Probate Court and Overbids

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Probate Court and Overbids

Dear Phyllis,

After months of searching for homes and submitting numerous offers, we finally had an offer accepted on a probate property. Surprisingly, in this particular probate case, the court required confirmation of our contract before proceeding with the closing of escrow. Our Realtor informed us that during the court process, there was a possibility of someone new entering the scene and outbidding us, even though we had already agreed upon a price. Despite the property being a fixer-upper, we made it clear to our Realtor that we would not increase our offer.

Undeterred, we proceeded with the necessary steps, such as conducting inspections, paying for the appraisal, and preparing for the closing. Last week, the court hearing took place. Our agent called us in the evening to deliver the disappointing news: we had been outbid. He explained that he hadn’t attended the hearing since we had no intention of increasing our offer, deeming his presence unnecessary. As a result, we have now lost several months’ worth of time and money spent on the appraisal and inspection, with nothing to show for it. At this point, I don’t exactly know what I’m seeking—perhaps just an opportunity to vent and understand if there were any potential alternatives that could have led to a different outcome.

JB

Dear JB,

I am sorry for your disappointment. Not all Los Angeles probate sales require court confirmation with the possibility of overbids. A probate sale is the sale of a home of someone who has passed and does not have a living trust.

Those requiring court confirmation:

At the court confirmation hearing three things can happen: 1) No other bidders appear in court; original buyer closes at the already agreed upon offered price. 2) There are other bidders, but the original buyer outbids them. 3) Other bidders appear and the original buyer decides not to increase his offered price and the highest bidder opens escrow.

Your offer was accepted “subject to court confirmation”. At the time of the court hearing your contingencies were removed and you were ready to close. Unfortunately, at your hearing, other bidder(s) came into play and outbid you. The first overbid is a complicated calculation. Approximately 5% over your currently “in escrow price”.

When thinking of purchasing a probate listing, the first question to ask is whether or not the sale requires court confirmation. As you have sadly learned it’s much better for the buyer when the court is not required to confirm the sale. As you weren’t going to increase your offer, there was no point in you or your Realtor attending the hearing.

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