It should also be noted that the presence of a tenant, assuming you wish to live in the unit, will also create expense. Assume the tenants has lived there for at least one year and the building was constructed before June 13, 1979, you will have to evict under the Owner Move-In provision of the Rent Ordinance which provides that you must live in the premises for 36 continuous months.

You must also pay base relocation expenses of approximately $5,000 per person up to three persons. If there are any children in the household, you would owe an additional $3,300+ . Also, if any tenant was protected or disabled, you would the additonal relocation expenses.

Lastly, if you are doing an Owner Move-In eviction, you have 90 days to move in after the tenant has moved out. This can be extended to 180 days by petition to the Rent Board. For buyers planning on doing remodeling before they move it, this can pose a problem. If you fail to move in within the time required, it is rebuttably presumed that the eviction was in bad faith, therefore opening you up to potential claims for wrongful eviction. For that reason, I always recommend that buyers obtain coverage for Wrongful Eviction on tenant occupied property, even if they plan on living there.

Jeffery Woo, Esq.
Sedgwick, Detert, Moran & Arnold LLP
Complex Rental Property Group
415-627-3607
jeff.woo@sdma.com

A stubborn Seller shouldn't factor into YOUR analysis. You've started with all of the right questions... and yes, Buyer paying normal Seller closing/transfer fees is normal in a probate. But you can factor those extra costs into your purchase offer. If it's going to cost you $10,000 extra dollars on closing costs, and $10,000 extra on double rent/mortgage payments, and $10,000 on repairs, then figure out the fair price of the condo, and make your offer that price less $30,000.

Now, the Seller might refuse... but if you are making a "fair" offer, chances are no one is going to offer more in this market (maybe in 2004 they would have, but not in 2008). A Seller can stomp their feet and pound their fists all they want, but if they are over priced, they're not going to get any offers.

In addition, "As Is" is an almost meaningless phrase. The only thing it means is that they are forewarning you that they won't do repairs. But you should write a contract with a Property Inspection contingency, and if you uncover extra repairs and expenses that you had not expected, you then ask for repairs or a reduction in the purchase price. They can refuse, but then you can break the contract subject to your property inspection contingency. Chances are if you get that far, they'll negotiate.

So start with a "CMA" (comparable market analysis) to determine the fair market value of the condo (try http://www.evaluate-my-home.com if this is in San Francisco) and then deduct the extra expenses you'll incur, and make that your purchase price. If someone offers more than you... well, that's not a smart investment price for you. Unless it's a "luxury" that you're willing to over spend on to get, don't get emotional and spend more than the condo is really worth.

See Probate Made Easy at the below link. (http://www.wwlaw.com/probatez.htm) Don't do it alone. Get help. A good investment of course depends on the purchase price, your ability to pay and the current market value. But what about the headaches? You also have what sounds like a hostile selling situation. The terms don't ring true. Get a Realtor who specializes in "probate sales" in your area and I believe you will get answers different than what you are being told. Good Luck

Mike,

...I meant "utmost importance"

Thanks,
Laarni

Hi Mike,

Most probate sales are as what you stated. The buyer agrees on the terms and conditions of the sale based on the probate court order. The only thing that will make this deal worth your while is to ask your agent what is the current market value of the property and do your math. By the end of the day, the worthiness of this transaction lies on what you'll get out of it so the knowing the market value is of utmost important.

Good Luck to you,

Laarni

Hi Mike,

Another big question to ask the listing agent is whether the sale requires court confirmation or if it's being sold under "IAEA" -- they'll be impressed if you use the acronym. :-) If it requires court confirmation, there's an added layer of complexity. In SF, the transfer tax is paid solely by the seller in a typical sale; however, that charge often gets passed fully to the buyer in a probate (as in all things real estate, everything is negotiable). One reason people are interested in probate properties is because they perceive that they'll get a "deal". But I've found that probates often sell for market price or close to it. And as you've discovered, a probate often comes with some disadvantages (ie: buyer paying transfer tax, deferred maintenance of the property, longer timeframes, and the uncertainty of a court confirmation). Assuming you're a first time buyer, unless the price is super attractive, it can sometimes makes sense to skip the probate and buy the "usual" way. Of course, when a probate property offers something that doesn't come along everyday, it can be a "deal" in other aspects (ie: location, original charm and details, etc.). Talk to your realtor and weigh the options, and see what makes the most sense.