Making The Deal Count

Two Things You Should Know About the Overbidding Process in a Probate Home Sale

13 April 2017

Trix Van Zee

Purchasing a house from a probate sale can net you a great home at a cheap price. Even if a seller has already accepted an offer on the property, you may be able to buy it at the court confirmation hearing where the judge will entertain additional bids on the house. Here's what you need to know about the process to help ensure you're fully prepared and increase the chance you'll get the home of your dreams. 

A Deposit Is Required

To successfully place a bid on a home at the court confirmation hearing, you must bring a cashier's check for a minimum deposit amount of 10 percent of the opening bid or your bid, whichever is greater. The opening bid is calculated in one of two ways, depending on where the home is being sold:

• The first bid amount plus 10 percent of the first $10,000 plus 5 percent of the balance (e.g. $150,000 + $1,000 [10 percent of $10,000] + $7,000 [5 percent of $140,000] = $158,000), or
• The first bid amount plus 5 percent of the first bid plus $500 (e.g. $150,000 + $7,500 [5 percent of $150,000] plus $500 = $158,000)

In this case, you would need to bring a cashier's check for at least $15,800 to secure your purchase of the home. Be aware, though, there may be other bidders in the court. The judge will run the confirmation like an auction and approve the sale to the person who offers the highest amount of money for the home. Therefore, it's best your deposit equals 10 percent of the maximum amount you're willing to spend.

Bidders Must Prove They Can Close

Before you even get a chance to make an offer, however, you may be required to prove you can close on the house. The judge is cancelling an offer already made by the original bidder in favor of a new person who is willing to pay more. The attorney representing the seller and other court officials may want to ensure the sale will go through; otherwise, the proceedings will just be a waste of everyone's time.

So you need to be prepared to show your cashier's check for the deposit as well as:

• A preapproval letter from the mortgage company, or
• A bank statement showing cash in the account to cover the price, or
• A statement show an available equity line of credit, or
• A certified financial statement, or
• A briefcase full of cash

If you don't have any of these things, the judge may not let you bid on the house. It's a good idea to contact the court clerk to determine if this is the case in your area and make the necessary preparations before you go to court.

For more information about these issues or help securing a home being sold in a probate sale, check out sites like http://valentineandvalentine.com and contact an attorney.

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