Probate Home Sales Have Their Own Special Rules

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Probate Home Sales Have Their Own Special Rules

Frequently the real estate that had been owned by a person now deceased is made available for sale through a procedure commonly known as a “probate sale.” When this happens a somewhat complex set of rules comes into play, especially, of course, in California.

The personal representative of the estate (also known as the executor or the administrator, depending on the circumstances) may seek purchasers directly or he may list the property for sale with a real estate broker. If the property is listed, the listing period may not exceed ninety days (California Probate Code # 10150(a)). Extensions of up to ninety days each may be granted if needed.

Prospective purchasers often find that things get a bit confusing when an offer is made. Generally, negotiations will be conducted as in an ordinary sale. That is, the offer may be presented to the executor, that person might then issue a counter-offer, there could then be a counter to that, etc. However, even when the executor and the purchaser have come to terms, the deal is still not final.

The estate’s acceptance is subject to confirmation by the court. The executor must petition the court for a hearing date for the purposes of confirming the sale. That is a public hearing, and notice of it is made public. The date set for the hearing will depend on the court calendar.

At the time of the hearing other interested parties may bid on the property as well. The Probate Code sets forth a formula for determining the minimum amount of the first overbid. The first overbid amount must be at least “…10 percent more on the first ten thousand dollars ($10,000) of the original bid and 5 percent more on the amount of the original bid in excess of ten thousand dollars ($10,000) …” [Probate Code #10311(a)(1)]

Suppose, for example, that an executor had accepted an offer of $300,000, and that you came to bid on the property at the confirmation hearing. You couldn’t open by bidding $301,000. According to the formula the first overbid would have to be at least $315,500. (10% of the first $10,000 = $1,000, 5% of $290,000 = $14,500).

After the minimum overbid has been made, there can, of course, be further bids. These are not subject to a formula, and the court may set the bid amounts at that time. For example, the judge can say that he will hear further overbids only in increments of $500.

If there is bidding, and the highest offer is on different terms than the originally accepted offer, the court will not confirm the highest offer unless its terms are acceptable to the estate’s representative. For example, the estate might have preferred and originally accepted an offer that involved credit such as carrying back a long-term mortgage. (It is a myth that probate sales must only be cash to the seller.) If an overbid offer were for cash, it would not have to be accepted. Similarly, if the accepted offer had been for cash and the overbid involved credit.

In general, the probate rules and procedures are designed to bring the best price to the estate. In that regard, the court is granted a great deal of discretion. Even with overbids, the court may disallow a sale, and order a new one, if it feels the price is not appropriate.

The code also directs the court to determine that the property received adequate exposure to the market. Listing brokers of probate sales need to be prepared to show that the property was marketed thoroughly.

There is a very complex set of rules for determining brokerage commissions in the event of an overbid situation, and it would not be beneficial to recite them here — especially because they can be set aside by the court. Brokers need to warily remember Probate Code #10161(a), “…whether or not the agent or broker has a contract with the personal representative, the fee, commission, or other compensation of an agent or broker…shall be the amount the court, in its discretion, determines to be reasonable…” [my emphasis]

It is often thought that probate sales represent the opportunity to find “a steal”. Given the procedures set forth for making such sales, that is highly unlikely.

melting-watch

MARKET WATCH

Single Family Home Activity in the Antelope Valley

In the last 24 hours
06/27/17

New Listings …  29
Sold …  19
Pending …  27
Expd/Wthd/Cancld …  07
Price Increases …  01
Price Reductions …  12
Number of listings* …  971
Average Days on Market …  78
Short sale/pay listings …  20
Equity listings …  794
Bank owned listings …  17
HUD, Corp, Probate and Auction listings …  40
Days of inventory (at the average rate**) …  23.43
Days of inventory (at yesterdays rate**) …  37.35
Actual Number of days of inventory***  …  ∞

View the last 8+ years of data HERE!

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(each will open a new tab)

New Listings on the Market

Closed (Sold) Transactions

Pending Units

Expired Listings

Price Increases

Price Decreases

Total Number of Listings

Days of Inventory 

Average Selling Price

Monthly Selling Price Points
(Price extremes at the end of the month)

Daily Day’s on the Market

Monthly Day’s on the Market

Total Sort Pays

Sold by Month

Total Sales in Last 12 Months

Avg. Number of Solds per Month over 12 Months

 

* Count includes all ACTIVE and CONTINGENT MLS listings
** Assuming no future growth or reduction
*** At yesterdays depletion rate (∞ indicates negative depletion,
inventory would not be depleted at this sales rate)
ALL DATA WAS DERIVED FROM THE “GREATER ANTELOPE VALLEY
ASSOCIATION OF REALTORS®” AND IS DEEMED RELIABLE.
THE CALCULATIONS OF THAT DATA IS THE
RESPONSIBILITY OF DON GOCKEL, REALTOR®

The Homeowner’s Summer Maintenance Checklist

WRITTEN BY REALTY TIMES STAFF

The Homeowner's Summer Maintenance Checklist

New season. New tasks. As summer approaches, make sure your home is set with this home maintenance checklist.

Inspect Your Air ConditionerAs temperatures warm, you’ll want to stay cool. And in order to enjoy the benefits of cooled-air you’ll need to make sure that your air conditioner is running properly. Throughout the winter and spring months it is common for your air conditioner’s condensing coils to get filled up with dust, lint, grass clippings and other debris. This can impair the units function. If you have debris, it’s an easy fix. In most cases the debris can be cleared with a high-pressure spray down from a water house. It’s also important to clear the area around your air conditioner unit. This means no overgrowing vines or shrubbery that can hamper its ability to operate.

Clean Up Your GrillThinking about hosting a few cookouts this season? Not before you clean the grill. If you don’t already have a grill cover, invest in one to keep it protected from the elements throughout the other seasons. Your first task includes scrubbing your grill grate with a wire brush. This should also be done every time you grill, but let’s face it, sometimes it’s overlooked. Next, remove and wash your burner protectors. These can be removed easily. Toss them in a soap-filled five-gallon bucket and get to scrubbing. After that, wipe up the grime from your burners and clean the plates underneath with a wire brush. The plates are also removable. Finally, remove the bottom tray that serves as a collect-all, give it a wash and put all of your pieces back in order. Then, you’ll be ready to throw some steaks on the fire.

Check for PestsMany types of pests thrive in the summer months. Due to summer temperatures, which affects behavior and development of common pests, ample food sources and increased daylight, many house and yard pests thrive throughout these months. But homeowners can prevent pests. First, check moist areas around your home and yard, like the gutters, for example, as these moist areas are hotspots for pest activity. Take a hard look at your home and inspect the outside of your house for cracks, crevices and holes, as these can be used as access points for unwanted pests, large and small. While you may be able to treat and prevent a number of pests, some pests, including wildlife, require special removal. If you suspect an infestation it is wise to contact a specialist or professional, as these trained experts have the skills necessary to properly remove wildlife nuisances.

Wash Your WindowsTake advantage of the warm weather, get outside and wash the windows. Ideally, your home’s windows should be washed twice per year. This task can be simplified and expedited with a squeegee. Instead of rubbing the dust and dirt around in a circular motion, opt for a strip applicator and use a solution of warm water and dishwashing soap. Next, wipe the window clean with a squeegee and clean up your window corners with a dry rag. For multi-pane windows you can customize a squeegee to fit the area by trimming it down with a hacksaw. It’s a simple solution for clean, streak-free windows.