Tips When Selling Probate Property

Tips When Selling Probate Property

  • The Crem Group RE
  • 09/6/23

A California probate property sale can overwhelm even the savviest owners and investors with regulations that seem twice that of a regular residential home sale. The unfamiliarity is understandable, considering probate is not an everyday occurrence for most individuals dealing in real estate transactions.

But even with a probate sale's extended timeline and additional rules and considerations, a little understanding goes a long way to ensuring a successful, stress-free transaction. Let's explore several key aspects of California's probate process and tips when selling a probate property.

What is probate?

Probate is the court-supervised legal process for verifying and lawfully executing a deceased individual's (or decedent's) will. The probate process is often avoided with proper estate planning while an individual is alive, including creating a will with a named beneficiary or setting up a trust. However, even in cases where a will is present, probate may still be necessary, with a representative, called the administrator or executor, being chosen to oversee the process under the Independent Administration of Estates Act (IAEA).

What is a probate property sale, and how can selling probate property be advantageous?

Probate property is any property or asset, including both personal and real property, owned by and included in a decedent's estate. A probate property sale involves the sale of the decedent's real property.

Effectively, a house and the land on which it sits are real property, while all movable items are considered personal property. For example, a home's built-in HVAC system is real property as it is a structural and integral part of the residence. Kitchen appliances and furniture are considered personal property.

In California, a decedent's real property can transfer without the need for official probate proceedings if an estate's total value is less than $184,500 or if the property has a named beneficiary or if the title has someone else's name on it, such as a spouse or domestic partner (community property).

Selling probate property can be advantageous for a variety of reasons. Foremost, it allows the executor of the estate to settle any debts and distribute the remaining assets to any of the decedent's beneficiaries more quickly. A probate property sale also simplifies the administration of the estate, which, in many cases, makes it easier for involved parties to understand their rights and responsibilities.

Be patient with the timeline, and plan accordingly

The transaction timeline is one of the most significant differences between a probate property sale and a regular real estate transaction. An average home sale in California takes anywhere from 60 days to six months. For a probate property sale, a best-case scenario is from six months to a year, with more complicated probates necessitating upwards of 18 months to two years to finalize the transaction.

Of course, as with any major real estate transaction, an array of variables can influence the overall process and either shorten or prolong the sale. The most important advice here is to remain patient with the process.

Remember that a property sale is just part of the larger probate process. It's a journey that can prove emotionally draining and grants you limited control over the process. Exercising tolerance of the timeframe and staying organized with any responsibilities relating to the sale will promote a stress-free transaction.

Familiarize yourself with the two types of probate authority you'll encounter

Upon entering probate, a court will determine the level of authority for the sale of an estate's real property — full authority or limited authority. Once the type of authority is granted, you can start the process of listing the probate property for sale. Recognizing the requirements for each will help streamline the sales process.

Full authority

Typically given three months into the probate process, grants the probate property sale without court supervision. However, you must follow several key requirements during the sale, including:

  • Interview a qualified probate agent/broker
  • Determine list price (no court limitation)
  • Execute a listing agreement
  • Market the property
  • Execute probate purchase agreement (acceptance of the offer)
  • Distribute Notice of Proposed Action
  • Open estate bank account
  • Close escrow

Limited authority

Given approximately six months into the probate process, limited authority is more closely monitored by the probate court, including the need for court confirmation. While many limited authority processes are similar to a full authority sale — finding a probate agent/broker, listing agreement, marketing plan, Notice of Proposed Action — several deviations, defined below, demand careful adherence to ensure court confirmation of the final transaction.

  • Determine list price: The final sales price of a limited authority probate sale must be within 90% of the property's appraised value

  • Notice of Sale: During the property's marketing, a "Notice of Sale" must be published at a minimum of three times over a period not less than 10 days before the sale; the third publication must be at least five days after the first

  • Report of sale and petition for an order confirming sale: Within 30 days of an accepted offer, a Report of Sale and petition for court confirmation must be submitted to the court

  • Court hearing and over-bidding process: The sale is open to overbidders during the court confirmation hearing, who, with a cashier's check of 10% of the minimum bid amount, can secure the final sale without contingencies.

  • Court order: Approximately 15 days after the confirmation hearing, the court issues a Sale Confirmation Order triggering the escrow closing.

Understand the specifics of the Notice of Proposed Actions

The Notice of Proposed Actions is a critical component of the probate process. It serves as a written notification to the heirs or beneficiaries (or any other interested parties) of the actions being taken on a decedent's estate. By law, the notice must be sent via mail (or electronic means if all parties agree) 15 days before the action referenced in the notice occurs.

A Notice of Proposed Actions provides the interested parties in a probate sale an opportunity to object to the sale. Should they oppose, a full authority probate sale will then be remedied under the supervision of the court and follow the limited authority process. To streamline the property sale, you don't have to provide a Notice of Proposed Action to any interested party who has consented, in writing, to the proposed action or who has waived, in writing, the right to a notice of proposed action.

Basic property listing and sales requirements still apply

Regardless of the intricacies of probate law and the probate authority you encounter, the property at the heart of any probate sale is exactly that, a property for sale. As such, many of the steps and procedures involved in selling residential real estate still apply if you hope to secure the best possible outcome for the probate sale. Key aspects to remember:

Prepare the property for sale

  • Inspect the property: A thorough inspection is essential for identifying any necessary repairs or improvements.

  • Stage it wisely: A well-staged property makes a strong impression on potential buyers, leading to a faster sale at a higher price.

Price appropriately

  • Do your research: Identifying comparable properties in the area and understanding the local market will help you set an accurate and potentially lucrative list price.

  • Avoid overpricing: Pricing too high can deter potential buyers, so it's wise to be realistic with the asking price.

Market effectively

  • Create an appealing listing: High-resolution images, virtual tours and professional videos, and engaging property copy will attract a broad range of potential buyers.

  • Utilize various channels: Widen your reach with a multichannel marketing plan that includes online listing services, social media visibility, and a dedicated website and landing pages.

What to disclose to buyers

The short answer is as much as possible while ensuring the property contract includes an "as-is" clause. Regarding property disclosures in real estate transactions, California's is one of the lengthiest such lists in the country. To keep a probate sale on track, the more you can disclose, the better you are protected from liability or future claims issues.

Transparency is vital during disclosures as you may not be familiar with the probate property and cannot accurately report any deficiencies. To avoid the appearance of glossing over a property's less appealing traits, order a pre-sale inspection to identify problems, tackle easy-to-address items, and disclose the rest.

Connect with a trusted team of experts

The probate journey is not one to take lightly or to take on alone, especially when it involves the sale of real property. Full of legalese and seemingly endless regulations and procedures, a probate property sale is equal parts complex and challenging, if not also time-consuming and extremely stressful. A seasoned probate real estate broker can help you navigate the myriad details of your sale and lift a considerable burden from your shoulders.

With expertise in probate, conservatorships, trusts, bankruptcy, and receiverships, and hundreds of satisfied clients, The CREM Group has the knowledge and experience to help guide you through the probate real estate process. The CREM Group's proven track record of success in dealing with these hyper-specific sales in the real estate markets of Los Angeles, Orange County, and the surrounding areas will ensure your probate experience is highly successful.

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