A California probate sale of real property is a Superior Court-supervised transaction governed by the Probate Code, and it runs on different rules than an ordinary home sale: a court-appointed referee sets the appraised value, the accepted price has to clear a statutory floor, and in many cases a judge holds a confirmation hearing where other buyers can show up and overbid. How much of that machinery you actually face depends on the authority granted to the personal representative at the start of probate.
Full Authority or Limited Authority Changes Everything
The Independent Administration of Estates Act (IAEA) splits probate sales into two very different experiences. The Letters issued to the executor or administrator will say which one applies.1Justia. California Code 10500-10503 – General Provisions
With full IAEA authority, the personal representative can sell real property without a court confirmation hearing. They send a Notice of Proposed Action (NOPA) to heirs and beneficiaries describing the price and terms. If no one objects in the statutory waiting window, the sale closes much like a conventional transaction. No overbids in a courtroom, no judge second-guessing the price.
Limited authority is the opposite. Every real property sale needs a formal petition, a confirmation hearing, and the possibility of competing bidders in open court. Even a representative with full authority can land in court if a beneficiary files a timely objection to the NOPA. Most of what follows is about the court-confirmed path, because that is where the procedure gets involved.
The Probate Referee’s Appraisal Sets the Floor
Before a court-confirmed sale can go anywhere, a court-appointed probate referee has to appraise the property. This is not the lender’s appraisal and is not something the family picks. The referee’s valuation becomes the yardstick the judge uses to decide whether the offered price is acceptable.
Two timing rules apply: the appraisal must have been completed within one year before the confirmation hearing, and the valuation date in that appraisal must also fall within that one-year window.2California Legislative Information. California Probate Code 10309 A re-appraisal is common when the market moves or the original number gets stale.
The referee’s fee is set by statute at one-tenth of one percent of the total appraised value of estate property, with a $75 floor and a $10,000 cap. The court can approve more if complexity justifies it.3Justia. California Probate Code 8960-8964 – Commission and Expenses of Probate Referee On an $800,000 property, the base commission is $800.
The appraisal also drives the price floor. The court will not confirm a sale unless the offered price reaches at least 90% of the referee’s appraised value.2California Legislative Information. California Probate Code 10309 On a $700,000 appraisal, the minimum acceptable offer is $630,000. Anything below that is dead on arrival.
Marketing and the Missing Disclosure Statement
The personal representative typically hires a licensed broker. An exclusive listing can run up to 90 days, with extensions available. The broker uses standard channels, but every buyer and buyer’s agent needs to understand the sale is subject to court confirmation and possible overbidding.
One thing surprises buyers: probate sales are exempt from the Transfer Disclosure Statement that California sellers normally provide. Civil Code Section 1102.2 excludes sales ordered by a probate court and transfers by a fiduciary administering a decedent’s estate.4California Legislative Information. California Civil Code 1102.2 The representative usually has no firsthand knowledge of the property’s condition, so these homes are sold as-is. Independent inspections are on the buyer.
Accepting an Offer and Petitioning for Confirmation
Once the representative accepts a qualifying offer, the purchase agreement should state the sale is subject to court confirmation and that a higher bidder could displace the original buyer at the hearing. The buyer typically deposits 10% of the price into escrow, refundable if the court confirms the sale to someone else.
The representative then files a Report of Sale and Petition for Order Confirming Sale of Real Property on Judicial Council Form DE-260/GC-060.5Judicial Council of California. Judicial Council Form DE-260/GC-060 – Report of Sale and Petition for Order Confirming Sale of Real Property No statute forces the representative to file within a specific number of days, but a purchaser can file the petition themselves if the representative has not done so within 30 days of the sale. Formal notice of the hearing goes to all interested parties, including the original buyer.
The Confirmation Hearing and the Overbid Math
This is where the probate process has no equivalent in a regular sale. The judge reviews the terms, examines the marketing, and then opens the floor to overbids from anyone in the courtroom who wants to top the accepted offer.
