5 Real Estate Terms
to Know About Probate Real Estate
Since you’re here, you’re probably wondering about the five real estate terms to know about probate real estate, and that’s what we’re gonna talk about right after this. Welcome back to my channel. If you’re new here, my name is Kim Ward, I am a real estate broker in San Diego and an expert in helping executors, administrators and trustees with homes in probate or a trust. Today we’re gonna talk about the five real estate terms to know about probate real estate. As an executor or administrator you’re probably being inundated with phone calls and mail from real estate agents and investors. All of this can be overwhelming for an executor or administrator that may be right in the middle of trying to figure out the probate situation, as well as grieving for the person that has passed away. You’re finding yourself responsible for a loved one’s home and all their personal property and tasked with completing their life. To get ahead a little bit about the terms when working on selling a home and probate, these are the common terms #1 closing costs, I believe that having the facts helps us to make good decisions, so that’s why I wanna share with you about all these terms.
Whenever I meet with a potential client, I bring with me an estimated seller proceed document. On that document, it has all the closing costs, all of the fees (including myself, my Real Estate Commission to represent the estate), it has whether… If there’s a mortgage, the interest rate of the mortgage, it has information on there, the numbers for property taxes, it has all of the closing costs laid out, it has a proposed sales price, all the expenses to sell the property, and what the estimate would be that the estate would receive after all those expenses are taken care of. Some of the other expenses on that document will be escrow and titled fees, could be some termite repairs, maybe some expense for having tented the property, cleaning the property there might be expense for that on there… If there’s a homeowners association, there will be the monthly HOA fee will be on there, as well as how much the homeowners association charges to move the documents from your loved ones named to the new buyer (You, the estate, pays for that expense to get those documents). The homeowners association documents to the buyer so that they can review all those documentation from the H)A and make sure that they still wanna go forward with the purchase.
The good news is that all or most of those fees are paid directly from the estimated proceeds through the escrow, so most of those fees do not come out of The estate’s pocket. The next thing is escrow and title, the escrow and the title company, they collect information from both parties, the seller (the estate), and the new home owner that wants to purchase the property. They are a third party, they’re a neutral party, and what they do is they put a lot of things together so that the transaction goes smoothly. One of the things is escrow will be asking you… Well, I’ll already know if I’m helping you, if there happens to be a mortgage on the property, they reach out to the lender and get all the information to pay off, so that when it’s time to pay off the loan at the close of escrow, they have that contact information, and they are able to then send the wire the funds to pay off that mortgage. Like I said, I always get that information ahead of time, even before we put the property on the market, I will make sure that I have all that information regarding your mortgage. I’ll also make sure that we get a preliminary title report from the title company, I get that before we even put the property on the market, because I wanna make sure if there are any unknown leans or debts, any kind of attachments to the property that will need to be paid in order to sell the property that you and the Estate are aware of it upfront. I don’t like weeks into a transaction to find out that there’s something attached to the property that we weren’t aware of, a preliminary title report also will have information on whether there’s any easements around the property that need to be addressed and also submitted to the buyers for their approval. We wanna make sure all this stuff is up front so that things do go as smoothly as possible.
I have a quick story about Tom, he contacted me to help him to sell his father’s property, or so he thought. When I pulled the preliminary title report, we discovered that Tom’s mother who had passed away years ago, and nothing had ever been done with the title, so his now, his mother was on the title also. That meant that we had to go through the probate court in order to have the portion that belonged to Tom’s mother probated, given to his father’s estate so that we could go forward with the sale. It was a little more work, but we avoided a huge delay once we had a buyer by knowing this information up front, and when I say up front, I mean before we put the house on the market. Inspections once a buyers under contract, after we’ve negotiated the actual purchase agreement contract, then the buyer will have a specific amount of time in order to complete their inspections. Inspections usually start with a general inspection report that cost the buyer about $550 (How much does home appraisal cost?). Then if there is something that is found that is a concern to the buyer, their inspector says, the roof appears to be at the end of its use of a lifespan, for instance, I recommend a licensed roofing contractor to come and do a further inspection on the property. Then the buyer will then pay for that inspection, which is usually about $100 to $150. They can bring in as many inspectors as they want, could be plumbing, could be electrical, things like that, and once the timeline is up, unless they have requested a few more days of an extension, then the buyer must remove that contingency or when I’m representing my seller, I would send a notice for them to remove the contingency and they have two days to take care of that. So, there’s timelines attached to all of this that keeps things moving forward, and that does lead us right into contingencies.
Like I said, the inspection is a contingency, it’s one of the contingencies that is part of a real estate transaction. Two other contingencies that are typically included in a purchase agreement are the appraisal and the full loan contingency. The inspection is perhaps the most important contingency attached to a transaction, and the close second is of course, the appraisal. I always do my best to show up for the last 30 minutes of the inspection, and I always do my best to show up to the actual appraisal appointment, I do this because for the appraisal, I can point out specific features, I can be talking to the appraiser about the price that has been agreed upon, and the good news is that I have not had a low appraisal in decades. That is important because I want things to move smoothly and easily, and I don’t want any unwanted surprises like an appraisal that comes in 15000 less than the agreed upon purchase price. And our final thing is timeline monitoring. When I’m helping a seller, I typically lower the timelines that are default, and on the California Association of Realtors purchase agreement. They default to 17 days for inspection contingency and 21 days for all other contingencies, when I’m representing a seller, I have inspection contingencies of 10 days (C.A.R. Quick Guide Contingencies and Cancellations).
The reason I do this is because my experience has been, that’s typically what makes a transaction not go forward, and I don’t want my sellers house to be off of the market for 17 days when it could be off the market for 10 days. Now, keep in mind, I rarely have a problem where we cannot negotiate something when there’s some type of an inspection that has a problem, some different maintenance or something at the end of its usual lifespan, we go back to negotiating again. And once that negotiating is done for the inspection contingency, I make sure that the buyers sign in writing that they are now removing that contingency and that way they can’t come back and ask for another repair or a credit or something like that. I also lower the timeline that 21 days for all the rest of the contingencies to 17 days for everything else. Okay, It’s only four days difference, but again, I want those contingencies removed so that my seller can feel confident that the property is going to be sold. I don’t like to give extra days that we’re just sitting around waiting for that time to tick off and my seller is wondering, Are we gonna have that household so that I can go on and do the other things in my life that I want to go and do? So, that’s why I manage those timelines, 10 days for inspection, 17 days for everything else, and I again, have the buyer in writing sign a document that becomes part of the contract that they are removing all contingencies…
That’s when I call my clients and I let them know that 95% of the time the transaction goes through and we will close escrow as scheduled.For more about my book What to Do When You’re Responsible For Real Estate A Loved One Leave Behind click here, if you would like a copy email me at email@example.com OR call my office at 619.741.0111 OR simple contact me via the contact page on this website located HERE. Thank you for watching my video or reading my blog (more information on contingencies removal and how they work in California real estate)