Nothing complicates the sale of an inherited home quite like having multiple heirs. When you and your siblings or other relatives become co-owners, everyone may have a different opinion on what to do next. Disagreements over the sale price, timing, or whether to sell at all can cause serious delays and strain family relationships. This guide offers practical advice for these exact situations. We’ll cover how to communicate effectively, resolve conflicts, and explore options like a buyout. Our goal is to help you and your family work together successfully when selling inherited property in Arkansas, preserving both your relationships and your inheritance.
Key Takeaways
- Probate is Your First Legal Step: Before you can sell, the Arkansas probate process is required to legally transfer the property’s title into your name. This crucial step not only gives you the authority to sell but also establishes the home’s new value for tax purposes, which can significantly reduce or even eliminate capital gains tax.
- Assemble Your Professional Team: You don’t have to manage this alone. Hiring a team of experts—like a real estate attorney for legal compliance, a tax professional for financial clarity, and an appraiser for an accurate valuation—is the most effective way to protect the estate and ensure a smooth transaction.
- Weigh Your Selling Options Carefully: Your family’s priorities should guide your selling strategy. A traditional sale with an agent may bring the highest price, but selling to a cash buyer provides a faster, as-is solution that avoids the stress of repairs, showings, and market uncertainty.
What Are Arkansas’s Probate Requirements?
When you inherit a property in Arkansas, you’ll likely encounter a legal process called probate. Think of it as the official system for settling a person’s final affairs. It’s the court-supervised process of validating the will, paying off any outstanding debts, and making sure all assets, including the house, are transferred to the correct heirs. It might sound intimidating, but understanding the basic requirements is the first step to getting through it smoothly.
The main goal of probate is to create a clear and legal transfer of ownership. Without it, you wouldn’t have the legal authority to sell the property, get a new title, or handle any related financial matters. While it can feel like a lengthy detour, it’s a necessary one that protects everyone involved—from the person who passed away to the beneficiaries and any creditors. If you’re just starting out and have questions about the terminology or the process, our Probate FAQ is a great resource to help you get your bearings.
When is Probate Necessary?
In Arkansas, if you inherit a house or any other property, probate is almost always required to legally transfer the title into your name. This process validates the deceased’s will and confirms you are the rightful heir. Until the probate court finalizes this transfer, you don’t technically own the property, which means you can’t sell it.
The court’s involvement ensures that everything is handled by the book. It confirms the will is legitimate, appoints an executor or personal representative to manage the estate, and oversees the distribution of assets. This step is crucial for creating a clean title, which any future buyer will require. It prevents future claims or disputes over the property’s ownership down the road.
What is the Probate Timeline?
One of the most common questions we hear is, “How long will this take?” The truth is, the probate timeline can vary quite a bit. For a straightforward, smaller estate, you might be looking at six to nine months. However, for larger or more complex estates, especially those with significant debts or disputes among heirs, the process can easily take a year or even longer.
Several factors influence this timeline, including identifying all the estate’s assets, notifying and paying creditors, and filing the necessary paperwork with the court. Selling a house during this time adds another layer, as the executor often needs court approval for the sale. Our estate solutions are designed to help you manage these steps more efficiently and reduce unnecessary delays wherever possible.
Which Court Approvals Do You Need?
Selling an inherited property isn’t as simple as just listing it on the market. Because the house is part of an estate under the court’s supervision, you will almost certainly need the court’s permission to sell it. The executor or personal representative of the estate is responsible for petitioning the court for an “order to sell.”
This order confirms that the sale is necessary—perhaps to pay off estate debts or to fairly divide the assets among the heirs. You cannot move forward with a sale until the legal ownership, or title, is officially in your name or the estate has been granted the authority to sell. Navigating these legal requirements can be tricky, which is why many people work with an attorney. You can find more attorney information to help you find the right legal support for your situation.
Gather Your Essential Documents
Before you can even think about listing the property, you need to get your paperwork in order. Think of this as your organizational phase—the step that sets the foundation for a smooth and successful sale. Gathering all the necessary documents upfront can save you from frustrating delays and legal headaches down the road. It might feel like a mountain of paperwork, but tackling it with a clear checklist makes it completely manageable. This process ensures you have the legal right to sell the property and provides transparency for potential buyers, which is key to a quick closing.