The first overbid cannot just be a dollar more. Probate Code Section 10311 requires the overbid to exceed the accepted price by at least 10% of the first $10,000 plus 5% of everything above $10,000.6California Legislative Information. California Probate Code 10311
On a $600,000 accepted offer, that works out like this:
- 10% of the first $10,000 = $1,000
- 5% of the remaining $590,000 = $29,500
- Minimum first overbid = $630,500
Once that first overbid clears, further bids usually move in smaller increments set by the judge, and competing bidders can turn the room into an auction. The judge is not required to accept even the highest bid and can reject all overbids and order a new sale if circumstances warrant.6California Legislative Information. California Probate Code 10311
The statute only requires that an overbidder be a “responsible person” making an offer that “complies with all provisions of law.”6California Legislative Information. California Probate Code 10311 In practice, most courts expect overbidders to arrive with a cashier’s check or certified funds, often for 10% of the intended bid. Deposit expectations vary by courtroom, so confirm the local rules for the specific department before the hearing.
Closing After the Court Signs Off
After confirmation, escrow proceeds along familiar lines, but the court’s order dictates the terms. Neither side can renegotiate price or conditions after the judge signs. The representative executes the deed at closing, and a certified copy of the confirmation order is recorded with it to establish clean title.
The broker’s commission is not automatically whatever the listing agreement says. The court decides what is reasonable for the broker’s services to the estate, and the estate owes the commission only if the sale is both confirmed and consummated.7Justia. California Probate Code 10160-10168 – Compensation of Agent, Broker, or Auctioneer If the deal collapses after confirmation, the broker is not paid out of the estate.
Medi-Cal Estate Recovery Can Eat Into Proceeds
Federal law requires state Medicaid programs to recover certain benefits paid on behalf of enrollees age 55 and older, including nursing facility care, home and community-based services, and related hospital and prescription drug costs.8Medicaid.gov. Estate Recovery California’s Department of Health Care Services can file a claim against the probate estate to recoup Medi-Cal costs, and because the family home is usually the estate’s biggest asset, the sale proceeds commonly fund that claim.
The estate’s attorney, personal representative, or anyone in possession of the decedent’s property must notify the Department of Health Care Services within 90 days of the death. Missing that notice creates complications that can hold up the probate.
Recovery is not allowed when the decedent is survived by a spouse, a registered domestic partner, a child under 21, or a blind or disabled child of any age. California also offers a hardship waiver when the primary asset is a homestead of modest value, defined as a home worth 50% or less of the county’s average home price. Raise any potential exemption with the estate attorney before closing, because otherwise the claim will be paid out of the sale proceeds during administration.
Tax Outcomes of the Sale
Inherited property gets a stepped-up basis under federal law: the cost basis resets to fair market value on the date of death rather than whatever the decedent originally paid.9Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent If a decedent bought a home for $200,000 and it was worth $900,000 at death, and the probate sale closes at $920,000, the taxable gain is $20,000, not $720,000.
California community property receives a broader benefit. Both halves of community property get the step-up when the first spouse dies, not just the decedent’s half, which can meaningfully reduce capital gains tax for a surviving spouse who sells later.
FIRPTA is a separate issue. If the decedent was a foreign person for tax purposes, selling U.S. real property triggers withholding under the Foreign Investment in Real Property Tax Act, and when a domestic estate sells property with gain allocable to a foreign beneficiary, the estate must withhold on that gain.10Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests A fully domestic estate with no foreign beneficiaries delivers a certification of non-foreign status to the buyer and no FIRPTA withholding applies.11Internal Revenue Service. Exceptions From FIRPTA Withholding The title company usually flags this, but raise residency questions with the estate’s attorney early.
Realistic Timeline and Costs
A court-confirmed probate sale commonly takes four to twelve months from appointment of the personal representative to close of escrow. The biggest variable is the confirmation hearing itself, which typically lands four to eight weeks after the petition is filed depending on the court’s calendar. Sales under full IAEA authority without a hearing can close in roughly half that time.
The main costs on top of the sale itself:
- Probate referee appraisal at 0.1% of total appraised property value, with a $75 minimum and a $10,000 cap.3Justia. California Probate Code 8960-8964 – Commission and Expenses of Probate Referee
- Court filing fees for the petition for probate and the confirmation petition, varying by county but generally in the several-hundred-dollar range per filing.
- Broker commission as negotiated, but ultimately set by the judge at a reasonable amount for services to the estate.7Justia. California Probate Code 10160-10168 – Compensation of Agent, Broker, or Auctioneer
- Statutory attorney and personal representative fees calculated on a sliding scale based on the estate’s total value under Probate Code Section 10810.
Representatives who underestimate the timeline or skip obligations like the Medi-Cal notice tend to end up redoing work. The cleanest sales happen when the representative, the attorney, and the broker treat the court-driven nature of the process as the starting point and build extra room into every deadline.