Many people are confused about the California Probate Sale Overbid Process and how to buy a probate home in Santa Clara County that is subject to overbid and court confirmation.
We generally do not represent buyers on purchasing a probate home. Our mission and focus are on listing homes sold by estate representatives of probate and trust estates.
We appreciate our client’s loyalty. When a client reaches out to us for help, we step up and help no matter what. We will represent a past client on the purchase of a probate home. One of our loyal clients contacted us indicating they wanted to overbid a probate home.
We requested the necessary documents and information needed from the listing agent so that we could fill our client’s request to represent them in the overbid.
Background: The home was being sold by the Santa Clara County Public Administrator.
What is a Santa Clara County Public Administrator?
Serving in a fiduciary capacity, the Public Administrator of Santa Clara County manages the estate of someone who has died and there is no one able or willing to manage the affairs of the estate. They are appointed by the Santa Clara County Superior Court to act on behalf of an estate as administrator (someone who died without a Will), an executor (someone who died with a Will), or successor trustee (a person who died with a trust). The Probate Code of the State of California mandates Public Administrator powers.
The public administrator’s office assigns the listing to one of their approved listing agents who must follow the guidelines and instructions they are provided. Those detailed instructions are then provided in the private remarks of the Multiple Listing Service (“MLS”). Private remarks are only seen by licensed real estate agents with access to the MLS.
When the seller accepts an offer on a probate home subject to court confirmation and overbid, the listing agent then updates the MLS to provide details on the court confirmation hearing date. Thereafter, when other agents ask for the disclosures, as we did, it is reasonable to presume there will be overbidders.
The home our client wanted to overbid on was in Sunnyvale which is perceived by many to be a highly desirable place to live. We recently published a post about a probate home in Sunnyvale selling $645K above the list price. That home was not subject to overbidding.
We believe there is a myth about getting screaming hot deals when buying a probate home. In November 2021 a Cupertino home in probate sold for over $3 Million.
We frequently get calls not only from investors but from people just wanting to buy a probate home. We know what investors want. They want off-market opportunities. Investors have cash and are willing to accept “as is” with no contingencies. However, typically, a non-investor buyer believes they can get a good deal. Often times they do not understand that financing may be an issue.
How does the probate court determine the amount of the overbid?
The California Probate Code sets forth the formula to determine the minimum first overbid.
The sale price published in the MLS of the Sunnyvale home subject to overbidding was $1,806,000.
The sale price of the accepted offer is what is used in the calculations.
The minimum overbid amount was $1,896,800. We discuss the formula for overbids in our posts on Submitting offers.
Probate Sale Minimum Bid
We illustrate the formula for this particular sale here.
The overbid must be the amount of the original bid of $1,806,000 … plus
A minimum of 10 percent of the first $10,000 of the original bid, which is $1,000 … plus
A minimum of 5 percent of the amount of the original bid in excess of $10,000.
The Santa Clara County Court Overbid Hearing
The judge asked the attorney how the attorney would like to conduct – overbid or auction.
After reviewing all of the disclosures and information on the home, our client wanted to overbid.
Due to a spike in COVID cases, the court had determined there would be no bidding in the courtroom. The hearing and the overbidding took place remotely via Microsoft Teams.
We logged in to Microsoft Teams on the date of the hearing to confirm the sale of the home.
The process works the same remotely via MS Teams as it does in court. The bailiff called the court in session as the Judge entered the room and took their seat.
The calendar was called one by one. As each case was called the attorney(s) appeared on behalf of their client(s). When the case for the confirmation of the sale was called, the attorney for the estate advised the judge that they were expecting several overbids. For that reason, given the time involved in the overbid process, the judge said they will call the case last on the 9:00 am calendar.
The attorney responded: Overbids, I am expecting them.
The buyer’s agent and the buyer were in the Microsoft Teams meeting, and we were logged in to the meeting. The judge took a 15-minute break. During the break, the attorney for the estate asked if there were any overbidders. No one spoke up to confirm an overbid.
Meanwhile, our client had not yet logged in. We were emailing and texting our client for status. Eventually, moments before the judge reentered the courtroom, our client texted back that they changed their mind. Given that we had already spent over an hour inside the virtual courtroom, we decided to stay to see if anyone did overbid.
After the break, the judge called the case. The procedure is for the attorney to state their name indicating they are the attorney for the public administrator and petitioner for the party, and state the name of the buyer with the accepted offer. The attorney also informed the judge there are no overbidders.
The terms of the purchase were read by the attorney: This is the petition to confirm the sale of property in the matter of the estate of [name intentionally left blank]. The subject property address is [address intentionally left blank, Sunnyvale, CA 94086.] The sale will be “as-is” with no contingencies. Terms of the sale are as published. 10% deposit at the sale price of $1,806,000.
The attorney again asked, are there any overbidders that wish to overbid. No response.
The judge asked, any overbidders? No response.
The judge said, going once, twice, sold. The sale is confirmed.
There were some administrative issues discussed between the attorney and the judge after the sale was confirmed.
If there had been an overbid the court sets the minimum amount of increase and continues to accept bids until the highest bid is made.
Certified Probate Realtor
The following day, as a professional courtesy, which is always the right thing, we emailed the listing agent to inform them that our client sent us a text message shortly before the attorney returned to the courtroom advising that they changed their mind. We thanked the agent for their time and for the opportunity.
We consulted with our clients to understand why they changed their minds. They knew what was expected going in when they decided they wanted to overbid. For privacy reasons, we will not share why the change of mind. However, it was for a good reason regarding a personal family matter.
While we understand the California Probate Sale Overbid Process and how to buy a probate home in Santa Clara County that is subject to overbid, we work exclusively with sellers and our past clients. However, should someone decide they would like to overbid on a home, we can refer them to a probate agent to represent them.