Are you thinking about investing in probate sales but need to learn its intricacies? This blog can be of great help as here we will discuss precisely what a probate sale is, how it works, ad how is it different from traditional property sales. So, read till the end and then decide whether buying or selling a probate property is a worthwhile investment.
Rest, learning about the California probate sale process can benefit you in many ways. California is a sunny state with a competitive real estate market. And that’s why investors look forward to earning huge profits through probate or flipping homes in California. If you are also on the verge of investing in California real estate, here are the essential things you should be acquainted with.
What Exactly Is A Probate Sale?
Probate is a legal process of managing a deceased person’s assets and liabilities. A probate sale typically occurs when a person dies without a will to direct the disposal of his/her estate. In some cases, a deceased owner may leave a will, but without a clear indication of who should inherit the property next.
Generally, an estate representative is appointed to deal with probate real estate, with or without a will. An estate executor or administrator is appointed to list a probate property and deal with it till the final closing. Rest, the property is listed and marketed the same way as a traditional sale. All potential buyers make offers on the property, however, the one with the highest offer wins the bid and steps further into the sale process.
It’s worth adding that probate sales are more complicated and lengthy than traditional property sales. So, if you are thinking about investing in probate, keep patience.
How Does A Probate Sale Work?
Although probate laws and regulations differ from state to state, one thing that’s common is that probate is dealt with by an estate executor or administrator. The estate representative is given the responsibility of guiding through the entire probate process and settling the decedent’s property at the final closing.
A part of the probate sale process also requires estate representatives to identify legitimate creditors of the property. And once identified, the executor or administrator must look into ways to pay off the creditors. If required, the representative must take the initiatives to sell off the property and liquidate the assets to clear off debts on the property.
However, to sell the property, it must be listed first. In this case, the executor or administrator is solely responsible to submit a property appraisal report to the probate court so that the court can set a listing price. At this stage, the estate representative should consider hiring probate realtors to list and market the probate property.
Once a prospect shows interest in buying the property and actually makes an offer, the estate executor or administrator must file a petition to the probate court to receive permission on selling the property. Post that, all heirs and beneficiaries of the property are notified about the offer. If no one objects to the offer, the sale process proceeds further.
All potential buyers making offers on the property must be present in court to submit their bids in the probate court. The highest bid wins and the winner immediately needs to pay an advance deposit of a minimum of 10% of the offer price.
How Is A Probate Sale Different From A Traditional Sale?
Probate has some unique features that set it apart from traditional property sales and they are as follows:
Takes More Time: Since probate is a complicated sale process, it takes longer time to close than any traditional property sale. A probate sale is only settled or closed when the court accepts the buyer’s offer and approves the sale.
No Repairs Required: Ideally, probate properties are sold in as-in conditions. And this is one of the top distinctive features of a probate sale. In this process, the seller, that is, the estate representative or legitimate heir chooses not to pay for any upgrades or repairs in the property, mainly because the estate may fail to have enough funds to afford these costs.
Advance Deposit: Unlike flipping homes in California, a probate sale requires a prospective buyer to pay an advance deposit of at least 10% of the offer price beforehand. This is a non-refundable amount, meaning, the buyer would not receive any money on outbidding the offer.
Final Words
Hopefully, this blog helped you learn a lot about probate sales like what is it, how it works, and how is it different from traditional sales. If you have already considered investing in probate properties, ensure to ask yourself what’s more important – buying a house quickly or grabbing a deal that can let you earn lucrative profits. Also, try to keep patience and get prepared for a lengthy waiting period.
