Buying Probate Property – 7 Things You Should Know

I often get calls from clients on a budget that start with something like, “Did you see that house for $400K (or fill in another absurd amount here)?” By the second or third call, I know it's time to bust out the trusty reminder: when a price sounds too good to be true in San Francisco, it always is. So, let’s unpack this a bit with the topic I’ve been meaning to write about—Probate Sales. Here we go…

Case in Point: Meet 210 Dublin Street
A rare find in our bustling city! While the price might suggest otherwise, housing this affordable in The City is still dream-chasing reality. (Check out the listing for yourself!)

A property ends up in probate when the owner dies without a will. (Friendly reminder: everyone should have a will—don’t have one? I can put you in touch with an estate planner or attorney to help you get those ducks in a row!) When a property goes into probate, it typically needs to be sold so that the proceeds can go to the estate and eventually to the heirs. So how does a probate sale actually work? Read on.

1. Two Kinds of Probate Sales

An administrator is assigned to the estate, and the property is sold in one of two ways. In some cases, the administrator can sell the property without court confirmation. Here, the sale proceeds like any other non-probate sale—the estate doesn’t need to provide disclosures about the property, unlike a regular sale. Buyers make offers, the best offer is accepted, and the sale eventually closes.

But, more often, the sale of probate property requires court confirmation, especially if heirs are bickering or no heirs exist. This is the type of sale I’ll focus on today.

2. Where to Find Probate Property

Most probate sales end up on the Multiple Listing Service (MLS), but some get listed on the “Blue Sheet” at the California Superior Court in San Francisco. If you’re working with a REALTOR who knows you’re interested in probate property, they’ll do the hunting for you.

3. Is Probate Property a Bargain?

Unfortunately, San Francisco doesn’t do “bargains,” even in probate sales. The accepted bid must be at least 90% of the property’s appraised value. Sometimes an overvalued appraisal can be appealed, but typically buyers scope out probate properties hoping to find that elusive “unicorn” deal. This unicorn usually doesn’t exist—the interest often builds to a point where there are multiple offers, so reaching that 90% threshold is no problem.

4. Before the Offer

Probate properties are marketed “as-is” by a REALTOR representing the estate, and the estate isn’t required to disclose anything about the property. But don’t worry—you don’t have to go in blind. You have every right to inspect the property, so bring a contractor, a friend, an architect, or your mother—whoever you want—just be sure to bring them before you submit an offer. Keep in mind, too, that when you make an offer, you’ll need to submit a cashier’s check for 10% of your offer price, payable to the estate.

5. So, Your Offer Is Accepted…Now What?

Your offer is accepted! Time to celebrate? Not quite. Next up is court confirmation. A court date will be set and published, and this is the point where other buyers get a shot at overbidding on the property.

6. How Do Overbids Work?

The first minimum overbid is set at 105% of the original accepted offer, plus $500. If more bids follow, the court sets the increase intervals, typically between $5,000 and $10,000. Bidders must bring a cashier’s check to the proceedings—my advice is to bring one that covers 10% of the highest amount you’re willing to offer. If you win with a lower bid, anything over that 10% still applies to the purchase price.

7. The Key to Winning in Probate Court

Here’s a truth that most people don’t want to hear: the key to winning probate is to discourage other bidders. No, you can’t stand outside the property claiming it’s haunted. The best way to avoid a bidding war is to make your initial offer count—high enough to discourage an overbid (105% plus $500) when the court date rolls around. But you also don’t want to overpay, so it takes some finesse to strike that perfect balance. With the right REALTOR on your side, this process can be as smooth as it is satisfying—maybe even a little fun.

Have questions about buying probate property? Give me a call—I’m here to help!