*Article updated 1 September 2023
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 a good idea of what to expect.
These are Jacobs top tips on what to remember when buying property from a deceased estate:
1. 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 which 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.
READ: Property inheritance must-knows and considerations
2. 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 in 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. Having to evict difficult tenants can add a whole new level of stress to things,” he says.
3. 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.”
READ: Selling deceased estate property must-knows
4. 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 from an ordinary property purchase.
READ: Buyer seeks compensation after failed purchase due to undeclared property in deceased estate
Purchasing property via a Deceased Estate Auction
Much remains unknown about deceased estate auctions despite the many opportunities they represent. The overarching benefit is that buyers often realise "exceptional value for money." Park Village Auctions' Jaco du Toit offers insight into the process of deceased estate auctions.
When someone passes away, their moveable and immovable property forms part of their estate, which must be distributed according to their will. "There are various circumstances in which the assets will need to be sold in order to wind up the estate. Examples include needing to realise cash to settle debts or the heirs electing to sell their inheritance and split the proceeds for even distribution," explains Jaco.
While executors can appoint an estate agent to sell a property from the deceased estate, the property must be sold "at fair market value." Jaco says this is where auction houses like PVA are primed for service.
Jaco, "Auctions have a reputation for being transparent and fetching market-related prices, which is part of their appeal to both sellers and buyers looking for a deal.
"More often than not, the executor will opt to sell more than real estate. There may be vehicles, equipment, or even a business as a going concern. It is more convenient to appoint an auction house to care of the asset disposal in its entirety."
When selecting the best auction house to handle asset disposal on behalf of a deceased estate, Jaco advises looking for the proper credentials and a proven track record. "PVA, for example, registered as professional valuers with the South African Council for the Property Valuers Profession (SACPVP), registered with the Institute of Estate Agents of South Africa (IEASA), and are recognised appraisers to the High Court," Jaco qualifies. He adds that seeing how many deceased estate sales are listed on an auction house's website indicates their competency in such matters.
Beyond fetching fair market-related prices for these assets, buyers also benefit from auction sales because the process is transparent and straightforward. The sale is concluded on the fall of the hammer. There are seldom any suspensive conditions. If there are any conditions, they are set by the Master of the High Court.
"There is also a misconception that banks don't finance property purchases via auction, but this is not the case," adds Jaco, who explains that a buyer must first acquire the finance before attending the auction. "Buyers are liable for the deposit, VAT and commissions on conclusion of the sale. After that, the buyer must produce "guarantees" for the outstanding remaining amount, which will also carry a deadline."
Jaco's closing tips for interested buyers are always to attend the viewing as all auction properties are sold "As is" and to familiarise oneself with the terms and conditions of the sale upfront. Jaco says, "One must always feel at ease asking questions. It is a red flag when the auction house is not forthcoming. We consider buyers and sellers our customers and work with utmost integrity to deliver great service to both."
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