I'm Gary D Sr, I've been working the Probate Real Estate niche for over 30 years and I also have been teaching Agents and Investors how to do what I do for over 20 years and have over 4000 students/members across the country. FOR YOU because you're here, reading this post and learning a little more about probate - I'm going to offer you a huge discount on all my probate material, just read the post and if you like what you're reading the link to the discount is at the bottom. But anyways, talking about Probate Real Estate and how you can Avoid those 10% deposits.
California has two ways to probate an estate. One is the long time Court Confirmed Sale process where one of the requirements is a 10% deposit made at the time of your offer.
You are not even in escrow yet, but you must submit the 10%.
Think about it on a $300K sale this is $30K and today agents accept from 1 to 3% of the offer price as depsosit so the 10% can be outrageous.
Yes, I understand it's only a deposit but if you represent investors like I do, and your making multiple offers, than the 10% deposits are going to add up and it's a process to get them back from the attorney or escrow if your deal does not make it. If you represent retail buyers, than the 10% could be a hardship if they are a VA, FHA (3.5%) or a Conventional (3,5 or 10% down) buyer. Most of the time they don't have the 10% upfront anyway so what happens in the real world of Probate Homes is these buyers bypass the property which it turn hurts the estate since the retail and move in buyers pay the most.
Now most of you probably have heard of the I.A.E.A by now and understand if the PR receives approval as Executor or Administrator with Full Powers the sale does not have to go to court or meet any of the crazy requirements of the court confirmed sale. The problem is from time to time you will run up against an old school attorney who wants the 10% even though it's not required. You have to know how to handle this or you are going to become frustrated as this will probably be your first probate sale situation (ha!) and then you will leave the probate niche. DON'T LET THIS HAPPEN...
If the attorney insists on the 10% deposit even though it's not needed under the I.A.E.A, this is what you do.
1. First explain to the attorney, under the I.A.E.A the 10% deposit is not required, send the legal definition and ask the attorney to accept the normal 1 to 3% deposits.
2. If this doesn't work tell the attorney your client will place $1K in escrow now and the remainder of the 10% deposits will be made 1 day after buyer removes inspection contingencies. This usually will work.
3. If all else fails have your estate attorney call. (You should have a relationship with one, I do. My attorney also assists with my probate students and will call the estate attorney for you and work out the Good Old Boy's system.)
This should help you avoid the 10% deposit issues when and if it comes up.
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