When you’re dealing with an inherited property, you’re not just selling a house; you’re settling an estate. That means there are specific legal and financial documents required to prove ownership, satisfy the court, and handle taxes correctly. Having everything organized will make your life easier when you start working with attorneys, real estate agents, or title companies. Let’s walk through exactly what you’ll need to find and prepare. If you get stuck or feel overwhelmed, remember that there are estate solutions available to help guide you through every step.
Property Deeds and Titles
First things first, you need to prove who owns the property and that you have the authority to sell it. The property deed is the official legal document that transfers ownership from one person to another. You’ll also need the title, which confirms the legal ownership of the property. Along with these, be prepared to provide the deceased’s death certificate, your own photo ID, and any proof of ownership granted to you by the probate court. You will also need to fill out a seller disclosure form, which is a standard document where you outline the known condition of the home for potential buyers.
Tax Records and Forms
Next, it’s time to get a handle on the property’s financial history. Gather all the property tax records you can find. These documents will show you what has been paid and what might be owed, which is crucial information for both you and the buyer. Understanding the property’s tax situation helps you anticipate closing costs, which can include outstanding taxes. Having these forms ready will also streamline conversations with your tax professional about any potential inheritance or capital gains taxes you might face. If you have questions about how this fits into the larger probate process, we have resources to help.
Court Authorizations
If the property is still in probate, you can’t just decide to sell it on your own. The executor or administrator of the estate typically needs to get formal approval from the court before listing the property. This step is a legal requirement designed to protect the interests of the estate, its heirs, and any creditors. The court wants to ensure the sale is necessary—often to pay off debts or to divide the assets fairly among the heirs—and that the proposed sale price is fair. Getting the right attorney information and guidance is essential for this part of the process.
Notices for Heirs and Creditors
Communication is key, especially when multiple heirs are involved. While Arkansas law may not require every single heir to agree on the sale, reaching a consensus will make the entire process infinitely smoother. Disagreements over the selling price or method can cause significant delays. You’ll also need to provide formal notice to any known creditors of the estate, as their claims must be addressed before the proceeds can be distributed. Properly notifying all parties involved protects you from future legal challenges and ensures that the sale is handled ethically and transparently. It’s a critical step in managing everyone’s expectations.
Understand the Financial and Tax Impact
Selling an inherited property involves more than just finding a buyer. It comes with a unique set of financial and tax implications that you’ll need to understand to make the best decisions for your family. From taxes on your potential profit to the day-to-day costs of just holding onto the house, getting a clear picture of the numbers is a critical step. This knowledge will help you set realistic expectations and plan your next moves, ensuring there are no surprises along the way. Let’s walk through the key financial elements you’ll encounter.
What is a Stepped-Up Basis?
One of the most important financial concepts to grasp when you inherit property is the “stepped-up basis.” It sounds technical, but it’s actually a huge tax advantage for heirs. Here’s how it works: the property’s value for tax purposes is “stepped up” to its fair market value on the date of the original owner’s death. For example, if your parents bought their home for $50,000 and it’s worth $300,000 when you inherit it, your new cost basis is $300,000. This adjustment can significantly reduce or even eliminate the capital gains taxes you might owe when you sell. You can find more definitions of common terms in our Probate FAQ.
How Capital Gains Affect You
Capital gains tax is a tax on the profit you make from selling an asset. Thanks to the stepped-up basis, you only pay taxes on the difference between the sale price and the property’s market value at the time you inherited it. If you sell the home for $310,000 after inheriting it at a value of $300,000, you would only be taxed on the $10,000 gain. In many cases, if you sell the property quickly, the sale price is very close to the stepped-up value, meaning you could owe little to no capital gains tax. This is a major relief for families who are already dealing with so much.
Transfer Taxes and Closing Costs
When you sell a property in Arkansas, you’ll need to account for transfer taxes and closing costs. The state transfer tax is currently $3.30 for every $1,000 of the sale price. On top of that, closing costs typically range from 8% to 10% of the final sale price. These costs cover things like real estate agent commissions, title insurance, and other administrative fees. It’s important to factor these expenses into your budget. Our Estate Solutions can help you understand all the costs involved and explore options like selling to a cash buyer, which can sometimes reduce these fees.
