Probate and Trust terms you should know...

PROBATE SALES PROCESS

There are many "moving parts" when it comes to selling a piece of property. The property needs to be listed for sale at a competitive price, the property needs to be marketed correctly to attract the right kind of buyer for the home, the buyer needs to lock down a loan (if not paying cash), inspections on the property need to take place...etc!

When selling a property that is in the probate process, things work a little bit differently. There are many court regulated steps that need to take place, and they must be monitored carefully, and deadlines need to be met for things to move along smoothly.

To give you an understanding of this process, here are some of the steps that must take place:

In order for the process to get started an Administrator or Executor of the estate must be appointed. If the decedent left a will, most likely the Executor will be mentioned in that will. The designated Executor is in charge of handeling the assets of the estate, including all real property. If there is not a will, or the Executor named in the will does not want to serve, the court will then appoint an Administrator to carry on those duties. Whoever is appointed Administrator of Executor has the authority to list and sell the real property.

The Administror or Executor can now hire a Realtor (perferably with probate knowledge) to help come up with a price, market, and sell the property. The price should take into account the appraisal that was done by the probate referee (the accepted offer must be at least 90% of the probate referee's appraised value).

The Realtor would then market the property to the public in their best attemp to bring in the highest possible. Marketing a property may differ from agent to agent, but the most commonly used marketing approaches may be by, holding a "Brokers Open" (a open house during the week to bring as many real estate agents to see the property as possible), an "Open House" (on the weekends for the public), posting the property on real estate websites, posting the property on the MLS, taking out an ad in the real estate section of the newspaper, and putting a sign on the property to attract any potential buyer driving through the neighborhood.

Once the property has been marketed and an offer has been accepted, a Notice of Proposed Action (NOPA) is mailed to all the heirs to let them know of the sale. If the Administrator or Executor has Full Authority, and there are no objections to the sale of the property, the sale may proceed without any court hearing, However, if the Administrator or Executor does NOT have Full Authority, OR, if there is an objection to the NOPA, the sale of the property must be published in a local newspaper, and a "confirmation hearing" must be set with the court by the attorney. During this time, potential buyers should still be encouraged to look at the property. The reason being, is because if there is another interested buyer, that buyer can show up to the confirmation hearing and overbid the original accepted offer which raises the sales price of the property.

OVERBIDDING PROCESS

Here is how the overbidding process works:

If there is a buyer who would like to overbid the original offer, that buyer must show up to the confirmation hearing with a cashier's check of at least 10% of the minimum overbid price.

The formula for the minimum overbid is; 10% of the first $10,000 plus 5% of the balance of the accepted offer.  For Example: Lets say the property is listed for $500,000 and we have agreed to accept an offer of $475,000. Here is how we get the minimum overbid price:

10%(.10) x $10,000 = $1,000

+

 5%(.05) x $465,000 = $23,250

$1,000 + $23,250 = $24,250

$24,250 + $475,000 (original accepted offer)= $499,250

So, the minimum overbid would be $499,250, and the overbidder would need to bring a cashiers check for 10% ($49,925). The home would then go to the highest bidder.  Once the bidding process is over, the sales process becomes "normal". The deposit check goes into an escrow account, and the sale should close in 30 to 45 days (or sooner).