Overbids and Final Sale Approval in Probate
In some probate sales, an accepted offer does not end the bidding process.
If the sale requires court confirmation, other qualified buyers may have the opportunity to appear at the hearing and submit a higher offer.
This is known as an overbid.
The overbid process is designed to help protect the estate by allowing the court to consider whether a higher and better offer is available before approving the sale.
In California, the first overbid must meet a statutory formula.
The first overbid must be at least the original accepted offer, plus 10% of the first $10,000, plus 5% of the amount over $10,000. California Probate Code section 10311 states that the court shall accept the offer and confirm the sale if the required conditions are satisfied, including that the offer meets the statutory overbid formula and is made by a responsible person.
For example, if the accepted offer is $800,000, the first minimum overbid would generally be calculated this way:
Original accepted offer: $800,000
10% of the first $10,000: $1,000
5% of the remaining $790,000: $39,500
Minimum first overbid: $840,500
If a qualified buyer appears and submits a valid overbid, the court may conduct the bidding process at the hearing.
The original buyer may also have the opportunity to continue bidding.
If the court accepts the highest acceptable bid, the court may confirm the sale to that buyer.
This is why court-confirmed probate sales require clear communication from the beginning.
The original buyer needs to understand that the accepted offer may be challenged by a higher bid.
Potential overbidders need to understand the deposit and qualification requirements.
Heirs and beneficiaries need to understand that the process is intended to protect the estate and maximize value where appropriate.
And the fiduciary must understand the responsibility of presenting the sale properly.
Probate real estate is not just about marketing the property.
It is about following the process, protecting the estate, and understanding what happens from listing to final approval.
In probate, the final sale is not always determined when the offer is accepted. In court-confirmed sales, the final decision may be made at the confirmation hearing.