Managing Ongoing Property Expenses
Until the property is sold, you are responsible for all its expenses. These carrying costs can add up fast and include mortgage payments, property taxes, homeowners insurance, utilities, and general upkeep. If the house needs significant repairs, that’s another financial burden to consider. These ongoing costs create a sense of urgency for many families to sell the property as efficiently as possible. If you’re feeling overwhelmed by the expense of maintaining an inherited home, please contact us. We can connect you with immediate cash buyers who purchase properties as-is, saving you time, stress, and money.
How to Manage a Property with Multiple Heirs
When a property is left to multiple heirs, it can feel like there are too many cooks in the kitchen. Suddenly, you and your siblings or other relatives are co-owners, and everyone might have a different idea of what to do next. This is a completely normal part of the process, but it requires clear communication and a solid plan. Agreeing on how to handle the property—whether to sell it, rent it out, or have one person buy out the others—is the biggest hurdle. Let’s walk through how to make these decisions together and what to do when you can’t seem to agree.
Who Makes the Decisions?
Ideally, all heirs should come to a consensus about selling the property. When everyone is on the same page, the process is much smoother. However, getting full agreement isn’t always possible. In Arkansas, all heirs generally need to approve the sale. If one person is holding out, it can bring everything to a standstill. If you find yourselves at an impasse, the court can intervene through a “partition action,” which is a legal process that can force the sale of the property. Understanding these legal pathways is crucial, and you can learn more about the terms and rules on our Probate FAQ page.
How to Resolve Conflicts
Disagreements are common when it comes to selling an inherited home. You might argue over the listing price, the timing of the sale, or even which real estate agent to hire. These conflicts can cause significant delays and strain family relationships. The best first step is open and honest communication. If you’re still struggling to find common ground, bringing in a neutral third party can help. Consulting with a real estate attorney can provide clarity on everyone’s rights and responsibilities. An attorney can facilitate productive discussions and guide you toward a fair resolution. We can connect you with experienced professionals through our attorney information services.
Explore Buyout Options
If some heirs want to sell the property but one or more want to keep it, a buyout is an excellent solution. This allows one heir to purchase the ownership stakes from the others. To do this, you’ll first need to get a professional appraisal to determine the home’s fair market value. From there, the heir who wants the property can secure financing—often through a mortgage or personal loan—to pay the other heirs their share. A buyout can be a win-win: it keeps the property in the family while providing the other heirs with their inheritance in cash, avoiding the complexities of a public sale.
When to Consider Professional Mediation
When conversations break down and even legal advice isn’t enough to bridge the gap, professional mediation can be a lifesaver. A mediator is a neutral third party trained in conflict resolution who can help facilitate a conversation between heirs. They don’t make decisions for you, but they create a structured environment where everyone can be heard and help you work toward a mutually acceptable agreement. Mediation is often less expensive and stressful than taking disputes to court. It’s a practical step to find workable estate solutions that preserve both the family’s assets and relationships during an emotional time.
Value and Prepare the Property for Sale
Once you have the legal authority to sell, the next phase involves getting the property ready for the market. This isn’t just about cleaning up; it’s about making strategic decisions to understand the home’s true value and address any issues that could complicate a sale. Taking the time to properly assess and prepare the property can make a significant difference in your final sale price and how quickly you can close the deal. It’s about putting your best foot forward to attract the right buyers, whether you’re listing traditionally or looking for a faster, alternative sale. This process ensures you’re making informed choices based on the property’s actual condition and current market dynamics.
Get a Professional Appraisal
Your first step should be to get a professional appraisal. This isn’t just a suggestion—it’s a crucial move that sets the foundation for the entire sale. An appraiser provides an unbiased, official valuation of the home, which is essential for setting a realistic listing price. More importantly, this valuation establishes the property’s “stepped-up basis” for tax purposes, which can save you a significant amount on capital gains taxes later. Think of it as your financial baseline. Without an accurate appraisal, you risk either undervaluing the home and leaving money on the table or overpricing it and scaring away potential buyers. This professional opinion gives you the confidence and documentation you need to proceed.
Analyze the Current Market
With the appraisal in hand, it’s time to look at the bigger picture: the current real estate market in Arkansas. Understanding local trends is key to managing your expectations. A hot market might mean a quick sale, while a cooler market could require more patience. It’s also important to be aware of the costs involved. Selling a home isn’t free—closing costs can range from 8% to 10% of the sale price, and you’ll also have property taxes to consider. If you’re feeling overwhelmed by these potential expenses, especially if the estate has limited funds, exploring our Estate Solutions can provide clarity and financial options to help you move forward without the stress.
