3 Most Common Mistakes When Selling California Real Estate In Probate

In previous articles, I discussed the unique sales procedures and forms used when selling real estate owned by trusts¹ and estates in probate².  I’m following up with a broker’s perspective on the 3 most common mistakes when selling California real estate owned by an estate in probate.  If you ever find yourself in the position of an executor with the responsibility of selling estate-owned real estate, I hope you will avoid these mistakes and have a smooth sale.

Here are the 3 most common probate sale mistakes:

1.  Executor not having court appointment documents.  At the beginning of the sale, escrow and title companies usually require a certified original of court documents (“Letters”) appointing the executor as the legal administrator of the estate and authorized to conduct real estate transactions.  Photocopies are not acceptable.  Estate attorneys will often order 20 or 30 originals from the court because they are needed for so many things, including real estate sales, bank account access, etc.

2.  Not making simple repairs or improvements that will increase the sale price.  Many estates in probate are “cash poor” – but when resources are available executors can easily increase the value of properties that have been neglected or improperly managed.

• Homes.  California law states that all probate real estate sales offer the property in “as-is” condition.  However, that doesn’t mean that the executor shouldn’t make basic repairs and updates that will increase the value of the home.  Even if the executor is in another state, hiring a local contractor to bring the property up to market standards is an easy way to greatly improve both the selling price and the probability of a quick sale.
• Rental properties.  Many income properties that end up in probate are found to have significant deferred maintenance and are charging below-market rents.  Catching up on repairs and maintenance while conducting a lease update and implementing rent adjustments can increase the market value of the property.
• Land.  Many executors are quick to list land for sale before doing a thorough review of the land’s potential market value.  Hiring a broker experienced with land sales can often keep an executor from making this mistake.

3.  Not conducting a proper inventory of the property.  A property inventory will identify what is being sold as either real property (real estate) or personal property.  When the value of personal property is significant, buyer and seller may want those items identified on a Bill Of Sale and their value not included in the price of the real estate.  Typical items placed on a Bill Of Sale could include furniture, expensive decorations or unattached fixtures, garden tools, lawn mowers/tractors, and large stocks of consumable cleaning, lawn care or pool maintenance supplies.  The value of pre-paid services that are sold with a property could also be shown on a Bill Of Sale, such as an annual home warranty or security system monitoring contract that conveys to the new owner (note: pre-paid services can also be credited to the seller in the final escrow figures).

Selling California real estate owned by an estate in probate is usually a smooth procedure.  But if you have any comments or questions about selling California real estate owned by an estate in probate, I’d appreciate hearing from you.  For information about the trust and probate real estate services we offer, click here:  Services For Real Estate In Probate Or Trust.

Note:  This is not a legal review of probate administration procedures and no legal opinion is offered.  Always consult with a qualified attorney for advice on probate administration and property sales.

^1. Selling California Real Estate Owned By A Trust

^2. Selling California Real Estate Owned By Estates In Probate

--------------------------------------------------------------------------------------------

John A. Souerbry & Associates (BRE 01370983)