Executor Fees for Selling a House: Compensation and Liability Risks

How Executor Compensation Works

Serving as executor is real work — and you're legally entitled to be paid for it. State law and the will determine executor compensation; fee rules differ by jurisdiction.

Examples of fee structures:

• Ohio statutory schedule: 4% on the first $100,000 of the applicable fee base, 3% on the next $300,000, and 2% above $400,000. On a $500,000 fee base, that calculates to $15,000. Ohio allows a 1% fee on the value of real property that is not sold.
• Reasonable compensation (some states): The court determines a "reasonable" fee based on the complexity of the estate, the time spent, and the executor's expertise. Massachusetts law, for example, entitles a personal representative to reasonable compensation.
• Hourly rate (rare): Some courts allow executors to bill hourly, particularly for complex estates requiring professional-level management.

These fees are paid from the estate when allowed, reducing the amount available for distribution. Estate-administration expenses may be deductible on Form 706 or Form 1041, but not both; the executor generally reports compensation as income.

If the will specifies a different fee arrangement (a flat amount, a bequest in lieu of fees, or no compensation at all), that provision generally controls unless the executor petitions the court for statutory fees instead.

The Liability Question

Here's what keeps executors up at night: can a beneficiary sue you for selling the house too cheaply?

Yes. An executor has a fiduciary duty to act in the best interests of the estate and its beneficiaries. Selling property significantly below fair market value — without adequate justification — can expose you to a breach of fiduciary duty claim.

Beneficiaries who believe the executor undersold the house can petition the probate court to surcharge the executor — meaning you'd personally owe the estate the difference between what you sold for and what the property was actually worth.

How to Protect Yourself

The good news: protecting yourself is straightforward if you document everything.

Get a professional appraisal. Before listing the property, commission an independent appraisal from a licensed appraiser. This establishes the property's fair market value and creates a defensible baseline for your pricing decisions.

List at or near appraised value. If you list at appraised value and accept a market-price offer after reasonable marketing time, it's very difficult for anyone to argue you sold too low.

Use a qualified real estate agent. Hire an agent with probate sale experience. Their comparative market analysis, marketing strategy, and negotiation records all serve as evidence that you followed a reasonable process.

Document your decisions. Keep a written record of why you accepted a particular offer — how long the property was on the market, how many offers you received, what conditions influenced the price (needed repairs, market conditions, carrying costs during a prolonged listing).

Notify beneficiaries. Before accepting an offer, notify beneficiaries of the proposed sale terms as required by the will, court order, and local probate law. Documented notice and lack of objection is evidence that the sale was conducted fairly.

Get court approval for below-market sales. If circumstances require accepting an offer below appraised value — a deteriorating property, mounting carrying costs, a soft market — petition the probate court for approval when required or appropriate. A court order can reduce the risk of a later challenge, but does not automatically eliminate every potential claim.

When Selling Below Market Value Is Justified

Sometimes selling at a discount is the right fiduciary decision:

• Carrying costs are consuming equity. If the house costs $3,000/month in mortgage, taxes, and insurance, holding out for a slightly higher offer that takes six months to materialize costs the estate $18,000 in carrying costs.
• Property condition issues. A house needing $50,000 in repairs to achieve full market value may net more from an as-is sale when you factor in repair costs, time, and risk.
• Market timing. In a declining market, accepting today's offer may be better than waiting for a higher one that never arrives.

The key is documenting the analysis — showing that you weighed the options and made a reasoned decision, not that you simply accepted the first lowball offer.

Selling to a Family Member

Executor sales to family members face extra scrutiny. If you sell the house to yourself, your spouse, or another close relative at a below-market price, beneficiaries have strong grounds for a fiduciary duty claim.

If a family member wants to buy the property, insist on an independent appraisal, offer other beneficiaries the right to match, and get court approval for the transaction. Transparency eliminates grounds for complaint.

For a structured approach to managing executor responsibilities around a property sale — including documentation checklists and fiduciary decision logs — our Selling or Keeping the Family Home After Death toolkit walks you through the entire process.