As probate properties are usually sold for less than their expected market value and owners are often keen to offload them quickly, this type of house sale is having a positive effect on the ailing UK housing market…
A probate sale is the sale of a property triggered by the death of the owner, with proceeds to be divided among heirs or creditors.
This type of house sale usually progresses fairly quickly as owners are keen to tie up all loose ends and avoid paying thousands in inheritance tax.
As there is often an emotional connection to the house, those selling the property may often not have the sale price at the top of their agenda.
Sellers of probate homes are not keen to put the property on the market and wait for prices to rise again and they are also not keen to do what many homeowners are doing and rent the property out until the market picks up. If they were to rent the house, the rent would be swallowed up by the interest due on the inheritance tax.
If the property was valued at a certain amount when the owner died, amazingly the valuation takes no notice of what is currently going on in the market, so inheritance tax is due on the valuation amount, even if it is miles higher than what it is worth in real time.
Executors have been caught by the market drop because it is only once inheritance tax is paid that they can apply for probate, and only then that they can dispose of assets.
With property it is possible to spread inheritance tax payments over 10 years but it is still necessary to pay interest on the unpaid tax in the meantime.
Due to these factors, the relative speed of probate sales are helping to drive the market forward at a time when ‘normal’ house sales are stalling and the UK property market is in desperate need of some good news.
In America, statistics have revealed that the opportunities are huge because each year over one million estates are probated and it takes an average of three years to probate an estate. So at any one time, there are over three million estates in the process of probate.
This provides an excellent opportunity for savvy investors, especially cash buyers as often the seller will prefer to have the cash quickly than to hold out for the best price.
The best way to buy probate property is directly from the estate executor or administrator without court confirmation, so long as the creditors agree.
Often the late owner will have lived in the property for years, so it may need some renovation and updating, meaning that there is room for a deal to be struck.
For more information on UK properties and the market in general, please visit http://www.themovechannel.co.uk/
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Notes to editors:
TheMoveChannel.com is a property website that was founded in 1999 as an online resource for buying, selling and learning about property. It now receives as many as 300,000 visits per month and advertises over 50,000 properties in nearly 90 countries, which are listed by over 500 partner organisations.
For further information as well as images and interview possibilities, please contact:
Dan Johnson
Managing Director
www.themovechannel.co.uk
0207 952 7650
