Probate and Real Estate: What Heirs Should Expect

Real estate is the single biggest reason probate takes longer and costs more than heirs expect. A house can't be split like a bank account. It has to be appraised, maintained, insured, and often sold, all under court supervision. If the estate you're inheriting from includes property, here's what that means for your timeline and your inheritance.

Why Property Complicates Probate

Estates with only liquid assets, bank accounts, investment portfolios, cash, can move through probate relatively smoothly. The executor pays debts, files taxes, and distributes the remaining funds. But real property introduces a series of additional steps that each take time and cost money.

The executor can't just hand over a set of house keys. They have to confirm how the property is titled, get it appraised, maintain it during probate, decide whether to keep or sell it, and (if selling) go through a court-supervised sales process. Each of these steps has its own requirements and timelines, and they all happen while the regular probate process continues in the background.

Title Verification

The first step is determining whether the property actually goes through probate. Not all real estate does:

• Joint tenancy with right of survivorship: The property passes directly to the surviving owner. No probate needed.
• Property in a living trust: Assets held in a trust bypass probate entirely.
• Community property with right of survivorship: In community property states, this designation transfers ownership automatically.

Only property titled solely in the deceased's name, or held as "tenants in common" without right of survivorship, must go through probate. The executor needs to pull the deed and verify the titling before proceeding.

Appraisals

The probate court requires a professional appraisal to establish the property's fair market value. The IRS Publication 559 (Survivors, Executors, and Administrators) explains how property valuations affect estate tax obligations. This value affects everything: the executor's statutory fees, potential estate tax liability, and how much each heir's share is worth. A standard residential appraisal costs $300 to $600. In California, a court-appointed probate referee handles the appraisal at a fee of 0.1% of the property's value, so a $750,000 home costs $750 to appraise.

Appraisals are based on the date of death, not the sale date. If the property market changes between those two dates, heirs may end up with more or less than the appraised value.

Carrying Costs: The Hidden Drain

While probate grinds forward, someone has to keep the property in good condition and the bills paid. The estate is responsible for:

• Mortgage payments: The lender doesn't pause collection because the owner died. The CFPB provides guidance for family members dealing with a deceased person's mortgage. Missed payments lead to foreclosure, which would devastate the estate's value.
• Property taxes: Due on schedule regardless of probate status. Delinquent taxes trigger penalties and, eventually, tax liens.
• Homeowner's insurance: Coverage must remain active. Policies on vacant or estate-owned properties often cost more than standard homeowner's insurance.
• HOA fees: If the property is in a community with an HOA, dues keep accruing.
• Utilities and maintenance: Pipes freeze in vacant homes. Lawns need mowing. Roofs leak. Deferred maintenance reduces the property's market value.

Consider a typical scenario: a home with a $1,800 monthly mortgage, $350 in property taxes, $150 in insurance, and $200 in maintenance. That's $2,500 per month in carrying costs. Over an 18-month probate, that totals $45,000, money that comes directly out of the estate and reduces what heirs receive.

Court-Approved Sales

When the property needs to be sold, because multiple heirs need to split the proceeds, because the estate needs cash to pay debts, or because no beneficiary wants to keep it, the sale typically requires court approval. The process varies by state, but generally works like this:

1. The executor petitions the court for permission to sell.
2. The court holds a hearing and, if satisfied, authorizes the sale.
3. The property is listed, marketed, and shown like any other home sale.
4. When an offer comes in, the executor may need to go back to court for confirmation of the sale.
5. Some states allow "overbidding" at the confirmation hearing, any interested party can offer more than the accepted bid, turning the hearing into a mini-auction.

This court-supervised process adds 3 to 6 months (or longer) beyond what a normal home sale would take. Standard costs, agent commissions of 5% to 6%, closing costs of 2% to 3%, and transfer taxes, still apply, and they're paid from the estate.

Multi-State Property Issues

If the deceased owned real property in more than one state, the estate may require probate proceedings in each state where property is located. The primary probate case ("domiciliary probate") happens in the state where the deceased lived. A separate "ancillary probate" must be filed in each additional state. The National Center for State Courts can help you locate the appropriate probate court in each jurisdiction. Each ancillary proceeding requires its own attorney, court filings, and potentially its own executor appointment, generating parallel timelines, duplicated costs, and extra complexity.

Timeline Impact

For estates with liquid assets only, probate might close in 6 to 12 months. Add a piece of real estate and you're looking at 12 to 24 months, sometimes longer if the property is difficult to sell, requires significant repairs, or is in a slow market. Multi-property estates with ancillary probate in other states can stretch to 3 years or more.

What Heirs Can Do

If you're an heir waiting on an estate that includes real property, the timeline can feel endless, especially when carrying costs are eating into your inheritance every month. An inheritance advance from CSF can provide cash within days, based on your expected share of the estate. The advance covers any type of estate asset, including real property. Our attorney-led team has experience with estates of all sizes and complexities.

If you're waiting for probate to close and need access to your inheritance now, CSF can help. Call (800) 317-3769 or request a free quote.

Frequently Asked Questions

How long does it take to sell a house in probate?

Selling a house in probate typically adds 4 to 8 months beyond the normal probate timeline. The property must be appraised, maintained, listed, marketed, and sold, often with court approval required for the sale and a confirmation hearing. In states that allow overbidding at the confirmation hearing, the process can take even longer.

Who pays the mortgage during probate?

The estate pays mortgage and other carrying costs during probate. The lender does not pause collection because the owner died. If the estate cannot cover the payments, the executor may need to petition for an emergency sale. Missed payments can lead to foreclosure, which would reduce or eliminate the property's value for heirs.

Can an heir live in a probate house rent-free?

It depends on the will and court approval. Some wills grant an heir the right to reside in the property. Without such a provision, the executor controls the property and may require the heir to pay fair market rent, which goes to the estate. The executor has a fiduciary duty to all heirs, not just the one living in the house.

What are carrying costs on a probate property?

Carrying costs include the mortgage payment, property taxes, homeowner's insurance, HOA fees, utilities, and maintenance. On a typical home with a $1,800 monthly mortgage, $350 in taxes, $150 in insurance, and $200 in maintenance, carrying costs total approximately $2,500 per month, or $45,000 over an 18-month probate.

Does probate property get a stepped-up tax basis?

Yes. Under IRC Section 1014, inherited property receives a stepped-up basis to its fair market value on the date of death. If a home was purchased for $200,000 and is worth $500,000 at the owner's death, the heir's basis is $500,000. This can eliminate or significantly reduce capital gains tax if the property is later sold.

What happens if the estate owns property in multiple states?

The estate requires a separate ancillary probate in each state where property is located, in addition to the primary domiciliary probate in the deceased's home state. Each ancillary proceeding requires its own attorney, court filings, and potentially its own executor appointment, generating duplicated costs and parallel timelines.