Buying Probate Property in Southern California
Probate Real Estate Broker in Los Angeles
At the law offices of Mike Millea, we’ve been helping clients throughout the greater Los Angeles area buy and sell property for years, and we have comprehensive experience with a wide range of investment properties. One of the best ways to purchase real estate at a reduced price is through the probate system– but buying probate property can also be exceptionally complicated. That’s why your Los Angeles probate real estate broker, Mike Millea, is here to help.
Why Should I Buy Probate Real Estate?
Probate properties often sell below market price, which can make them a valuable, profitable form of investment property for real estate investors. However, the probate process is complex and comes with some risks, so you should always have an experienced probate real estate agent on your side. Mike Millea is one of five people with a dual background as a real estate agent and real estate attorney, allowing him to guide his clients through profitable property dealings. If you’re considering buying probate property, it’s important to understand the process first.
How to Find Probate Real Estate
For the most part, probate properties are marketed similarly to traditional real estate, and if you’re extremely well-versed in navigating the laws around probate real estate sales, it’s possible to find and buy a probate property on your own. However, the easiest and safest way is to go through a probate real estate agent. Probate agents have networks and resources that let them find excellent deals on probate properties and navigate the complexities of the buying process.
How to Buy Probate Real Estate
After finding a property you’re interested in, there are two options available for purchasing it: you can either make an offer on the property outright or wait for the auction in probate court and outbid the other prospective buyers.
Making an Offer on a Probate Property
The first option, making an offer outright, works similarly to a traditional real estate sale. The asking price of probate property is determined jointly by the real estate agent of the executor of the estate and a court-appointed appraiser. Once the price is set, the real estate agent markets the property normally, and any interested party can make an offer.
However, there are a few differences with probate property. If the buyer accepts your offer, they can either make a counteroffer or accept your price. But if they do accept, you’ll need to make a 10% deposit. Keep in mind that this deposit is only semi-refundable: you’ll get it back if the court doesn’t approve your offer or another buyer outbids, but you won’t get it back if you choose not to continue with the purchase.
After the Offer
If the seller accepts your offer, they’ll need to apply for a court date, which is normally 30 to 45 days after the purchase application. During this wait period, the seller will need to relist the property at a slightly increased price: in the case of California, the buyer’s offer plus 5% and $500. This notifies other interested parties of the sale and gives them a chance to place a higher bid. If there are no other buyers and the court approves the price, the sale is finalized and your 10% deposit goes towards your purchase of the property.
The Probate Auction Process
However, if there are other interested buyers, the property will be put up for auction to finalize the sale. This means that, even if you’ve already put a deposit down, you’ll need to compete with other buyers at auction to secure the property. Once the auction ends, the highest bidder needs to provide a deposit of 10% of the final sale price, concluding the process.
Things to Keep in Mind When Buying Probate Properties
- Prepare for a Long Haul: Purchasing probate property can provide excellent value, but the process normally takes at least 6 months or more. For those looking for a quick investment, probate is rarely the right choice.
- Deposits May Be Nonrefundable: While you’ll get the deposit back if you are outbid or the court denies your price, you won’t get the deposit back if you choose not to purchase the property after submitting an offer.
- Probate Properties Are “As Is”: Probate properties have no warranty, meaning you are solely responsible for any necessary repairs. In addition, because the original owner is deceased, there is often no one to disclose relevant facts and repair records on the house. This means you’ll need to be thorough when asking for an inspection of the property.
- You’ll Likely Pass Your Initial Offer: Even if you’re the first person to make an offer, you may be outbid during the final auction, which means you may exceed your initial price.
Contact Your Los Angeles Probate Real Estate Agent Today
At the offices of Mike Millea, we’ve been helping investors find and purchase probate real estate for years, and we use our deep expertise and knowledge of the probate system to help our clients get great prices as quickly and easily as possible. Contact us today if you’re interested in purchasing probate property or any other investment real estate property. We look forward to hearing from you!