Selling a California house in probate can be challenging and cumbersome, especially if the property has been left unused.
Contrary to what many people think, it doesn’t matter where the owner lived because, after their passing, the location of the property determines which state laws (California) will be followed.
You will need an experienced attorney, executor, and estate agent to deal with the legalities of the matter at hand.
Moreover, filing all the documents in California probate court and finding the highest bidder takes time. Not to worry! We’ll walk you through the process.
Priority Home Buyers
What Is Probate Property California?
When the owner of property dies, it is termed a probate property, and the California estate assets must be transferred accordingly. But how the assets are distributed is not determined by a real estate agent; instead, there is a probate court to look over the probate process.
In other words, a California probate sale determines the validity of claims of individuals to the assets of the deceased person. Like most legal processes, probate sales are a complicated process, and you may want an experienced probate attorney to help sell the house.
The probate process becomes more difficult if there is no original will.
Can You Sell A House In Probate California?
Yes, you can sell a house while in probate in California. But the legal process is such that the proceeds are unlikely to be distributed how you want. When you are the executor of the probate property, you can sell the house to pay for probate costs, provided the real estate wasn’t handed down to a beneficiary in the will.
But this is different from a traditional home sale because after California probate properties are sold, the amount helps pay for real estate debts, service fees, and court costs. The remaining amount is split equally among the beneficiaries by a probate court.
Probate Laws California
The California probate laws make the probate process mandatory so that all assets can be equally distributed to the heirs or family members to settle debts.
But you can also avoid probate by satisfying one or more of the following criteria –
If you can’t fulfill any of the above criteria, then you must follow the probate process. That is still the case whether the deceased has left a will or not (also known as having died “intestate“).
Moreover, when there is no will, an executor might be appointed to discuss how the assets will be distributed. The tricky bit will be keeping up with the timelines of the probate court.
Steps To Follow
To go through the property sale smoothly, make sure to follow the points mentioned in this section.
Step 1 – Filing All Documents
The first step is filing the original death certificate, will, and probate petition in the respective County Court based on where the deceased lived. While there is no deadline within which you must approach the probate courts, submit the documents timely to get court approval.
It is a lengthy process, lasting several months, so get started quickly.
Step 2 – Appointments
Once you file the documents, the probate court appoints a personal representative or executor for the probate property. Usually, the appointed individual is authorized to take suitable action.
Step 3 – Notify
The executor will notify the creditors and heirs about the probate, allowing creditors to submit their claims against the probate real estate.
Step 4 – Assets
It is the job of the executor to take inventory of and secure the assets till the probate is complete. Some assets could be appraised during this time.
Step 5 – Taxes
All tax returns must be filed and outstanding taxes paid.
Step 6 – Dispersion Of Assets
The real estate sale will take place, and all assets will be distributed according to the will. When there is no will, California state laws will be followed.
If following these steps seems complicated, you can contact a probate attorney for help.
How Can You Sell A House In Probate California?
Selling a house in probate is easier said than done, so you will need an experienced real estate agent or or local California investor. For instance, if the house has been left abandoned by the deceased or sat empty for a long time, it might need repairs.
At such times family members are likely to find a hoarding situation and will be worried about selling a probate estate in poor condition. But before that, it’s essential to determine the best time for probate home sales by contacting a probate real estate agent.
Steps For Selling A House in Probate California
To find potential buyers and sell your California real estate at the right price, you must know about these steps.
1. California Court Appointed Administrator or Executor
A person is usually appointed as an administrator or executor if the decedent has mentioned someone in the will and that person accepts the responsibility. When there is no executor, the probate court or other relatives will appoint the closest relative as the executor for the probate case.
2. Probate Property Appraisal
It’s necessary to conduct a property appraisal first. You can find appraisers online or ask your real estate agent to suggest someone, but remember, the home buyer must pay at least 90% of the appraised value.
3. Listing The Property
After that, the property is listed for sale and marketed to find a new buyer. The buyer will know that it’s a probate sale, and they must offer suitable money with a 10% down payment.
Although you can reject the offer on the house, the offer is only valid if it is accepted by the court. The seller can’t commit to the original buyer even if they like the offer.
4. Going To Court
It is the job of the estate representative, in consultation with an attorney, to submit the necessary details to the court detailing the sale. If all parties agree, the court sets a future date to finalize the selling of the property.
5. Notice Of Proposed Action
When the offer is accepted, all heirs will receive an email with the Notice of Proposed Action, which contains details of the sale. Heirs must go through the notice within 15 days and raise objections, if any.
The sale can be completed without another court hearing if there are no objections.
Possible Buyers of Probate Properties California
In this section, we have highlighted 3 possible buyers for probate sales.
A. Cash Buyer
You can contact cash home buyers for a probate sale, as they are similar to house flippers and buy homes in need of repairs. Best of all, they don’t have service fees or real estate commissions, even help pay closing costs.
Apart from major repairs, they help you with unique selling situations, such as buying houses in preforeclosure, lien, bankruptcy, code violations, etc. You can even sell a home in foreclosure and probate simultaneously under the right circumstances to an experienced cash buyer.
