Last Thursday bright and early, I went downtown to the LA Superior Court for a Confirmation Hearing for my listing at 276 Wapello in Altadena. This is an adorable English cottage in a great pocket in Altadena.
We had an accepted offer at $ 815,000. The Court was petitioned and we got a court date within 30 days. That’s FAST!! The first overbid amount was $ 856,250. Any overbidders were required to be qualified to bid by providing a cashier’s check for 10% of the first overbid amount PLUS extra cashier’s checks for any amount that they intended to overbid. The bidding is for an all cash, non-contingent sale. Pretty scary for the average buyer.
When there are any overbidders, the Judge determines the minimum amount of increase required over and above the first overbid. This determination is made at the time of the confirmation hearing. Since we did have three over-bidders appear at Court, the Judge set the bidding in increments of $ 5000 and the bidding went around 11 times (!) until only one buyer was left standing. The original buyer was outbid at Court and we have opened Escrow with the new buyer. The original buyer gets their deposit returned.
So what’s the advantage of even being the original bidder? As the original buyer, you get to perform inspections, review title and get a loan approval, including an appraisal, if needed. Your price is less than someone who comes to bid at Court. The higher price and 10% cash requirement needed to bid often deters overbidders. The disadvantage is the waiting and the fact that the deposit is held until the court date.
The overbidder at court gets NO CONTINGENCIES of any kind. The sale is all cash. The overbidder has to close within 10 days of the receipt of the fully confirmed (signed) court order into Escrow. Can they try to get a loan, yes, but if they fail to perform on time, they lose their 10% deposit.
Why in this modern day world of Living Trusts would anyone have to go through Probate? You’d be amazed at how many people do not have a Trust of even a Will.