One of the most common questions I hear from families in probate is some version of “Can my brother just buy the house?” or “Can I keep Mom’s house if I pay my sisters their share?” The answer is usually yes, but how it works depends on who wants to buy, whether that person is also the executor, and how the purchase is financed. Handled well, an heir buyout can save the whole family tens of thousands of dollars and keep a house in the family. Handled poorly, it can blow up the estate. This article is part of my complete guide to selling a house in probate in Santa Clara County.
Key Takeaways
Summary: An heir can usually buy the family home from a probate estate at a fair price, while an executor who wants to buy faces strict self-dealing rules. A distribution in kind or a well-structured buyout can save the estate a six-figure commission and may preserve the parent’s property tax base under Prop 19.
From my practice: Here’s why I never let a family treat the probate referee’s number as gospel. On a downtown co-op I sold for an estate, the referee appraised it at $755,000, and the open market paid $679,000 after about two months on the market. If an heir had bought it at the appraisal, they would have paid more than $75,000 over what the market would bear. An open-market test, or a current appraisal from someone who knows the building, is the fairest starting point for a family buyout.
If the Buyer Is an Heir but Not the Executor
An heir who isn’t serving as executor can buy the house much like any outside buyer. The executor negotiates a price, ideally supported by an independent appraisal or broker opinion of value, and the sale goes through the normal probate process. With full IAEA authority, that means a Notice of Proposed Action to all heirs, who can object within 15 days. With limited authority, it means a court confirmation hearing, where an outside buyer could overbid the heir. Families are sometimes surprised by that last point, but it’s exactly how the process protects the other beneficiaries. I explain both routes in IAEA full authority vs. court confirmation.
If the Buyer Is the Executor
This is where families get into trouble. California’s Probate Code generally prohibits a personal representative from buying estate property, because the executor is on both sides of the deal. There’s a path, but it requires court approval, and the court looks closely at whether the price is fair and whether the other heirs have given informed consent. If you’re the executor and want to buy the house, talk to the estate attorney before you make any offer or even suggest a price. Sometimes the right move is for a different sibling or a professional fiduciary to step in as administrator for purposes of the sale.
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The Distribution in Kind Approach
Often the simplest way for an heir to keep the house isn’t to buy it from the estate at all, but to receive it as part of their inheritance. This is called a distribution in kind, and when the heir’s share is worth less than the house, they pay the difference to the other heirs or to the estate. Here is how the numbers might look in a San Jose estate with three siblings.
| Estate | Amount |
|---|---|
| House, appraised value | $1,800,000 |
| Cash and investments after expenses | $300,000 |
| Total estate | $2,100,000 |
| Each sibling’s one-third share | $700,000 |
If Sibling A takes the house, valued at $1,800,000, that’s $1,100,000 more than A’s $700,000 share. The two other siblings each receive $150,000 of the estate’s cash, so each is still owed $550,000. Sibling A pays each of them $550,000, usually from a new mortgage on the house. Each sibling ends up with $700,000 in value. The estate never pays a real estate commission or prep costs, and Sibling A buys the house at its true appraised value without competing against outside buyers.
The exact mechanics, including whether the heir pays the estate or the siblings directly and how the court order is worded, are legal questions for the estate attorney. My job in these cases is usually to help the family agree on a fair value and to make sure everyone understands what the house would realistically net on the open market by comparison.
Agreeing on a Fair Price
The biggest source of conflict in heir buyouts is price. The heir buying the house naturally wants a lower number, and the others want a higher one. The probate referee’s appraisal is a starting point, but it can be months old. What I recommend is that the family agree in writing, before anyone sees the result, to use an independent appraisal or a detailed broker opinion of value from someone who isn’t representing any one sibling. Some families agree to use the average of two. Then compare that value to what the house would net on the open market after commission and preparation, because a buyout at a slightly lower price can still leave the selling siblings better off.
A real example: When there are no good comps, value turns into an argument. On an inherited home that was a manufactured house on its own lot, I split the question in two: what the house was worth, based on three recent manufactured-home sales, and what the land was worth, based on a nearly identical lot a short walk away. That one-page memo pointed to about $1,289,000, and it gave everyone a way to check the math instead of arguing about it. For a sibling buyout, the same kind of written, sourced valuation is what keeps the price fair for the heirs who aren’t buying.
Financing an Heir Buyout
Most heirs can’t pay siblings out of savings, so financing is usually the real constraint. Lenders can finance a buyout once the heir has title or a clear path to it, and some lenders have specific programs for estate and trust buyouts. Getting prequalified before the family agrees on a plan avoids the painful situation where everyone waits months for a buyout that falls through. I ask the heir to talk with a lender in the first few weeks, and I give the family a deadline after which the house will be listed if financing isn’t in place.
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Property Taxes and Prop 19
If the heir will move into the house as their primary residence, Prop 19’s parent-child exclusion may allow them to keep some or all of the parent’s low assessed value, up to the exclusion limit, which is currently $1,044,586 above the parent’s taxable value through February 15, 2027. How the buyout is structured can affect how much of the house qualifies, and transfers between siblings are treated differently from transfers from parent to child. This is a question for the attorney and CPA before the deal is finalized. My Prop 19 explainer covers the basics, and my Prop 19 guide for Silicon Valley families runs the math on a San Jose example.
Capital Gains
An heir who receives or buys the house gets a basis close to its date-of-death value, and if they later sell, their gain is measured from that point. If they live in it for two of the five years before selling, the home sale exclusion may also apply. See capital gains tax on selling an inherited house in probate for how the stepped-up basis works. For the full probate sale process, go back to my guide to selling a house in probate in Santa Clara County.
Sources and Further Reading
- California Courts Self-Help Guide: Property After Someone Dies
- California Probate Code § 10503 (sales under independent administration authority)
- California Probate Code § 10300 (notice of sale for court-supervised sales)
- California Probate Code § 10311 (overbids at confirmation)
- IRS Publication 559, Survivors, Executors, and Administrators
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Run My Numbers →Frequently Asked Questions
Can an heir buy a house from a probate estate in California?
Yes. An heir who isn’t the executor can buy the house at a fair price through the normal probate process, either with a Notice of Proposed Action under full IAEA authority or through a court confirmation hearing.
Can the executor buy the house from the estate?
Generally only with court approval, because California’s self-dealing rules restrict a personal representative from buying estate property. The court looks closely at price and at the other heirs’ consent.
How do you buy out siblings from an inherited house?
A common approach is a distribution in kind, where one heir receives the house as part of their share and pays the difference to the other heirs, often by taking out a mortgage.
Can an heir be overbid on a probate house?
In a court confirmation sale, yes. Outside buyers can overbid the heir at the hearing. Under full IAEA authority there’s no public overbidding, though other heirs can object.
Does Prop 19 apply when a child buys out siblings?
Prop 19’s parent-child exclusion can apply when a child receives the parent’s home and makes it their primary residence, but how the buyout is structured matters. Get advice from an attorney or CPA.
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