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Selling Homes through Probate in Southern California

Home » Selling Homes through Probate in Southern California

October 15, 2019 Words by The CREM Group

When real estate is left to loved ones, it often is not just designated for a single named beneficiary. Many families leave a home or other property to all children to be divided equally. During probate, the estate’s executor commonly will sell this property and distribute the profits among the beneficiaries. Selling property through probate in California is a bit different than selling a home you own outright, which you must take into consideration when listing and negotiating a sale. The process of selling California property through probate is a bit more complicated than selling property under any other circumstances.

Selling California real estate (real property) through probate takes place through a process that you can see as a series of court-regulated steps. The California law makes it complicated, and to be done right the first time, the steps along the path must be managed and monitored. Documentation is specialized, and deadlines are unforgiving. In the case of probate, the court’s supervision must be honored throughout the marketing, offers, negotiations, and final sale of the property.

The Good: The courts protect people from entering a contract without all the proper clearances (e.g., selling before ownership is established.) The Bad: If you or your real estate agent makes a mistake, the consequences are more severe when compared to selling real estate under normal circumstances. The Ugly:When the time line is stretched, the property sits vacant. An uninhabited property comes with its own set of risks: vandalism, property insurance lapse, squatters, etc.

You Need a Professional Cast

In addition to the courtpersonnel, the sale generally involves the estate ‘s Executor or Administrator, the attorney who represents the estate, a [probate] real estate agent working on behalf ofthe seller (the estate), one or more buyers who submitbids for the property tothe court, and the buyers’ real estate agent/broker. Each of these individuals must follow the guidelines and adhere to court’s deadlines. There are a lot of moving parts and the people must communicate well with one another or the house will not be sold in a timely fashion at the best possible price.

You Should Understand the Language

Probate and trust sales have a vocabulary all their own. The courts use terms that you should know if you’re going to sell something as valuable as a house.(See Our Glossary.)These dealingsalso involve assortedcontracts and disclosure documents that are not used in other types of real propertytransactions. Go to this link to see forms needed in California if you want to be familiar with them ahead of time.

A good probate real estate agent knowledgeable in selling or buying real property through probate will be able to translatethe “legalese.” They will explain each of the forms, and walk you through the steps in the process. Clear communications in a common language are vital.

Good:Knowing the lingo is a good idea because sometimes you might have to explain it to a family member when your probate real estate agent or probate attorney is unavailable.

Bad:Poor communication makes it so people miss court dates or aren’t aware of the importance of a signature, for instance.

Ugly:When another heirs contest the handling of the documents or of the process at any point along the path, there can be harsh words and the familysuffers.

Main Steps in Probate Sales

Every sale is unique. However, the basic steps of the probate and trust sale process, are as follows:

  1. Appointment of the estate Executor or Administrator. In most cases, the decedents will names an Executor who is selected to take care ofthe distribution of all of the assets, including real property. However,when an Executor has not been named, or when the named Executor is not willing to serve, or if there is no will, then the court appoints an Administrator to carry out these duties. It is the Executor or Administrator who has the authority to list and sell the property.

 

NOTE:THE SALE CANNOT PROCEED UNTIL THE EXECTUOR OR ADMINISTRATOR HAS BEEN IDENTIFIED.

  1. As stipulated in the Independent Administration of Estates Act (IAEA), it is the Executor who establishes a list price for the real property. The price will take into account the appraisal by the Probate Referee and is usually determined with the help of a real estate agent who is experienced in probate and trust sales. That agent/broker then lists theproperty for sale.

 

  1. The probate real estate agent/brokeraggressively markets the real property to the public to attract the highest offer. Marketing a probate home generally involves similar approaches to marketing a ‘normal,’ non-probate home, including newspaper advertising, signage, listing on real estate websites, and holding open houses for potential homebuyers and other real estate agents. The probate real estate agent will also schedule appointments to show the property to interested buyerswho inquire directly.

 

  1. While buyers of probate and trust real estate may be seeking a bargain, the State of California courts limit the range of their offers. An accepted offer must be≥90% of the Probate Referee’s appraised value. Once a satisfactorybuyer is found (they have to look good on paper, at least to start),the real estate agent will assist the seller in negotiating terms that are best for the estate.

 

  1. When the property has an accepted offer, a Notice of Proposed Action stating the terms of the proposed sale is mailedto all heirs. The heirs are given 15 days to evaluate the notice and pose any material concerns or objections. If there are none, the sale may continue without a court hearing.

Good:If no one objects, the sale flows through like a gushingriver after aspringthaw.

Bad:If the Executor/Administrator does not have full independent powers under the Independent Administration of Estates Act (IAEA), or if one of the heirs poses an objection to the Notice of Proposed Action, then notice of the sale must be published in a generally distributed local newspaper (unless the will does not mandate such action).

Ugly:When someone misses part of the process or an objection is raised, the home may have to be put on the market again. The attorney for the estate has to apply for a court date (also known as the“confirmation hearing”) when the sale will hopefully be executed. The court date is usually within 30 to 60 days of the date the application is filed. A copy of the application and details about the sale are mailed to all interested parties.

It’s back to limbo, like when escrow falls through on a regular sale. So, after the court date has been set, the probate real estate broker should continue to advertise the home and show the property to potential buyers in the hope of securing an overbid, which willraisethe sale price.

There’s a formula for overbidding and you can see it here on this blog post.

GOOD, BAD, and UGLY

Probate home sales are good if handled by professionals. Probate real estate agents and probate attorneys with lots of experience are your best bet. If someone has an objection, then selling the house can take longer, which is bad. It means more expense for upkeep and maintenance and increases the negativity surrounding a home that has been “sitting too long.” The ugly part of selling probate homes is when the process gets stalled through a missed court date, sketchy paperwork, or unhappy heirs.

 

 

 

Disclaimer: This content is meant purely for educational purposes. It contains only general information about real estate and/or legal matters. It is NOT legal advice and should not be treated as such. We recommend consulting a legal or tax professional before acting on any advice, opinion, or point of view described herein.

 

Testimonials

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

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