Always work to determine the fair market value of the house and find professional cash home buyers with a long record of successful deals.
B. House Flipper
A house flipper buys houses in poor condition, conducting repairs and renovations before selling them to a new family. Selling to a house flipper has its advantages because it’s cost-effective as you don’t have to spend money on repairs.
You can likely transfer ownership of the house to a flipper in the following instances –
- The property is located in an attractive location
- It’s not a historic property
- It’s possible to fix the damages in a few months
- There are no major issues or structural damages
C. Property Investors
Another option is selling the California house to property investors, a mix of cash buyers and house flippers. A property investor buys a house as an investment to fix it, resell it, hold it, or rent it for a fixed time frame.
Such investors are experienced in buying properties in poor condition, provided they have a unique selling point.
Splitting Commission On Probate Sales California
After a California probate sale, the real estate commission is split equally (50-50) between agents representing the seller and buyer. For example, if the total commission from the house sold is 6%, your agent will get 3%.
Out of this 3%, the agent has to further split the commission with the office, which involves a minimum split of 50-50 but can be as high as a 90-10 split. Hence, of the original 6% commission, an agent will only get 1.5%.
But it’s important to remember that most things are negotiable in real estate, and you shouldn’t be hesitant to hire a professional for probate sales because of commissions. An agent can help you negotiate low rates based on the transaction type, frequency of business, and services offered.
For example, a real estate agent who buys and sells a large volume of homes every month might be willing to provide an exclusive offer accompanied by the deal. Such agents even offer a discount when referred by a trusted source.
You further have the option of staging an open house yourself; agents can work directly to secure a buyer. A home buyer can talk to real estate agents about incentives and bonuses that will be paid from the listing agent’s commission or the seller’s.
Probate Sale Overbidding Process California
During the probate sale, the California court won’t approve the original buyer’s offer outright and will allow others to bid on the property. But the new offer must be 5% and $500 more than the original offer.
This will go on, and the judge will welcome new bids, just like an auction, until the highest bid has been made. Once a new buyer has been selected, 10% of the amount will be returned to the original buyer.
When the overbid is accepted, the buyer has to pay 10% of the total money through a cashier’s check. This check is presented to the executor during the hearing by the winning bidder.
After that, the contract is signed, and since there are contingencies attached to the contract, escrow closes within 15 days from the hearing.
How Much Does Probate Cost California?
The legal system is never free, and the least of your worries is the court cost and fees. As per California state law, when there is no will left behind, the process is complicated, and the probate sale could be expensive.
According to the American Bar Association, probate and administration fees can cost 6-10% of the estate. But this is just the preliminary cost, and deductions and liens will also be taken out.
All payments are made for taxes, the funeral, and other debts before the amount left is distributed among the beneficiaries or heirs.
What Are The Common Issues Of A Probate Sale?
Usually, the jurisdiction of a probate sale is confusing, and the probate process is conducted by the state in which the house is located (in this case, California). If the deceased owner possessed properties in other states, supporting administration is further implemented.
The probate process follows the jurisdiction of the state in which the property is present, irrespective of where the deceased lived, or the beneficiaries live. Even when the probate process is ongoing, the executor can accept a buyer’s offer and sell the property.
However, this makes the process more tedious and leads to another issue – you have to monitor the property to ensure state regulations are being followed. The California probate court also has to approve the terms of the sale.
The 2 Types Of Probate Sale in California
The first job of the probate court is to determine whether the probate sale is formal or informal. We have explained both these types in this section for your convenience.
A. Formal Real Estate Sale
A formal probate process necessitates that each step of the real estate sales transaction must be approved by the court. This makes the formal process more lengthy, and it can take over 6 months to complete everything.
It is also essential for the executor to contact a professional attorney for help with the sale. Once the property has been appraised, the executor will file a petition to begin the probate sale.
After the hearing, the court will grant permission to list the home formally as a probate sale.
B. Informal Probate
Informal probate would come into effect if the property were owned by the deceased, along with someone in joint tenancy holding the right of survivorship. This happens when a surviving spouse holds joint ownership of the home, so the property can be sold through informal probate by placing it in a living trust.
In such situations, the process is less complicated for the executor, with the concerned individual filing all the probate forms and original will in court. The court files Letters of Testamentary and, following the submission of other files, lists the property for sale.
It takes place without any bidding, auction, or court interference, which reduces the time taken to find a buyer.
Selling a house in probate in California isn’t too difficult – and after reading this guide, you will know how to begin.
Priority Home Buyers offers effective solutions to help you with the legal process and achieve a quicker resolution (including cash in hand and the ability to move on). We are available for a free consultation 24/7 by phone at 877-775-0988.
We can also help sell an inherited house if you have already made it past the probate process or were fortunate enough to bypass it completely. Things are always easier if the deceased has left behind a will. But still, following California state law, the executor is required to initiate the probate process in court.
Utilizing our in-house probate attorneys and estate agents, we can easily help settle all outstanding payments, like taxes, service fees, etc. If all the steps are followed correctly, the court will conduct a bidding process to find the highest buyer. We’ll be here by your side :)