Complete Necessary Inspections
Before you even think about listing the property, I always recommend a thorough home inspection. It might seem like an extra expense, but it’s an investment in a smoother transaction. An inspector will identify any hidden issues, from a leaky roof to faulty wiring, that could derail a sale down the line. By uncovering these problems upfront, you have the power to decide how to handle them. You can either make the repairs yourself or adjust the asking price accordingly. This proactive approach prevents last-minute surprises during the buyer’s inspection period and shows potential buyers that you’ve been transparent, which builds trust and can lead to a faster, cleaner closing.
Handle Property Maintenance
Inherited homes often come with deferred maintenance. Maybe the previous owner wasn’t able to keep up with repairs, or the house has been sitting vacant for a while. Addressing these issues is essential. Things like peeling paint, a neglected yard, or outdated fixtures can significantly lower the property’s perceived value and deter buyers. Taking care of necessary repairs makes the home more appealing and can directly impact your final sale price. If the thought of managing and funding these repairs feels like too much to handle, we can help. We connect families with resources and even provide options for a quick cash sale, letting you bypass the repair process altogether. You can contact us to learn more.
Explore Your Selling Options
When you inherit a property, deciding how to sell it can feel like a huge task. There isn’t one “right” way to do it; the best path depends entirely on your family’s goals. Are you aiming for the highest possible price, or is a fast, simple sale more important? Understanding your options is the first step toward making a choice that feels right for your situation. Let’s walk through the most common ways to sell an inherited home in Arkansas so you can weigh the pros and cons of each.
Work with a Real Estate Agent
Hiring a real estate agent is the traditional route, and for good reason. A great agent understands the local market, handles the marketing, and negotiates on your behalf to get a competitive price. They manage showings and paperwork, which can take a lot of pressure off you during an already stressful time. The main thing to remember is that this service comes with a cost. You’ll typically pay a commission from the sale proceeds, so it’s important to factor that into your financial planning. This path often takes longer, but it can be a solid choice if your top priority is maximizing the sale price.
Sell to a Cash Buyer or Investor
If speed and convenience are what you need, selling to a cash buyer or real estate investor is an excellent option. Investors can often close the deal in a matter of days, not months, because they don’t need to wait for bank loan approvals. A major benefit is that they usually purchase properties “as-is.” This means you can skip the time-consuming and expensive repairs, cleaning, and staging. For families dealing with probate, this straightforward approach can be a lifesaver. Our team specializes in providing these kinds of estate solutions, connecting you with immediate cash buyers to make the process as smooth as possible.
Consider a Property Auction
A property auction is another way to achieve a quick sale. Auctions create a competitive environment that can drive up the price, and they operate on a set timeline, so you know exactly when the property will be sold. This method works particularly well for properties that are in good condition or have unique features that might spark a bidding war among interested buyers. It brings a sense of finality and can attract serious buyers who are prepared to commit on the spot. While not as common as other methods, it’s a viable option if your goal is a fast, decisive sale.
How to Compare Your Options
Choosing your selling method comes down to what you value most. Do you have the time and resources to prepare the home for a traditional sale with an agent to get top dollar? Or do you need to close the estate quickly and avoid the hassle of repairs and showings by working with a cash buyer? Think about your timeline, your budget for potential repairs, and how much hands-on involvement you want. Each path has its own benefits. If you’re feeling unsure about which direction is best for your family, get in touch with us. We can help you understand your options and find a solution that fits your specific needs.
Assemble Your Professional Team
Selling an inherited property can feel overwhelming, especially when you’re juggling legal, financial, and real estate tasks all at once. The good news is, you don’t have to do it alone. Building a team of professionals is one of the smartest moves you can make. Think of them as your personal board of advisors, each with a specific role to play in making the sale as smooth and successful as possible. This isn’t just about hiring people; it’s about creating a support system that understands the unique challenges of an estate sale.
Your team will help you avoid common pitfalls, meet legal deadlines, and protect the estate’s financial interests. They bring specialized knowledge that the average person simply doesn’t have, from understanding Arkansas probate law to calculating complex tax implications. With the right people in your corner, you can focus on making clear-headed decisions instead of getting bogged down in confusing paperwork and procedures. This allows you to honor your loved one’s legacy without the added stress of trying to become an expert in four different fields overnight. Let’s break down who you need on your team and exactly what they’ll do for you.
