I recently had a prospective buyer inquire about an available listing which was a probate sale.   Probate is a legal proceeding utilized to settle financial affairs such as real estate after death.  Often probate is avoided if the seller had a living trust or title was held as joint tenants or community property with rights of survivorship.  Some probate sales require court confirmation, others do not.  If the sale does not require court confirmation it isn’t too different from a “typical” sale.

Probates requiring court confirmation:

If you make an offer on a probate property which is subject to court confirmation, you could be in escrow for several months or more before you know for certain if the sale will be confirmed.  You will likely pay for and perform an inspection and obtain loan approval prior to your court date. Typically after the buyer’s contingencies are removed, a court date is requested which is usually in 4-6 weeks.  At the time of the confirmation hearing, another buyer may outbid the original buyer. There is a statutory formula for the amount of the first overbid:

It is an additional amount equal to 10% or more, on the first $10,000 and 5% on the amount of the original bid in excess of $10,000. 

For example:  Original bid = $100,000

First overbid must be 10% of 10,000 = + 1,000

5% of $90,000 = + 4,500

First overbid must be = $105,500

If the court receives an acceptable overbid, the court will ask for any additional bids. The judge will usually establish minimum increments as to additional overbids. Generally the terms at the time of overbidding will not allow contingencies (inspection, loan, etc.).   If outbid, the successful over-bidder will be required to execute the bid in writing and usually at this time, present a 10% (cashiers check) deposit. If the court confirms the sale to an over-bidder rather than the original buyer, the original buyer’s deposit shall be refunded.