Author Topic: Buying from a probate seller in California (East Palo Alto)  (Read 1637 times)


  • 5 O'Clock Shadow
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Buying from a probate seller in California (East Palo Alto)
« on: February 16, 2015, 01:17:17 PM »
My wife and I are considering buying a house in California from a probate seller. We went to the house Saturday and talked to the selling realtor. The story is that the original owner died in 1996. Several family members then lived in the house off and on through the years. About 3 years ago the house was completely vacant, and a squatter moved in. Turns out, that squatter was wanted by the federal government, so they raided the house, causing some damage here and there. After all this, it took about two years for the courts to figure out who actually owns the house and approve of the sale.

This house is in East Palo Alto, CA, the cheapest neighborhood in an area overflowing with extremely wealthy neighborhoods. The house is listed for $415K, and we would finance about half of that. The goal is to rehab-while-living-in-it for 2-3 years and then sell it at a profit (with that sale marking our FI finish line). Our walk-through inspection of the house was satisfactory and barring any major problems the come up in inspection (roof, plumbing, electrical), we feel confident that we could build a lot of value in this property. The other hope is that the forces of gentrification will increase the property value over that amount of time. We feel confident that we could sell the property for at least $500K in the future, after all repairs, so we're trying to determine the best purchase price and understand what repair costs will be.

So, my questions are:
- Do you have any recommended reading for buying from a probate seller? I've read all the things that come up from googling that term around. (Offers need 10% cash down, there is an "overbidding period", etc.)
- Are there any additional costs in a probate sale?
- How would you compare a probate sale to a forclosure?
- How much should we bid? Should we wait and try to "overbid"?
- We have not talked to a bank about financing yet, would this type of sale cause any problems? The offer period is open until 2/25/2015.

Thanks for any advice you have. Long time reader, infrequent poster.


  • Bristles
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Re: Buying from a probate seller in California (East Palo Alto)
« Reply #1 on: February 16, 2015, 11:36:24 PM »
Obviously, the big risk when betting on gentrification is that the engine driving gentrification might slow down. For you, that'd be the hot Silicon Valley tech economyŚ if Palo Alto or Mountain View starts looking 'cheap' (relatively) again, people will be less likely to move to East Palo Alto. In a recession, the poorest neighborhoods are generally hardest hit. Moreover, if you work in tech, your income will be at risk at the same time.

So are you in financial condition to potentially lose sweat equity, and even possibly money, on the house if you're unable to wait until prices bounce back?


  • Bristles
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Re: Buying from a probate seller in California (East Palo Alto)
« Reply #2 on: February 17, 2015, 12:57:41 AM »
I bought, rehabbed, and resold a probate house once. What a hassle, but I did make a good profit.

First thing you do, is change ALL the locks, and secure it tightly at all times against any remaining relatives. Believe me, they show up, and they are bold enough to take stuff thinking they are still entitled to it. Even if it wasn't there before the house was sold... I had one of them remove and steal the entire bathtub/shower unit one piece!

P.S. It's a bitch to LIVE in a house, and rehab it at the same time... I really don't recommend it, unless your marriage is very good...


  • Handlebar Stache
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Re: Buying from a probate seller in California (East Palo Alto)
« Reply #3 on: February 17, 2015, 01:47:24 AM »
Do you have experience of refurbing houses? I probably don't need to say this, given that these forums are generally populated by sensible people, but IRL I have met many people who have watched too much TV and think you can buy, do up, and sell a house at a huge profit easily. In actuality, there is a lot to consider, and a lot of work. And whilst much of it is grunt work, there's also dealing with utility providers, contractors, deliveries... it's a lot of scheduling, organising, thinking through the order in which to do things. It's especially if you live there at the same time and either have to do the work after your real job, or have contractors having to work around your stuff during the day.

So, if you know what you're getting into and are prepared for the hard work, it sounds like a fairly reasonable plan, as long as the gentrification would be a BONUS and no part of the actually needed return. Do not do it if you are counting on that, only do it if it all adds up, and the side benefit of doing it -here- is that you may also get the extra on top, in my opinion.