go this route, be sure you understand the state laws surrounding disclosure — in short, disclose everything. Even if there’s an issue with the home you aren’t aware of, the buyers might decide to take legal action against you as the seller in the future. Finally, to arrive at a realistic asking price, you should get a general idea of the property’s current market value by comparing similar properties nearby that have recently sold and are about the same size, both in house and lot, and built around the same timeframe (called “running comps”). Just don’t skip on the high-quality photography and staging the home, as today’s internet-savvy buyers will typically scroll by properties that don’t pique their interest.
Owner Financing
Now, for those home sellers with no time constraints, a great tip for selling a probate property in HI is to consider offering owner financing (also called “seller financing”). You may need to do the same repair work and are still under the same obligations regarding disclosure after the sale.
In this arrangement (also called “carrying paper” or “selling on terms”), you’ll be offering the opportunity of homeownership to buyers who may not be in a position to qualify from a bank for a traditional or conventional mortgage. Instead of getting a mortgage from a bank, they get one from you. In exchange for the deed, you get a mortgage secured by the attorney or title company back against the property – this protects your position. While the borrowers/buyers are saving up for their down payment and fixing up their credit, they’re making monthly payments to you at a mutually agreed interest reate. You may be able to charge a higher rate than what you’d earn in investments elsewhere since you’re offering someone else the dream of homeownership, making this a wise investment of its own.
Agent
If the property is in great shape and/or you can afford to make all of the repairs required to bring it up to market standards and keep up with the monthly obligations, selling a probate property in HI with a local real estate agent may be your best path forward. Even after the 6% commissions, cleaning and staging expenses, and closing costs, some properties are better suited to a traditional listing and can provide the beneficiaries with a sizeable profit. Just remember, a real estate agent cannot provide you with a confirmed closing date or even guarantee the property will sell at all; if you or the other beneficiaries are in a financial bind, this may not be a suitable sales method.
You’ll also have to open up the doors to the general public since the property will hit the MLS, so if you’re concerned about strangers walking through your family’s home of 40 years, you may prefer a private direct sale to a company that buys houses in Hawaii like us.
Direct Sale
Our final tip for selling a probate property in HI is to consider the ease of a direct sale; you’ll save valuable time with a guaranteed closing date lined up. As professional investors instead of agents, we don’t work on commissions — instead, we work full-time buying properties in Hawaii for cash (or terms), in as-is condition (even if they’re one Hawaiian breeze from blowing over). After taking the time to speak with you about your property and any obstacles or challenges you’re facing with the probate, we’ll help you understand your options so you can make an educated decision.
Doesn’t it make sense to talk to a direct buyer like us at Oahu Home Buyers before you decide on one of the more common methods of selling a HI property? Contact Oahu Home Buyers today at (808) 333-3677.