HOW TO CHOOSE THE BEST PROBATE REAL ESTATE AGENT
In many California probate cases, the home is the biggest decedent’s asset. A significant number of cases involve mortgage encumbrance, and the estate does not have cash available to pay off the mortgage or any other debt that comes to light. For these reasons, many heirs decide that the best course of action is to sell the home, pay off mortgage loans, any other debts, and then divide the net proceeds among all the heirs.
Do I need a real estate agent in probate?
Just like in any real estate transaction in California, most heirs decide to hire a licensed real estate agent to help with the sale of a home. It is a wise decision in any real estate purchase or sales situation and even more so in probate. Why? Because probate is more complex than a regular real estate transaction and because a successful probate sale requires a qualified team, which includes a real estate agent, attorney, probate referee, judge, and others.
While one cannot select a probate judge, a personal representative is free to choose the attorney who will represent the estate as well as the real estate agent who will list and market the property. To make sure that you get the best representation in complex probate matters, you want to choose a listing agent who either specializes or has proven experience with probate sales.
An experienced real estate agent is especially crucial in limited authority cases. To put it simply, “authority” in probate means how much power the personal representative has. In California probate, there are two types of authority: full authority and limited authority. Full authority is a lot less restrictive, mainly because it does not require court confirmation. Limited authority automatically includes court supervision, so the property can only be sold with the close supervision of the probate judge, and the sale must meet certain criteria.
If you are an heir of a home in California and you are stuck with limited authority, you want to hire a real estate agent who understands probate procedures well and who has been through multiple overbidding processes.
If you don’t have an experienced probate real estate agent in your personal network, a probate attorney may be able to recommend a real estate agent for you. However, don’t feel obligated to go with the attorney’s recommendations. Only you can decide whom you want on your probate team!
I have compiled a specific list of questions to ask a potential real estate agent in a probate transaction. If he or she is unable to answer most of the questions below, you are better off looking for a real estate agent elsewhere.
The ultimate list of questions California heirs should ask a prospective probate listing agent
- Does the personal representative have the full authority or limited authority under the Independent Administration of Estates Act (IAEA)?
- Which court documents tell you whether full or limited authority is granted to the personal representative?
- What are the appropriate C.A.R. forms used for a probate transaction?
- When can the personal representative sign your listing agreement?
- What is the allowable commission rate for REALTORS in a probate transaction?
- What is the minimum sale price for a property sold in probate?
- When can you accept an offer in probate?
- What is the minimum deposit amount in a probate transaction?
- How does the appraised value given by the probate referee intertwine with your selling price?
- When is “court confirmation” necessary in a probate case?
- Are you able to articulate and walk your buyer through the “over-bidding process”? For example, you have an accepted offer of $500,000 that is scheduled for court confirmation; what is the starting over-bid amount in court?
- Do you know the formula to derive the starting bid amount in court confirmation?
- What legal documents will the title company require before escrow can close?
- What role does the “Notice of Proposed Action” play in your real estate transaction?
- Are you able to articulate the time frame as to when escrow can close in a probate transaction?
If your listing agent is able to answer all of the above questions, congratulations! You are in good hands and you should hire this real estate professional to sell your home.
What is the real estate commission in California probate?
The commission percentage for real estate agents in Southern California (Los Angeles County, Orange County, Riverside County, San Bernardino County and San Diego County) is 6% for cases with full authority. If it is limited authority, the commission can only be 5% in Los Angeles and San Diego County.
The precise real estate commission percentages are not mentioned under the Probate Code. However, customarily the court “standard”, in cases with limited authority, is a commission rate of 5%.
Once the Order for Probate and the Letters are issued, the personal representative has the power to sign an exclusive listing with the listing agent or broker for a period of no more than 90 days (Probate Code §10150(c)).
Once escrow closes, real estate agent gets their commissions and the buyer obtains possession of the property. However, the heirs do not have access to the money. The proceeds of the sale must be deposited into the estate’s bank account until probate concludes. This account is usually opened prior to the close of escrow by the personal representative. In order to open the account, the bank will request a copy of the Order for Probate, a certified copy of the Letters, and the estate’s tax ID.