The Executor may indeed sell the property even though the values have declined since the decedent's death. If a current market value appraisal is made and sale is for that price, then there should not be an issue. Some Executors (or their counsel) in an abundance of caution will want to have the court (or each beneficiary) agree that this lower value is acceptable.
As an aside, the decrease in value since the date of death may be a tax boon for the beneficiaries as any gain (or in this case loss) as to a beneficiary's share may be claimed on their personal taxes. Depending on other factors (such as income tax bracket and other taxable transactions) everyone might find this to be an unexpected benefit of the lower value. The accountant preparing the estate's tax return (Form 1041) should be able to discuss this more with the Executor who thereafter should share the information with the beneficiaries. Beneficiaries should discuss this with their own tax advisor too.
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I believe at some point the executor's duty to close the estate overtakes the duty to get any particular price for the property. If the property is sold in a down real estate market the heirs get their cash and if they choose can use that money to buy property at a low price. On the other hand, some heirs may need their money now because they are hurting financially during the "Great Recession."
I think the heirs who want the property sold now or reasonably soon should talk to a local probate attorney who will know how the probate judge in charge of this case thinks. However, as a general rule, the executor has a duty to close out the estate, not keep real estate for years based on the hope of a rise in property values.
As noted, the Executor may have an overriding obligation to settle the estate once the administration exceeds a reasonable amount of time, but closing the estate does not necessarily require the sale of the property. Depending upon the circumstances, it may be in the best interest of the beneficiaries that the property be distributed to them as tenants in common. Ideally - and provided the beneficiaries agree - they would then contribute their fractional interests to a limited liability company which leases out the property to cover expenses and eventually sells the property when the market has improved. While this is not always feasible, this strategy is becoming more common in today's depressed real estate market. In any event, this is just another option to consider.
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