We were contacted by a couple who were the tenants of a home in San Jose. The landlord had died and the estate was in probate. The home the couple had rented for many years had to be sold.
Why Buyers Need Their Own Agent Representation When Buying a Probate Home
The real estate agent who had previously listed and sold the deceased landlord’s primary residence contacted the tenants and advised it was time to sell the rental home. The tenants were given the opportunity to buy the home “off-market” before it was listed on the Multiple Listing Service (“MLS”).
The tenants did want to purchase the home they had lived in for over 6 years. They had completed many improvements to the interior of the home at their own expense, including painting the entire interior, new flooring, and kitchen appliances. All improvements were done with the landlord’s permission.
The real estate agent for the estate examined the overall condition of the home which was in a poor and neglected condition. The roof was deteriorated, the kitchen and bath were dated (original), old wiring, peeling paint, original windows, termites, and more.
Based upon the market analysis and the condition of the home the real estate agent recommended a price to sell the home to the tenants. The price was well within the probate referee’s valuation of the home.
The tenants met with a mortgage lender and got approved for a loan to purchase the home at the price recommended by the real estate agent representing the estate in the sale of the home.
The administrator of the estate agreed to the recommended price indicating in an email response “We will accept the offer.” The real estate agent responded advising they would have the formal written offer ready the following day.
The agent sent the formal offer to the tenants and scheduled a time to meet to sign it. The offer price was the price recommended by the agent representing the estate which the Administrator agreed to.
The estate attorney chimes in the email discussion with “It is too low – Court won’t approve.” That led to the real estate agent insisting the offer price be the same as the probate referee’s valuation of the home despite the fact the sale did not require court approval.
The California Independent Administration of Estates Act (“IAEA”)
The Administrator for the estate was granted Letters of Administration with Full Authority under IAEA by the Santa Clara County Probate Court. That means that most estate activities, including selling probate property do not require court approval.
The short video explains a probate sale with full authority under IAEA means a probate sale without court confirmation.
“Probate Purchase Agreement”
The real estate agent prepared a new offer, sent it to the tenants, and scheduled a time to sign the offer. The terms of the offer were written without consulting the tenants. The offer removed all contingencies except loan and appraisal and included a contract addendum written by the estate attorney. The agent did not include the Representative Capacity Signature Disclosure which is an important document that all parties need to sign.
I am not an attorney. I am a licensed California Real Estate Broker and Certified Probate Real Estate Specialist and have been practicing full time since January 2003. I have worked as a paralegal for 15 years in various capacities and have a good grasp of contracts, legal terminology, and legal research.
In my opinion, if the probate attorney knew anything about real estate or fully understood the real estate purchase agreement, they would have known their addendum was redundant. One provision did not apply at all a real estate purchase contract.
To confirm my opinion, I consulted with my risk management attorney who is well versed in real estate matters. When in doubt about the language or terms added to a contract by someone else, like the addendum written by the attorney for the estate, it is our best practice to consult with our attorney. Just because something is written by an attorney for the estate does not mean someone buying a probate home should sign it.
Following a 30-minute discussion with my attorney, he confirmed what I had concluded, and that was to recommend my clients not sign it.
Certified Probate Real Estate Specialist
After receiving the revised offer, the tenants had the aha moment and realized that they were NOT being represented, did some research online, called a few real estate agents to get help, and ultimately asked if I would represent them.
They sent me the email communications between the listing agent, the administrator, and the probate attorney, the revised offer, and copies of the initial offer.
The Estimated Buyer Costs was the most hideous I had ever seen. It was particularly important to the tenants to understand what the costs were. What they were given in no way reflected the actual buyer costs.
After a careful review of all the documents, I scheduled time to meet with the tenants to see the home and discuss representation. I agreed to help.
I called the real estate agent representing the estate to introduce myself and advised that I would be representing the tenants on the offer to purchase.
The tenants signed the Probate Purchase Agreement. The offer price was the same as the revised offer prepared by the agent representing the estate. All of the seller disclosures were signed and returned with the offer. The contingencies were not removed, and the contract addendum was not signed and returned with the offer.
The tenants, now my client, was advised not to sign the contract addendum. As previously mentioned, prior to writing the offer, I sent the contract addendum to my risk management attorney for review and sanity check. The attorney agreed with me and said: “I would not have the buyer sign it.” That information was shared with my client who agreed not to sign it.
