You've probably heard the term 'estate' before...
But what exactly is an estate?
Let's dive into the key characteristics and features of estates, the legal definitions of estates as they apply to real estate, and what an estate sale is versus a probate sale.
To clarify, there is a more colloquial understanding of an "estate," and more specific, legal definitions of an estate.
Colloquially, an estate can be thought of as the houses, outbuildings, farmland, gardens, and grounds that surround a very large home in the form of a country house, mansion, or luxury property.
A good example of this would be the grounds of Bly Manor from Netflix's 'The Haunting of Bly Manor' or Downton Abbey from the show 'Downton Abbey'.
For examples based in the real world, Amazon's Jeff Bezos purchased the Warner Estate last year, while country music legend Dolly Parton lives on a sprawling estate in Brentwood.
In real estate, (no pun intended) there is no standard industry-wide definition for what an estate is (aside from legal definitions, which we will get into below). However, many luxury and expansive homes will be advertised as an estate, "estate-like", or a "luxury estate" if they have some of the below qualities which provide that sense of stately, luxurious elegance:
Now that we've described the colloquial definition of an estate, we should also note that estates have very specific definitions in real estate law. At its most essential, an estate is the interest held by an owner in property, and real estate is the interest to real property: land and the structures on it.
The interest/rights tied to real estate can be further broken down into types of freehold estates (tied to ownership) and types of leasehold estates (tied to tenancies/leasing/renting).
Fortunately, most buyers will not need to have a legal understanding of these terms, though it is important to know what type of estate interest the property they are purchasing is. This information can usually be found in their preliminary report/ title commitment. Generally speaking, a fee simple or fee estate gives the owner the maximum bundle of rights.
Let's first start with an estate sale: an estate sale is usually the sale of property of a homeowner who recently passed away, with the goal of selling the home and personal property within. Those who inherited the home would receive the proceeds from such a sale. Alternatively, the surviving family members with interests in the property may be unable to come to an agreement on what to do with the property and the dispute would be brought before a court, which orders a sale, with the proceeds to be divided between family members.
Probate sales happen when a property owner passes away without a will or without naming specific heirs. In this case, the court must go through the probate process and appoint an administrator to handle the sale of the property. In this sense, a probate sale is an estate sale with a specific cause. The sale follows certain specific rules designed to help maximize the sale price and requires court approval of the initial offer before additional offers are entertained as bids.
Many buyers like probate sales because homes bought through probate can be cheaper than homes purchased regularly. However purchasing a home through probate can have many downsides, such as a much longer time to obtain possession of the property as debts and other challenges are cleared; the inability to request seller repairs or credits for repairs; and nonstandard terms that may require the use of a real estate attorney.
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