Real Estate Attorneys
A real estate attorney is your legal guide through this process. Selling an inherited home isn’t a typical transaction; it’s tied to the probate court and specific Arkansas inheritance laws. Your attorney will review all contracts, prepare legal documents, and ensure the sale complies with every requirement. They are especially crucial for interpreting the will, handling any disputes among heirs, and making sure the title is transferred correctly. Having an expert manage the legal details gives you peace of mind and protects the estate from potential liabilities down the road. We work closely with legal experts and can help you find the attorney information you need.
Tax Professionals
The financial side of selling an inherited property can be tricky, and that’s where a tax professional comes in. They can explain the tax implications, like capital gains tax, and help you understand how the property’s “stepped-up basis” affects what you might owe. This is not something you want to guess on. A tax advisor or CPA will help you plan accordingly, ensuring there are no surprise bills from the IRS after the sale closes. They can also help prepare the final tax returns for the deceased and the estate, making sure all financial matters are settled correctly. You can find answers to common financial questions on our Probate FAQ page.
Property Appraisers
Before you can decide on a selling price, you need to know what the property is actually worth. A professional property appraiser provides an official, unbiased valuation of the home. This appraisal is critical for a few reasons. First, it establishes the fair market value, which is your starting point for setting a list price. Second, this value is used for tax purposes to determine the stepped-up basis at the time of the owner’s death. An accurate appraisal ensures you’re pricing the home competitively without leaving money on the table, and it provides the official documentation you’ll need for the estate’s records.
Title Companies
A title company plays a vital role behind the scenes to ensure the sale can legally proceed. Their job is to research the property’s history and confirm that the estate has the clear right to sell it. They search for any hidden issues, like outstanding mortgages, contractor liens, or other claims against the property. If they find any problems—known as “clouds on the title”—they must be resolved before the sale can be finalized. This protects both you and the buyer from future legal disputes over ownership. Finding the right estate solutions often starts with ensuring the property has a clear title.
How to Handle Common Challenges
Selling an inherited property often comes with a unique set of challenges that go beyond a typical real estate transaction. From tangled legal paperwork to the weight of emotional ties, it’s easy to feel stuck. But you don’t have to face these obstacles alone. Understanding these common hurdles is the first step toward overcoming them, and there are straightforward solutions available to help you move forward with confidence. Let’s walk through some of the most frequent issues and how you can handle them.
Clearing Title Issues and Liens
Before you can sell an inherited property, it needs to have a “clear title.” This means there are no outstanding legal claims or debts, known as liens, against it. These could include an unpaid mortgage, property taxes, or a contractor’s lien for work that was never paid for. Any of these issues must be resolved before the sale can close. A good first step is to run a title check with the local county clerk. If you uncover any problems, don’t panic. This is a common situation, and our team specializes in finding estate solutions to help clear titles, even in complex cases, so you can proceed with the sale.
Addressing Outstanding Debts
It’s very common for an inherited home to still have a mortgage or other debts attached to it. These obligations don’t disappear and must be settled as part of the estate administration. Typically, the proceeds from the home’s sale are used to pay off the remaining mortgage balance and any other estate debts. For many families, managing mortgage payments on a second home while it’s on the market can be a significant financial strain. This is where selling quickly to a cash buyer can be a huge relief, as it allows you to settle debts without months of uncertainty. You can find answers to more questions about handling estate finances in our Probate FAQ.
Managing the Sale Timeline
The probate process has its own schedule, which can make selling a house more complicated than a standard sale. The person in charge of the estate—the executor or administrator—usually needs to get court approval before listing the property. This is especially true if the sale is necessary to pay off the estate’s debts or to fairly divide assets among the heirs. While waiting for the court can be frustrating, it’s a required step to ensure everything is handled legally. Working with an experienced probate attorney is key to keeping the process on track and avoiding unnecessary delays. We can connect you with trusted legal experts through our attorney information resources.
Working Through Emotional Hurdles
Selling a home filled with memories of a loved one is often the hardest part of this process. It’s more than just a building; it’s a place of personal history, and letting it go can be emotionally taxing. The stress of cleaning out personal belongings, making repairs, and staging the home for showings can feel overwhelming while you’re grieving. Choosing a simpler sales process, like working with an investor, can give you the space you need to focus on what matters. It removes the pressure of a traditional sale and allows you to move forward on your own terms. If you’re looking for a less stressful path, please contact us to discuss how we can help.
