Probate is a legal process that allocates the assets of an individual who has recently passed away. Probate can include paying remaining debts, identifying legal heirs, and distributing the deceased’s belongings to their beneficiaries. In California, the probate process can sometimes involve an overbid, meaning that interested parties have the opportunity to bid on a probate property. An overbid is designed to ensure the probate property for sale is sold for fair market value and that the proceeds are distributed to the appropriate parties.
If you’re interested in purchasing California probate real estate and want to be competitive during an overbid, it’s important to understand how the process unfolds. In this guide, we’ll walk you through how overbids work during probate in California, including common reasons for overbidding and how to calculate a competitive offer, all so you can secure the property you’ve got your eye on.
Understanding the overbid process
In California, the overbid process allows interested parties to bid on a probate property, with the highest bidder winning the right to purchase it. However, there are several reasons why overbidding can occur during probate. The most common is that the initial asking price for the property is lower than its fair market value, encouraging bidders to bid higher in order to secure the property. Additionally, if there are multiple people who are willing to bid on the property, this can drive up the price during the bidding process.
To calculate the overbid amount during the probate process, interested buyers must add 10% of the first $10,000 of the original price plus at least 5% of the remaining amount. So, if the initial asking price for a property were $1,000,000, the minimum overbid amount would be $1,050,950.
Understanding the overbid process is essential if you’re hoping to bid on California probate real estate. By being aware of the common reasons for overbidding and how to calculate the overbid amount, you can be better prepared to submit a competitive offer.
Strategies for being more competitive
In California, the overbid process can be highly competitive, and it’s essential to have strategies to increase the likelihood of coming out on top. So, before you submit an offer, you’ll want to conduct thorough research on the current real estate market in your area to get a sense of the property’s value. You may also want to partner with a real estate team that can provide assistance in buying probate property for sale. Otherwise, you’ll want to research comparable sales in the area, review property assessments, and find out what the initial asking price is.
From there, as with any real estate investment, you’ll want pre-approved financing so your offer can go through without a hitch. Not only that, but pre-approval demonstrates you’re serious about investing and have the means to do so. You may also consider increasing your down payment or deposit amount to demonstrate your commitment to purchasing the property and make your offer more appealing to the seller or estate executor.
A shorter escrow period or waived contingencies can be appealing to estate executors who want to close the sale quickly as well. However, with shortening your escrow period, you’ll want to be sure you’ll still have enough time to do your due diligence before closing. For contingencies, consider waiving the inspection or home sale contingencies if you want to make your offer stand out. Finally, you may want to consider submitting a letter with your bid that highlights your interest in the property and explains why you’re the best candidate for the purchase.
Tips for navigating an overbid
If you’re anticipating an overbid for a probate home, lean on these final tips for easily navigating the process. First, work with an experienced probate attorney or real estate professional. An experienced probate attorney can provide invaluable advice and guidance as they help you understand your rights and responsibilities, navigate complex legal issues, and negotiate on your behalf. A real estate team with experience helping buyers secure probate properties is a smart move as well, especially if they have experience in real estate law.
You’ll want to be prepared for multiple rounds of overbidding, too. The overbid process can be a lengthy one, and it’s not uncommon for there to be a few rounds before a final offer is accepted. Be ready to increase your offer if necessary, and work closely with your lender and real estate team to ensure you’re not bidding beyond your budget.
Then, of course, though it can be tempting to continue bidding on a property you love, it’s necessary to know when to walk away. Always make your budget and the property’s actual value your top priorities when considering whether to continue bidding or look elsewhere.
Find success during the probate overbid process
Navigating the overbid process during real estate probate in California requires a thorough understanding of what’s involved, the current market, and how to put in a competitive offer. Though there are elements of the process that are similar to those of any other real estate investment, overbids can be tricky to navigate without professional assistance. If you're looking for expert help as you take on the real estate probate process in California, hire The CREM Group. An attorney-owned real estate brokerage firm that specializes in probate, trust, and partition sales, The CREM Group has years of experience not only in buying and selling real estate but in real estate law as well. They can provide the guidance and expertise you need to make the most of your investment and secure the property you desire. When you’re ready to look for probate property for sale, don't hesitate to contact The CREM Group for more information.