In a Redwood City Probate sale, sometimes the highest offer turns out not to be the best offer, but until it does not close, it is impossible to know that. So what do you do if you are the Administrator of a Redwood City Probate Estate and you are faced with very different competing offersrs.
There is not one right answer, but here is an example and some things to keep in mind when making your decision. Remember the guiding principle here is that I am making the assumption that you have full authority to sell the home and court confirmation is not mandatory. If the sale has to be confirmed by the Probate court then this blog does not apply to you. The Administrator of the Redwood City Probate Estate with full authority gets to make the decision as to which offer is accepted, but that decision must be sent to all the heirs of the estate in a Notice of Proposed Action. If any heirs object, the sale may have to go to Probate Court for confirmation and an over bid process which will cause months of delay.
The Administrator of the Redwood City Probate Estate is charged with getting the best price and best terms for the house for the heirs to the estate. Best price is easy to determine, best price is not.
Take an example of what happened in one of my Probate listings in Redwood City.
I was hired to sell a home in Probate in Redwood City. The home had major cracks in the walls, a broken heater, bad plumbing, broken windows, major floor slopes, a garage that was leaning, and the house basically looked like it was being held up by termites holding hands.
The Probate Court sent out a Probate Referee who said the value of the house was $575,000.
The Administrator of the Redwood City Probate Estate hired me to sell the house. I suggested getting inspections. The foundation inspector said the foundation was no good and would cost ninety thousand dollars to replace.
We decided to list the house at $650,000 because the market was rapidly appreciating and the house had a lot of charm and a great location even though it needed so much work. Other homes in the neighborhood were selling in the $800-$900,000 range.
The seller received 3 offers for the Redwood City Probate home.
- $650,000 As Is, no property contingency, 14 day loan contingency.
- $600,000 As Is All cash, no inspections or contingencies of any kind, close as soon as the heirs sign a Notice of Proposed Action.
- $800,000, All Cash, No appraisal contingency, 5 day property contingency.
This $800,000 offer seemed too good to be true. I told the seller that with a 5 day property inspection I expected the buyer would come back and try to re negotiate the price even though all the inspections were done and we knew very little, if anything could be salvaged. At that point if the price was over $600,000 then it was worth the risk.
It was also possible the buyer had never seen the house, had no idea what he was doing, and was making high ball contingent offers on many properties with the hope someone would take his offer and then he could decide if he wanted the property. He was as likely to cancel the contract as not.
The Administrator of this Redwood City Probate Estate decided she had to take a chance on the $800,000 offer. She knew it was a long shot, but if she did not accept it the other heirs could accuse her of not taking the best offer for the estate because she was in a hurry to close escrow and get her money. She knew that for them the higher price was worth it even if they had to wait longer.
So the highest offer was accepted and 4 days later the contract was cancelled. The buyer discovered how much work needed to be done, despite supposedly reading all the reports, and dropped out.
The offer for $600,000 was then accepted as the buyers were still interested and closed escrow 14 days later.
The heirs all agreed that they gave it a shot at getting more than the house was worth, and were willing to take market value for the house.
So, if you are an Administrator of a Probate Estate sometimes the highest price offer may not seem like it will close, but taking a chance on it can be the best thing for the estate, and if it does not work out at least you have fulfilled your fiduciary duty.
Keller Williams Realty