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What you need to know about probate sale in California

In a turbulent real estate market, some California residents might be looking to purchase real estate through a probate sale. There are a lot of advantages to purchasing property this way, but it can be a risky endeavor when not done carefully.

What is a probate sale?

A probate sale is what happens when a person dies without a will or estate plan. The state is then in charge of essentially offloading all the assets, which in many cases can include the person’s house.

How does a probate sale work?

The court will usually turn to a real estate agent to sell the house while still maintaining control over the sale. The court will decide things like the listing price based on a home appraisal or input from the real estate agent.

Putting offers on a house or property that’s being sold through probate sale is different too. Potential buyers must make an offer with at least a 10% down payment in the form of a cashier’s check.

The court can decide whether to accept or deny the offer at a confirmation hearing, regardless of whether the buyer had the highest bid. This can take time to organize, and even when the hearing is set, the sale is still not official.

Why is a probate sale risky?

At the hearing, other bidders can make offers on the property, and it essentially turns into an auction. If the original buyer who put the 10% percent down payment is outbid, they may lose their down payment.

Because of the risk, it’s important to do a lot of research beforehand to ensure that the risk is worth it. You’ll want to work with professionals to ensure that there won’t be any surprises and that the investment is sound.