Why you might want a probate sale with court confirmation.

In this article, we will look at why you should sell your inherited property through a court confirmation sale. Note, that this is a type of sale that you would use while the property is still in the name of your deceased relative.

If you are about to inherit property in Bakersfield that you wish to sell, contact me to discuss your best options. You may want to sell the home prior to inheriting it to avoid capital gains taxes. You may want to sell the home in probate to avoid being responsible for a vacant home during the probate proceedings. There are many reasons you may want to sell your inherited property before you inherit it. Call me. I am Bakersfield’s probate home sale specialist.

Court confirmation sales

Articles generally focus on the “great prices” that can be found in court confirmed probate sales, but there is another side. The court confirmed sale can actually be better for the home seller in some situations.

Everyone boasts that a court-confirmed sale is a great place to purchase properties at a discount1Babich, How Does a Court Confirmed Probate Sale Work in Real Estate? (Aug 14, 2019) https://listwithclever.com/real-estate-blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate/; Desimone, How Does a Court-Confirmed Probate Sale Work in Real Estate? (Jan 26, 2012) https://www.zillow.com/blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate-70702/; DeSimone, 7 Things To Know Before Closing A Deal On A Court-Confirmed Probate Sale (Jan 27, 2012) BusinessInsider.com https://www.businessinsider.com/personal-finance/7-things-to-know-before-closing-a-deal-on-a-court-confirmed-probate-sale-2012-1, but few write about the advantages to the seller. Probate is the process that the court uses to fairly distribute a deceased person’s belongings.2The Sanborn Team, Frequently Asked Questions (2020) https://www.sanbornteam.com/probate/sell-probate/frequently-asked-questions/ “Court confirmation exists so that heirs or debtors cannot be taken advantage of.”3Rosdail, Sales with Court Confirmation (Oct 26, 2018) https://www.jenniferrosdail.com/courtconfirmation/, emphasis added.

Some people believe that probate is not necessary when there is a Last Will and Testament. Probate occurs even if the deceased has a will. If there is a will, the probate court will ask the parties to prove that the will is valid and the most recent version of the document that reflects the decedent’s final wishes.4The Sanborn Team, Frequently Asked Questions (2020) https://www.sanbornteam.com/probate/sell-probate/frequently-asked-questions/. Call me for a free evaluation of your inherited property to determine if probate is right for you.

A court confirmation sale is required when the Administrator lacks “full authority.”5Prob. Code, § 10308; Aronsohn, Court Confirmation (Feb 27, 2017) https://asprobaterealty.com/blog/court-confirmation However, an Administrator with “full authority” may ask the court to confirm the sale anyway.6Aronsohn, Court Confirmation (Feb 27, 2017) https://asprobaterealty.com/blog/court-confirmation Before we talk about why you might want to request a court confirmation sale when you don’t need one, I will give a brief overview of the process.

The court confirmation sale process

The process isn’t so different from a “normal” real estate sale. Except for the confirmation hearing, it is almost exactly the same.

The process occurs much like a regular real estate sale until the first offer is received and accepted. You sign a listing agreement with a real estate agent. The agent markets the home on the multiple listing service (MLS), and buyers tour the home to decide if they wish to buy it at full market value. Just like a regular sale, the buyers will make offers and the seller will select one.

Unlike a regular sale, when the seller accepts a buyer’s offer, the seller’s acceptance is conditioned upon the court’s approval or confirmation.7Desimone, How Does a Court-Confirmed Probate Sale Work in Real Estate? (Jan 26, 2012) https://www.zillow.com/blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate-70702/

Once the seller accepts an offer, the court sets a date to confirm the sale, and at the hearing, potential buyers bid up the price of the house until the final buyer is selected.8Desimone, How Does a Court-Confirmed Probate Sale Work in Real Estate? (Jan 26, 2012) https://www.zillow.com/blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate-70702/ The court-scheduled hearing will be at least 30 days after the seller accepts the original offer.9DeSimone, 7 Things To Know Before Closing A Deal On A Court-Confirmed Probate Sale (Jan 27, 2012) BusinessInsider.com https://www.businessinsider.com/personal-finance/7-things-to-know-before-closing-a-deal-on-a-court-confirmed-probate-sale-2012-1.

