Probate sales can be a great way to pick up a property for a fantastic price, but they can also be confusing for even the most seasoned real estate veterans. There are many moving parts when it comes to this type of real estate transaction, so today, I wanted to discuss how probate sales work. Of course, working with an expert real estate agent will be your biggest asset if you find yourself falling in love with a home that is being sold through probate. Here is some additional information to consider.
What is a Probate Sale: When someone passes away, the executor or administrator may need to sell a piece of real estate to liquidate and distribute the assets of an estate to the survivors. In this instance, a real estate agent who is versed in probate law will help list the property for sale and help to market it. Interested buyers will have to issue a 10% deposit upon making an offer on a probate property, although the final sales price is not agreed upon at this time. It is typical for probate properties to end up at auction on a final court date where the initial potential buyer may bid on the property with other interested parties. Their deposit would be returned should they not win the auction.
If you’re still interested in possibly purchasing a probate property, here are some additional things to keep in mind:
- Hire An Experienced Probate Agent: Not all real estate agents are versed in probate sales, and you will need someone who knows what they’re doing with this kind of transaction since it’s not the same as a typical real estate sale. Working with an agent who knows probate can also help you during the bidding process.
- Keep In Mind the 10% Deposit: As you’re looking at probate properties, keep in mind that you will need to put down a 10% deposit if you decide to make an offer. This is generally done through a cashier’s check. And be prepared for this money to be held onto for a lengthy period of time, that is until the court date when a winning bid is confirmed. Once you make an offer on the property, the published list price will be changed to reflect your offer, which becomes a waiting game.
- When Is the Court Date?: The court date is established after the first buyer’s offer is submitted and approved. This can be anywhere between 30 to 45 days later. The property will continue to be marketed during this time, and other offers will be accepted along with the 10% accompanying deposits. In states like California, buyers can raise their bids between offers, so make sure you work with an agent who knows the laws and intricacies.
- Show Up For the Court Date: Be prepared to show up in person for the established court date along with all of the other potential buyers who submitted offers and had them accepted. This is where the auction will occur, and others may try to outbid you. Only the winner will pay the 10% deposit, and all other parties will have them refunded. If you are the winning bidder, make sure you have your funds in order for the property to avoid losing your deposit.
- Quick Escrow: Probate sales have very quick escrows that start ten days after the court sends out the Order Confirming Sale. There may be a timeline delay between the court date and receiving this signed document of between 3-4 weeks, but again, it’s essential to make sure your funding is lined up to avoid any issues.
- Probate Sales Are Sold “As-Is”: Homes sold in probate are sold “as-is,” which means you should pay for an inspection. This can help avoid any major surprises later on, like foundation problems that can be costly.
I’m a local real estate professional with decades of experience in the Pasadena area. I am available to assist you in buying or selling a home, so please contact me if you would like to schedule a time to discuss your needs. 626-714-6808