Within hours of sending the offer to the agent representing the estate, the offer was rejected. No reason was given other than “your offer is not acceptable to my seller.”
This started a series of emails and phone calls with the agent for the estate. The attorney now wants the offer price to be higher. Regarding the contract addendum, the attorney wrote: “Included or no deal”.
The buyer agrees to increase the offer price. I called and emailed the lender to get an updated pre-approval letter and received no response. After three days the lender finally called. He advised he was out of the office on vacation and no one is monitoring emails for the week and that voice messages are checked periodically. He said he would get me the updated approval when they returned to the office in a few days.
A new offer is prepared to provide the seller with everything they asked for. The seller countered the offer at a higher price!
There are no words to describe the buyer’s emotions with the process. The counter-offer at a higher price was a devastating blow. I offered recommendations on how to restructure the offer. The buyer was done and decided to move on. I completely understood and supported their decision.
The following morning the Buyer called. After sleeping on it they wanted to take me up on my offer to restructure the offer in a way that would get the probate attorney to agree.
The plan was successful. The administrator accepted the offer! We were now over another hurdle.
Buying a Probate Home | Title and Escrow Company
In Santa Clara County, the sellers choose the title and escrow company. Typically, that is done after the probate listing agreement is signed. In most other counties in California, the buyer chooses the title and escrow company.
Every single experience I have had representing a buyer at this title company, the name shall not be disclosed, has been horrible. My experience has consistently been that buyer’s agents are treated like feca
The escrow officer complained in email communications about all the work she had to do. These are head-scratching moments. The resistance of the escrow officer to do her job escaped me.
This carried on to the end of the transaction. I sent the “broker demand” to the escrow officer 10 days before the scheduled close of escrow. She confirmed receipt. The broker demand is what escrow officers use to pay the probate sale commission. The day escrow closed she sent me an email asking me to send her my broker demand. I said nothing about having already sent it and send it again.
What response did I receive? “WE don’t …. [fill in the blank].” I once again engage the listing agent for the estate and ask for his help to inspire his escrow officer to do her job.
One week after escrow closed, I still had not received my broker package from the escrow officer. A broker package is typically sent to the agents no later than the following day.
We need the documents contained in the broker package in order to maintain a Department of Real Estate compliant file AND I must include some of the documents contained in the broker documents with the closing file I am required to provide to my client.
I finally connected with the escrow officer’s assistant on the phone and asked if she would PLEASE send me the broker package. She gasped as she said, “you have not received it!?”
Bare Naked Truth
I believe that if most people (home buyers and sellers) fully understood what takes place behind the scenes in the real estate industry their heads would be spinning like Linda Blair in the Exorcist movie.
My clients are unaware of the drama and shenanigans that take place behind the scenes. They only know what they need to know. My job is to provide an excellent home selling and home buying experience.
This transaction was among the most frustrating transactions representing a buyer because we were not working with professionals experienced in probate!
We do what needs to be done to serve our clients! The clients are over-the-moon happy and most grateful we agreed to represent them.
For confidentiality reasons, there are several aspects of this probate home purchase that are not shared here. Even without all of the shady details, it is my expectation that the reader takes away a few things.
- The importance of a buyer having their own representation.
- Hire a lending professional that ensures their business is covered when they are vacationing or otherwise unavailable for extended periods of time.
- Real estate agents are not one size fits all nor are they created equal.
- Probate is a highly specialized area of law.
- It is prudent to hire an experienced local probate attorney to manage the probate process.
- Probate real estate is a highly specialized area of real estate.
- It is prudent to hire a trained and experienced certified probate real estate specialist to manage the probate house sale process.
Our primary focus at Need Probate Help is listing homes in probate for sale. It is rare for us to represent buyers who want to purchase a probate home. In this particular situation, my heart would not allow me to decline the tenants’ request to represent them.
In my clients’ words “You are one of the most honest and professional individuals I have ever met. When I felt I wasn’t being properly represented I needed to find an advocate and I found you. I can’t thank you enough for taking this journey with us.”
I applaud my clients for recognizing they had no representation working directly with the real estate agent and the attorney representing the estate. I am honored to be chosen as their advocate.
When buying a probate home, call Kathleen Daniels, a Certified Probate Real Estate Specialist. Although it is rare we represent buyers on probate homes, there are special circumstances to consider and exceptions can be made.