OBJECTING TO A NOTICE OF PROPOSED ACTION
In a recent blog post I explained what happens in the probate real estate process. That postfocused on how to respond to a notice of proposed action. Now, let’s take it a step further and talk about what happens AFTER YOU OBJECT TO A NOTICE OF PROPOSED ACTION….
So you got the NPA (notice of proposed action) in the mail, you thought about it, you talked to your friends, you debated, and finally you OBJECTED! You did it. You signed the form, on page 2, where it says OBJECT and you sent it to the attorney. Of course, you did this within 15 days of the notice being sent (or at least before the house closed escrow).
WHAT IS IT WORTH?
Before I go on it’s important to remember that without a time machine, to travel ahead a year or two, it’s IMPOSSIBLE to know what a house will be worth. I once heard that, with the stock market at least, a price is determined when half the people think it’s going up in value and half the people think it’s going down. Houses are not that much different.
WAS THAT THE RIGHT CHOICE?
Each case is unique and different. It’s almost impossible to really “know” if it was a good choice merely by looking at the raw numbers provided by the probate attorney.
WHAT’S THE HOUSE REALLY “WORTH?”
Let’s analyze a hypothetical case. Let’s say a house is appraised for $375,000 by the probate referee. First thing to ask is when was the appraisal done? Date of death or was it a “reappraisal for sale?” So let’s say there is an appraisal that says it’s worth $375,000. Is it? Did the appraiser go out to the house or do a “drive-by” appraisal? In my experience the probate referees usually do a drive-by so the accuracy is questionable; it’s more of an average. Is the house in question in better or worse condition than average? Does it need work? If the house is selling for $300,000 is it definitely too low? It’s really hard to know just looking at the raw numbers.
WHAT’S THE ACTUAL SALES PRICE?
Plus, don’t just look at the apparent bottom line number. Make sure you look through all pages of the contract. Look for buyer’s credits, requests for repairs and how the closing costs are to be divided. The actual sales price can be heavily clouded by these other things which can drastically change the bottom line.
BEFORE COURT – WHAT HAPPENS?
So, you have objected… now what? In some cases when the buyer learns of the objection she will walk away from the deal. There are so many investors out there right now and investors don’t want to tie their money up in deals that can drag on for months. Thus many of them will WALK! If this happens the sales process starts over. At least in the current HOT HOT HOT real estate market you are likely to get another buyer fast… or at least hopefully you will. It’s like a good game of chess… you need to think about your move carefully!
So, you have objected, the buyer hasn’t walked, well then what? The Executor’s attorney will have caused notice to be sent to the buyer and all interested parties of the sale. The attorney also will cause publication to be made in the legal section of an appropriate newspaper; but do any real buyers read that or just other investors? The buyer, and others, may show up in Court to bid or at least watch the bidding. In my personal experience there are typically NO bidders at Court. Thus, it usually only delays the process but, in some cases, a bidder or two emerge to raise the price!
THE BIDDING PROCESS
The bidding process is an auction and the probate Judge is the auctioneer. She literally calls out the property for sale, the terms of the sale, and asks if anybody wants to bid on the property. The first overbid is about 5% over the contract price. The exact formula is laid out on California Judicial Council form DE-260. If nobody overbids the Judge calls out “going once, going twice, and SOLD” or something very close to those exact words. It’s literally an AUCTION!
AFTER THE AUCTION
After the auction the sale can be closed within a few days by taking the certified Court Order to the title company. The Executor’s attorney will take care of that.