4 Things to remember when buying property from a deceased estate
Buying a home after the previous owner has died may sound a little spooky, but it doesn’t have to turn into a horror story.
According to David Jacobs, Gauteng Regional Sales Manager for the Rawson Property Group, deceased estates can offer excellent property investment opportunities. The key is to go in with your eyes wide open and good idea of what to expect.
These are his top tips on what to remember.
Don’t go too low
“One of the most common reasons buyers investigate deceased estates is that they expect to get a real bargain,” says Jacobs. “That can be true, but it’s not always the case.”
Jacobs explains that heirs are seldom as emotionally attached to a property as the previous owner would have been. They also aren’t usually relying on the sale to finance another purchase. That can increase their willingness to negotiate on the sales price – particularly when speed is of the essence – but it’s very unlikely to convince them to ignore market value altogether.
“Your best bet for having an offer accepted is to do your research, understand fair market value, and then – depending on the competition – make an offer on the lower end of that spectrum,” says Jacobs.
Inspections are essential
No matter how good the price-tag, Jacobs urges buyers never to neglect a full property inspection before committing to buying a deceased estate.
“Legally, you have to be given a disclosure document listing all known defects in the property,” he says, “but when the most recent owner has died, who exactly is drawing up this list? Chances are, they’re not nearly as familiar with the property as a normal seller should be, and so they won’t know all the hidden issues that could be lurking just out of sight.”
Given that many deceased estates belonged to elderly owners who may not have been as active on maintenance as they should be, those hidden issues could be more extensive than you think. As a result, Jacobs says the price of a professional inspection is generally more than worth it to avoid the nightmare of being saddled with a real property disaster.
“It’s also important to find out whether the property is currently tenanted,” he adds. “Having to evict difficult tenants can add a whole new level of stress to things.”
Make sure the sale is authorised
Properties that are part of a deceased estate can only legally be sold by the estate’s executor. No agreement signed before the executor has been formally appointed by the Master of the High Court will be valid.
“It can take as long as three months for the executor to receive his/her Letters of Executorship from the Master,” says Jacobs. “Unless you’re okay with waiting that long to formalise your offer, it’s best to ensure those letters are in place before getting started.”
Expect some delays
Once your offer to purchase has been accepted, Jacobs says sellers of deceased estates have a few more hoops to jump through. As a result, the transfer process tends to be a little slower than normal.
“The executor needs to apply to the Master of the High Court for consent to the agreed sale,” says Jacobs. “As part of this, he/she will need written consent from all heirs with an interest in the property. Getting all the necessary paperwork together and waiting for the court’s response can take several weeks, or even months if there are any issues.”
While the process may seem complicated, Jacobs says the majority of extra work during a deceased estate sale is the responsibility of the sellers. Buyers who have done their homework and are willing to be patient during transfer shouldn’t find the process too different to an ordinary property purchase.