Probate Property Sellers Guide
Selling real estate through probate or trust is a court-regulated process with strict deadlines and specialized documentation. It involves key players like the estate's Executor or Administrator, legal representative, estate's real estate agent, buyers, and their agents—all following Court guidelines.
Probate and trust sales have unique terminology, disclosure documents, and contracts. It's crucial for your real estate agent to be well-versed in these processes, ensuring clear communication. Whether you're the seller or buyer, understanding the jargon, documentation, and steps is essential.
Here's a guide of the key steps in a typical California probate or trust sale:
The Executor or Administrator is Named: The decedent's Will designates an Executor responsible for managing asset distribution. If no Executor is named, is unwilling to serve, or there is no Will, the court appoints an Administrator to fulfill these responsibilities. The appointed Executor or Administrator gains the authority to list and sell the property.
The List Price is Set: Per the Independent Administration of Estates Act (IAEA), the Executor establishes a list price for the real property, ideally with the assistance of a real estate agent experienced in probate and trust sales. This price considers the Probate Referee's appraisal and aims to attract potential buyers.
The Property is Listed: The real estate agent actively markets the real property to the public through various means, such as signage, newspaper advertisements, listings on real estate websites, and open houses for agents and potential buyers. The agent also schedules property viewings for interested parties.
Note the Offer Restrictions: Buyers of probate and trust real estate are at times constrained by court-imposed limits. An accepted offer must equal or exceed 90% of the Probate Referee's appraised value. When a buyer is identified, the real estate agent assists in negotiating mutually agreeable terms.
Notice of Proposed Action: After securing an accepted offer, a Notice of Proposed Action is sent to all heirs, outlining the terms of the proposed sale. Heirs have 15 days to review the notice and raise any objections. If no objections are raised, the sale can proceed without a court hearing.
Publication of Sale Notice: If the Executor/Administrator lacks full independent powers under IAEA or if an heir objects to the Notice of Proposed Action, the sale must be publicly announced in a widely circulated local newspaper (unless the will dictates otherwise).
Confirmation Hearing Application: The estate's attorney requests a court date, known as the "confirmation hearing," to execute the sale. This court date typically falls within 30 to 45 days of the application's submission. All interested parties receive a copy of the application and sale details.
Continuous Marketing: Even after setting the court date, the real estate broker should keep showcasing the property and promoting it to potential buyers, with the hope of securing an "over-bidder" and raising the sale price.
Court Confirmation Hearing: During the court confirmation hearing, another interested party may submit a higher bid than the previously accepted offer. In such instances, the overbidding party must appear at the hearing with a cashier's check (personal checks are not accepted) equal to at least 10% of the minimum overbid price.
The minimum overbid calculation is based on this formula: 10% of the first $10,000 plus 5% of the balance of the accepted offer. Your Real Estate Agent will break this number down relative to the listing price of the property.
Escrow and Closing: In cases of successful overbidding, the winning bidder provides a cashier's check to the Executor/Administrator, and escrow is initiated. The escrow process is expected to conclude approximately 30 to 45 days following the court hearing.
See this outline to see a shorter, more general Probate Process.
If you need assistance selling real property through probate, trust, or conservatorship, call The Kaur Gray Group at 951-543-4592 today.