We're the first to admit that probate sales confuse us. We have enough trouble with our probation officer as it is. And reported that 520 Peru, the dump with just a toilet, had sold for $378,500. We were a tad premature- it turns out there's a formula for making an offer and closing the deal in probate- and Jackie Cuneo, the listing agent for the dump in question took the time to explain it. In language we can understand. The upshot is that the house will probably sell for 360K, but read more about how it all works after the jump, and how you'll have the opportunity to pay even more.
Oh, and after you've read this? Call a lawyer and find out how you can spare your heirs probate in the first place, no matter how many bathrooms you don't have.
· Where are They Now? 520 Peru [Curbed]
· Jackie Cuneo [Zephyr RE]
Jackie Explains Probate
1. Property is marketed by a Realtor, just like any other property. If it's a dog that should be torn down, I do my best to be honest, forthcoming, and optimistic with full disclosure. Interested parties can fully inspect the place, and download copies of 3R reports, Title report, Environmental disclosures, etc.
2. Offer date set and offer is received. In this case, we received a high bid of $360,000 ($10K below original asking, but 90% of the appraised value, required by the court.)
3. Court date to be set for late August. The "first overbid" is equal to the previous high bid ($360K) + 5% + $500. This will be the $378,500 now posted in the MLS, if anyone chooses to appear in court to bid.
4. When the probate court date comes to confirm the original sale price of $360K, the public is allowed to attend to submit an "overbid" as set by the formula above (they can't offer, for instance, $361,000). If there is an overbid, then the bidding is opened to everyone on the floor (judge sets the increments) and the property is sold in this auction-like atmosphere. Bids are as-is and require the brave buyer to put a 10% cashier's check down on the property.
Probate can offer great opportunities to investors but can also get some people overly carried away due to the auction bidding. In any case, it's always interesting.