Guide To Buy Probate Homes For Sale
Are you curious about how to buy probate homes fro sale? You might be dreaming of a Granny Home selling for cheap in a primo neighborhood.
There are a few different ways to sell a home after the owner dies. The most common method is a house sold in a living trust, but today we will discuss a house that sells from probate with court confirmation.
Table Of Contents
- What is a probate sale
- Not all probates are created equal
- Are probate homes a deal
- Tell me how to find a Glendale CA probate homes for sale
- Do I need all cash to buy a probate home?
- How do I get my offer on a probate home accepted?
- What happens once my offer on a probate home is accepted?
- What is an overbid on a probate home?
- What happens at the court confirmation hearing for a probate home?
- What happens if I am the winner of the probate home for sale?
- Important Stuff To Consider when Buying A Probate Home For Sale
What is a probate sale?
A probate sale happens when a person dies without creating a Living Trust for their assets. When this happens the house is sold from probate and there are still Glendale Ca probate homes for sale that need court confirmation as part of the sale process. The process notifies anyone who might be interested (potential buyers) or have an interest (potential heirs) to “speak now or hold your peace”.
It is not, however, a process designed to sell a home for maximum value. For the bold and informed buyer, buying a home that requires a court confirmation may be an excellent opportunity.
Not all houses sold from probate are created equal
There are several situations where the home of a deceased person is sold and the process is nearly identical to a normal sale (no court confirmation is required). We are not addressing these situations in this article.
This article is about a home being sold in probate where a court confirmation hearing is required.
Is buying a house from probate a good deal?
List price is set by a court-ordered appraisal and the listing agent. If a court confirmation is required, the list price is usually lower than “market”. Don’t get too carried away! The entire process is designed to make sure the property is sold for a decent price. The process is a lot longer, the buyer can get beat out at the last minute and there are no repairs or contingencies.
Few buyers have the stomach for the court confirmation process. And this is the opportunity. While there is little chance of a “steal”, a decent to good deal is often within reason.
Tell me how to find probate properties.
All Glendale Ca probate homes for sale are listed on the Multiple Listing Service and syndicated to internet portals like Zillow and Realtor(dot)com. Remember, the purpose of the court confirmation process is to ensure all interested parties know about the sale and have a chance to speak.
Do I need all cash when buying a probate property?
It is possible to use a mortgage just as in any other purchase, but there are no contingencies.
This means that if your offer is accepted but you are unsuccessful in securing the mortgage you will lose your 10% deposit.
How do I get my offer on a probate home accepted?
The law says the home must sell for at least 90% of that court-appointed appraisal value. Assuming the list price is that value, your offer must be no less than 10% off that price. However, all bets are off if there are other buyers making an offer.
If there is no competition from other buyers, do a little math. Your number should be just high enough that the “overbid” amount is unattractive to potential competitors.
The judge favors buyers who understand buying a house from probate, so include the following in your offer:
- Offer to deposit 10% of the offering price into escrow upon acceptance
- Have your inspections completed or waived
- Demonstrate funds for an all-cash transaction or include a strong pre-approval from a reputable lender
- Indicate your understanding and acceptance of the court confirmation process and timelines
- Indicate the deposit is non-refundable unless outbid by a competing offer.
What happens when my offer is accepted on a probate home?
The administrator will take your non-contingent offer to the court and ask for a confirmation hearing date. This can be as short as 30 days, but 60 is more likely.
The court wants to ensure that everyone who is buying a house from probate are given a chance to submit a bid. The listing agent is required to continue marketing efforts during this time.
What is an overbid on a probate home?
The list price is now the official overbid amount. The formula for this amount is set at 10% of the first $10,000 plus 5% of the balance.
This means if your accepted bid is $500,000 the advertised overbid amount is $500,000 + $1,000 + $24,500 = $525,500.
Ideally, this price will not be very attractive to competitive bidders buying a house from probate!
What happens at the court confirmation hearing when buying probate properties?
There are three possible situations:
- There are no other bidders. Your original offering price is now the official sales price and you can move forward to close the escrow
- There are competitive bidders and you decide to bow out.
- There are competitive bidders and you enter the process as one of the bidders
The judge will decide on the bid increments based on factors like the offering price and the number of bidders. Increments can be anywhere from $500 to $5,000 or more and will continue until only one bidder remains.
If you are the “last person standing” you must give a personal check to the court for 10% of the overbid amount and you will proceed to close. If you are not the court will return your original 10% deposit in about 10 days.
What happens if I am approved to buy a house from probate?
It takes about 30 days to clear the last of the required procedures and paperwork in order to close escrow and transfer title. During this time you will process your loan (if you have one). Remember, if anything goes wrong with the loan and you cannot close escrow you will lose your 10% deposit.
Important Stuff To Consider when buying a house from probate.
Buying a house in probate can be a better deal than a regular sale, but there are some big cautions to consider.
- There are no disclosures and everything is “as-is” condition
- Do ALL your homework before turning in your deposit.
- 10% deposit is required upfront and held for months
- This deposit is non-refundable! The only way you get it back is if you are outbid at the court hearing
- You are committed to this home until the waiting period is complete
- Your deposit is forfeit if you cancel
- You won’t know if you will get the home, or the final sales price, until the court date
- The waiting is stressful, and so is the court date.
We Can Help
I bought my first Glendale CA home with a probate court confirmation process and it was the most stressful home purchase of my life.
It also turned out to be one of the best purchases of my life. The listing agent was the wise guide who helped me every step of the way.
Buying house from probate?
Call us at 818.482.1885, text at 818.946.0106 or email at kendyl(at)glendalediggs(dotted)com
