Who pays for the probate valuation & who organises it?
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When someone passes away, the estate must be probate valued, calculated and reported to HMRC. Then the probate process should begin so the estate can be split amongst all beneficiaries.
The cost of probate valuations vary depending on the type of service and method chosen, but as an average, you can expect a probate valuation to cost you between 1% and 5% of the estate’s full value.
Most estate agencies will cover the probate valuation cost as part of their service and will agree upon the cost from the onstart.
Many people during the house valuation process for probate, wonder “can I sell a property before probate?”, as the probate and selling property process can be extremely time-consuming. In this article we will cover all this and more!
What is a probate valuation?
The legal process of dealing with the value of the estate when a person passes away is called probate. Typically, the valuation for probate is executed by the deceased person’s executors via the Grant of Representation.
The Grant of Representation allows executors to access all information – including bank accounts, stocks, shares, and the deceased person’s property – to determine the open market value of the assets.
A probate valuation will cover all items of value, minus any outstanding debts, with the remaining amount being liable for inheritance tax. If the probate valuation reveals the assets are £325,000 or less, then you are not required to pay inheritance tax – anything above this and you will be liable to 40% tax.
If someone passes away without leaving a will, then a professional valuation must be done on their estate according to the Rules of Intestacy.
How is the value of a property defined?
The value of a property is defined through a probate valuation, with the valuer taking note of the size of property, amount of bedrooms, amount of storage, the age of the property, any wear and tear, and room layout.
All of this information is paired with local market trends, similar and neighbouring properties and what amenities are available in the local area, in order to come up with a house valuation for probate.
How is a property valued for probate?
The property probate valuation will be carried out from the day of death, which is known as a date of death valuation. This is where the values are generated from selling prices on the open market.
If a person dies on the 12th December, but the house valuation for probate takes place on the 4th January, then the selling prices would be based on the 12th December valuations.
Why should you value an estate for probate?
Probate valuations are different from normal valuations, as probate valuations are conducted in such a way that HMRC will accept it. You cannot use a market valuation to determine the probate value of a property or you will face penalties from HMRC.
By carrying out a probate valuation, you are ensuring that you are providing the correct amount of assets to be taxed with inheritance tax.
What are the different types of probate valuations?
There are two different variations of probate valuations which can be carried out; formal and informal valuations.
Formal probate valuations are needed on properties that are subject to inheritance tax or have gains of £10,000 or more, or are considered as a “larger” property. The formal probate valuation report is far more in depth than an informal valuation and will cover any commercial properties or land with development potential.
Informal probate valuations will usually be part of an estate agent’s service and are low on cost, or cost-free.
Who pays for probate valuations?
The person who pays for probate valuations, largely depends on what type of probate valuation you are getting and the value of the property itself.
If you are using an estate agent (like us), then an informal probate valuation will be covered within the agency service or fee. But, if you are using a professional probate RICS surveyor or solicitor who carries out a formal valuation, then you will need to cover the fee.
Who needs to organise the valuation?
The personal representatives of the deceased person are responsible for arranging probate, and the probate valuation. If they decided to sell the property through an estate agent, the estate agent should organise the valuation on their behalf. But if they go through a probate valuations company then they will need to liaise with the valuers themselves.
How much do probate valuations cost?
Probate valuations through an estate agent won’t charge the property probate valuation fee as part of their service, but some agencies may charge a low fee (below 1% of the property’s value).
Specialist probate solicitors will usually charge between 2% and 5% of the estate’s total value (+VAT), with the more experienced solicitor charging a higher rate.
RICS Chartered surveyors will charge between £150 and £800 per valuation and are the most recommended type of probate valuation as they are HMRC approved.
Who owns a property during probate?
During probate, the ownership of a deceased person’s estate is in a transitional state as it is in the process of being transferred to the beneficiaries as determined by the will, or by the rules of intestacy.
How long after probate can a property be sold?
You will be able to sell a property as soon as probate has been granted, but you will be able to put the house on the market before this has been reached. With the average UK probate process can take between 9 and 12 months, you could put the house on the market and find a potential buyer.
Can I sell a property before probate?
Dealing with probate and selling property is a complicated process, often involving layers of conveyancing and considerations for the wishes of the deceased.
Unfortunately, you cannot sell a property before probate, you will need to wait until probate has been granted in order to sell a property. You can however put a property on the market during the probate process in order to generate interest and attract more buyers.
What is the probate selling a property process?
If you are looking at the probate selling a property process, it can be very complicated, but below is our quick guide on how to achieve it:
- Carry out a house valuation for probate.
- Pay any inheritance tax due.
- Obtain the grant of probate.
- Prepare for private and selling property.
- List the property for sale.
- Accept an offer, exchange and complete as usual.
Is selling property after probate taxable?
When selling property after probate, the executors of the estate will need to raise enough funds to cover the Inheritance Tax and any other costs which have arisen over the probate period.
HMRC will request that Inheritance tax is due on the estate within 6 months of the date of death, and Capital Gains Tax will be due within 60 days of completion.
Luckily, as a beneficiary you will not need to pay Capital Gains Tax when the property is transferred to you.
What happens if you sell a property for less than the probate value?
If you decide to sell the probate property within four years of the deceased passing then you may be due a Inheritance Tax overpayment refund from HMRC. Furthermore you will not need to pay Capital Gains Tax on the sale of your property as it does not make any profit.
Are probate properties cheaper?
Probate properties are often sought after from first time buyers, property investors or people looking to renovate a house. This is simply because most probate properties were owned by older generations and will need updating.
Because of the cost of property taxes, like Capital Gains Tax and Inheritance Tax, and the cost of maintenance, the executor of the estate may wish to sell the property as soon as they can.
Luckily, executors of an estate may be more willing to accept a below market value cash offer as this speeds up the selling process after a long and drawn out probate process. The probate process is often so long that many property investors avoid it entirely, which means that there is less demand for probate properties.
How The Property Selling Company can help you with probate properties
Here at The Property Selling Company, we pride ourselves on offering a different way of selling and buying probate properties. We are part of a leading UK property selling solution, and have many different ways to sell.
Using our service, however, you will benefit from a sale in at least 28 days, for free, with no hidden fees. We believe that selling a house shouldn’t be complicated or costly and will do everything in our power to ensure you have a smooth service.
If you are looking for a property after probate service or even during service, well we can do this too! All of our agents are trained in dealing with probate houses and can even help you with valuing property for probate.
We will even cover all the legal and marketing fees usually associated with selling a probate property. Want to find out more about our service? Contact one of our team today!
Probate valuation FAQs
While estate agents will be able to give you an informal house valuation for probate and this allows you to have a rough understanding of the estates value, you will need to get a formal RICS house valuation for HMRC purposes.
It is generally easy to organise as there are many Chartered Surveyor firms out there that specialise in probate properties and Red Book valuations. If you want to know more about this, please feel free to contact one of our team and we can direct you in the right direction.
Because the probate and selling process can be quite drawn out, it is your duty to do everything you can to increase the speed and efficiency of the process. This can be achieved by:
- Understanding your duty as the executor of estate or personal representative.
- Starting probate as soon as you possibly can.
- Obtain death certificates as soon as possible.
- Collect as many details about the deceased person’s estate as possible, in the early stages of probate.
These will help speed up the process by ensuring you aren’t sorting these at the last minute, and make the transfer of property far more efficient.
No you cannot sell a house in probate as before you can sell the probate property, you will need to apply for a grant of probate which can take 12 weeks or more to get. But, you will be able to list the home for sale before you get the probate granted.
While you cannot complete on a house during probate, you will be able to market it and gather interest from potential buyers.
