Selling Probate Property At Auction
Dealing with probate property can be a complex proposition, particularly at such an emotional time for the family and executors involved. As you have found your way to this page, may we offer you our condolences for your loss. Here at City and Rural, we have a lot of experience in these matters and, together with this guide, are here to help you through the process.
An accurate valuation of a probate property and its contents is a vital part of getting the Grant of Probate. This is required by the Executors of the Estate (a position more commonly held by an appointed solicitor, family/friend, or both) and is a legal certificate that gives them authority to settle the estate in accordance with the will. It is obtained from a court’s probate registry.
If the deceased has not left a will, a close relative can apply for a grant of letters of administration from the probate registry. Again, this is a legal document giving them authority to deal with the affairs of the estate.
Before the Executor/s of the estate can apply for probate, they must assess the value of the money, shares, property and possessions within it. The HMRC Inheritance Tax Manual – HMRC internal manual – GOV.UK (www.gov.uk) states that where the total gross value of the estates is more than £250,000, which is very likely if 1 or more properties are within it, then a professional valuation is required for any items worth more than £1,500.
Inheritance tax (IHT) is only payable when the net value of the estate (after debts and funeral expenses have been paid) exceeds the “nil-rate band” of £325,000. There is further guidance on the rates of IHT on Inheritance Tax thresholds and interest rates – GOV.UK (www.gov.uk).
It is extremely important to ensure that the probate property valuation is accurate and transparent. This will only become more important in future, as the nil-rate band has been frozen until 2026, while property prices are likely to continue to rise, making more estates liable for Inheritance tax. If HMRC suspects that an estate has not been valued accurately, it can launch an investigation – and this has become more common in recent years. In 2019-20, it investigated one in four estates that were liable for Inheritance tax. This will only delay settlement and increase property costs as well as distress for the beneficiaries.
How Long Does Probate Take?
• whether you are using a solicitor
• the nature of the assets and liabilities
• the number of assets
• the nature of some assets, e.g. a property
• the number of beneficiaries
If probate is required for one bank account, then probate can be obtained in 5-6 weeks, however most estates are more complicated than this and can take between 12-14 weeks with larger estates often taking much longer.
Obviously, the valuation forms an important part of this service and could potentially save the estate thousands of pounds in Inheritance Tax if done correctly. At City and Rural, we offer two types of professional valuation:
Section 160 Inheritance Tax Act 1984 compliant valuation. Costs start from as little as £300 + VAT. This is perfect for non-contentious estates and will provide the price that the property within the estate would reasonably expect to achieve if sold on the open market at the date of death.
RICS Redbook Valuation. Costs start from £450 + VAT. This is the preferred valuation by some accountants and solicitors, particularly where the beneficiaries are charities, and is carried out by an RICS registered valuer.
On our initial conversation we will advise you as to which type of valuation is necessary. Once we have completed our valuation, should you wish to sell the property we will talk you through the options available and advise which method of sale is most appropriate.
The valuation is only part of the process:
• Applying for the grant of probate.
You will need to obtain a grant of probate before you can sell the property. Whilst you are more than able to submit the necessary documents yourself we would always recommend speaking to a specialist solicitor, particularly where the estate is liable for Inheritance Tax. If you do not already have a solicitor, contact us for recommendations.
• Contents Valuation and Clearance.
The contents of the property will need to be valued and we would recommend the property is cleared before the property is sold. We can arrange this for you using our third party suppliers.
• Empty Property Maintenance and Property Inspections.
Gaining the grant of probate can be a lengthy process. In order to maintain the building insurance, it may be necessary for regular property inspections. If you are not local to the property, this can be a time-consuming and costly process. At City and Rural, we offer a property inspection service and will provide a quote based on the frequency of inspection required by your insurer. We will also read the utility meters, collect and forward all posts and ensure the property is safe and secure, as well as acting as a local keyholder. In addition, we can arrange for cleaning and garden maintenance as required, as well as any maintenance issues within the property, such as a winter drain down of the heating and water system, all through our associated property management team.
• Tenanted Property Management.
It is quite common that tenanted investment property will make up part of the estate. Becoming a landlord overnight can become a daunting prospect, particularly if you have no experience with what this entails. We offer a full property management service by ensuring you are fully compliant with all current letting legislation and that rents are collected and the properties are properly maintained through our letting agency, Davies and Way.
• Production of an EPC.
All properties that are to be sold or let will require an up-to-date Energy Performance Certificate (EPC) – We will organise this and supply copies and links to the required parties with prices starting from £120 + VAT for single residential property.
• Assessment of Planning Options
Probate properties often offer opportunities for extension or redevelopment; on some occasions, there could be space for a building plot. Our auction team will consider and advise on the options.
• Commercial Property
Whilst residential property makes up the majority of Probate Property, commercial property will also form part of some estates. Our RICS valuers are expert in commercial valuation and will undertake the management of tenanted commercial property if required as well as help with reletting with all types of commercial property including mixed use, industrial, commercial and other types of property.
So why should you sell your probate property by auction?
• Speed of Sale: Auctions are typically much faster than traditional sales, which can be beneficial if you want to settle the estate quickly. Auction timelines are set in advance, so you know when the sale will happen.
• Competitive Bidding: Auctions create a competitive environment where interested buyers bid against each other, often driving up the price. This can result in a higher selling price than a traditional sale.
• Certainty of Sale: When a probate house sells at auction, it’s usually a sold-as-seen, cash sale. Buyers have limited room for negotiation after the auction, meaning you’re less likely to face delays due to inspections or financing.
• Reduced Holding Costs: Probate properties can accumulate costs quickly, like taxes, utilities, and maintenance. An auction’s quicker process reduces the amount of time you’re responsible for these holding costs.
• Transparent Process: Auctions are straightforward and transparent. Interested parties can see each bid, providing a level of openness that builds trust and may encourage more buyers to participate.
• Suited for Properties Needing Renovation: Many probate properties need repairs or updates. Auctions attract investors and buyers who are willing to buy sold as seen, which saves you from the cost of repairs or staging.
Somewhere along the way, property auctions acquired the reputation for being the place bar none to pick up bargain properties. However, the type of thing selling at auction is no longer dependent on bargain hunters or those looking for ‘something special’. Nor are auctions the sole preserve of property professionals, although they do feature frequently. First-time buyers and members of the public looking to pick up buy-to-let investment properties or, indeed, family homes make up a significant part of the audience at residential auctions. Selling by auction can be an efficient, potentially lucrative option if you’re handling a probate property, especially if speed, certainty, and minimising upkeep costs are key priorities.
Not every property will be suitable for auction, and we will advise you on the most appropriate method of sale, whether that’s auction, tender or conventional private treaty sale. As a rough rule of thumb, if you can answer yes to two or more of the following questions, then the property may be suitable for auction:
• Does the property appeal to a certain niche buyer?
• Does the property require improvement or modernisation, etc?
• Does the property have development potential?
• Does the property have any “issues” or problems?
• Is the property tenanted?
• Is there a healthy buy-to-let market in the vicinity of the property?
• Is the property unusual?
• Is the property close to a university, hospital or other major employer?
• Locally, is there a shortage of this kind of property?