Follow These Steps to Finalize the Sale
Once you have a handle on the property and your responsibilities, you can move toward the final sale. This part of the process involves a few key stages, from valuation to closing the deal. Taking it one step at a time will help you feel in control and make informed decisions that honor the estate and its beneficiaries. Think of this as your roadmap to the finish line, helping you complete your duties with confidence.
Assess the Property
Before you can list the property, you need to know what it’s worth. The best way to do this is by getting a professional appraisal. An appraiser will give you an official valuation, which is essential for setting a fair market price and for tax purposes. This isn’t just a suggestion; it’s a foundational step that informs your entire selling strategy. A clear, professional valuation protects you and the estate, ensuring you meet your fiduciary duties and start the selling process on solid ground.
Gather All Documents
Getting your paperwork in order is a non-negotiable step. You’ll need a file with several key documents ready to go. This includes the death certificate, the court document proving you have the authority to sell (Letters Testamentary or Letters of Administration), property title records, and recent property tax statements. You will also need your photo ID and a seller disclosure form, which informs potential buyers about the home’s condition. Having these items organized will prevent delays and show buyers you’re prepared. Our Probate FAQ can help clarify any terms you’re unfamiliar with.
Choose Your Sale Method
You have a few paths you can take to sell the property, and the right one depends on your goals for speed, convenience, and price. Working with a real estate agent gives you market expertise and negotiation support, but it comes with commission fees. For a faster, more straightforward process, you might sell directly to a cash buyer or investor. This option often means a quicker closing with fewer hassles. An auction is another alternative, though less common. We provide estate solutions that include connecting you with immediate cash buyers to simplify this choice.
Finalize the Transaction
Closing the sale of a property in probate has a few extra layers of complexity. As the executor or personal representative, you will likely need the probate court’s approval to finalize the sale. This is especially true if the money from the sale is needed to pay off estate debts or to be distributed among the heirs. Working with a knowledgeable attorney is crucial here to ensure every legal box is checked. They will help you file the correct petitions and get the court’s permission, making the final transaction smooth and legally sound.
Related Articles
- How to Sell Inherited Property in Arkansas
- Arkansas Probate Tax Advice: A Practical Guide
- How to Sell Probate Property in Arkansas: A Simple Guide
Frequently Asked Questions
Can I sell the house before the probate process is complete? Generally, you need to wait for the court to grant the estate’s executor or personal representative the authority to sell. The probate process is what legally confirms who has the right to manage and distribute the deceased’s assets, including the house. While you can start preparing for the sale by gathering documents and getting an appraisal, you typically cannot finalize a transaction until the court gives its approval.
What if the house needs a lot of repairs and we don’t have the money to fix it? This is a very common situation, and you absolutely have options. Many families don’t have the extra funds or time to manage extensive renovations on an inherited property. Instead of taking on that burden, you can choose to sell the house “as-is” to a cash buyer or investor. This allows you to bypass the entire repair process and sell the home in its current condition, which can be a huge relief both financially and emotionally.
How is the selling price for an inherited home decided, especially if heirs disagree? The first step is always to get a professional appraisal. This provides an unbiased, data-backed valuation of the home’s fair market value, which serves as a neutral starting point for everyone. If heirs still can’t agree on a listing price based on the appraisal, it may be helpful to consult with a real estate attorney or a mediator. They can help facilitate a productive conversation and guide everyone toward a price that is fair to the estate and all beneficiaries.
Will I have to pay a lot of taxes when I sell the property? Many people worry about this, but you might owe less in taxes than you think thanks to a rule called the “stepped-up basis.” This means the property’s value for tax purposes is adjusted to its fair market value at the time you inherited it, not the original purchase price. You only pay capital gains tax on the profit made above that new value. If you sell the home relatively quickly, the sale price is often very close to this stepped-up value, resulting in little to no taxable gain.
What happens if there’s still a mortgage on the property? An outstanding mortgage doesn’t just disappear; it becomes a debt of the estate that must be paid. The most common way to handle this is to use the proceeds from the sale of the home to pay off the remaining loan balance at closing. The title company will ensure the lender is paid directly, and any remaining funds are then distributed to the estate and its heirs.