Once the court finds the highest bidder and finalizes the court order that confirms the sale, the county recorder records the court order.10Prob. Code, § 10314. This puts everyone on notice that the sale occurred under court supervision and protects the seller against claims of trying to cheat the other heirs out of money that was rightfully theirs.

Bidding in a court confirmation sale

The court confirmation process includes a type of bidding that ensures the highest possible price for the house out of available buyers.

Court-confirmed sales occur in an auction-style format.11Babich, How Does a Court Confirmed Probate Sale Work in Real Estate? (Aug 14, 2019) https://listwithclever.com/real-estate-blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate/. The court’s role is to ensure that the house sells for a fair price.12Desimone, How Does a Court-Confirmed Probate Sale Work in Real Estate? (Jan 26, 2012) https://www.zillow.com/blog/how-does-a-court-confirmed-probate-sale-work-in-real-estate-70702/ And, the court attracts potential buyers (and thus potentially drive up the purchase price) by requiring public notice of the confirmation hearing.13Prob. Code, § 10300.

“From [the acceptance of the first overbid], the judge will raise the price incrementally, and each bidder will agree to the new price, or drop out. The judge has full discretion on what those increments will be. This raising of price and asking for agreement from bidders will continue until only one bidder is standing. The winning bidder delivers a non-refundable Cashier’s Check in the amount of 10 percent of the sale price to the Estate then and there in the courtroom.”14Aronsohn, Court Confirmation (Feb 27, 2017) https://asprobaterealty.com/blog/court-confirmation. The bidding process is described in the California Probate Code, Division 7, Part 5, Chapter 18, Article 6; also referred to as Probate Code sections 10300 through 10316.

Through this process, the seller is protected from lowball cash offers, because the court is unable to confirm a sale for less than 90% of the appraised value, and the court has an auction style-bidding that gets the price as high as possible.15Prob. Code, § 10309; Prob. Code, § 10311 (the judge must ask all buyers if they are willing to accept a higher price as defined by statute) The seller is also protected from any person who objects to the sale, because the court limits the amount of time those people have to make an objection.16Prob. Code, § 10310. Objectioners must object to the court before the confirmation hearing or forfeit their right to be heard.17Prob. Code, § 10310.

In Review: Top Reasons to ASK for a court confirmation sale

You may have caught it while reading the article above, but if you didn’t, here are the bullet points. A court confirmed sale:

  • …protects the estate’s Administrator from claims that the Administrator tried to unfairly profit from the sale. Because the court is involved, no person can say that the Administrator unfairly sold the home for less than the home was worth or to a friend who would flip the home for a huge profit.
  • …ensures that the home is not sold too cheaply. People selling inherited homes often are taken in by all cash offers that are ridiculously low. The cash offers seem attractive, because the person making them points to the cost of repairs or the cost of holding the property. Often the new owner is unsure about the true value of the home. The court protects you from these complications and forces a bidding process to get the price as high as possible.
  • …are not as scary as people think. Unlike a short sale, the court confirmed probate sale is never unreasonably delayed. You do not wait for discretionary approval by an independent third party. The court sets a hearing date at the earliest possible time, and the rigid process guarantees approval of a valid offer within that reasonable time.

Court confirmed probate sales take a little extra time, but with the right realtor, they actually can be quite simple. If you’d like to have a realtor who specializes in Bakersfield probate sales, then call me, Jared Clemence. I will be happy to just talk to you about your situation, because probate may or may not be appropriate for you. I can help you decide.

If you would like to read more about why you might not want a court confirmed probate sale, then check out my blog for the article highlighting the other side of the coin.