Some sales state that they are subject to “court confirmation,” or you will see a “1st overbid” price stated. What does this mean?
Court confirmation exists so that heirs or debtors cannot be taken advantage of. People selling in these circumstances are presumed by the law to need a little extra protection. They are likely selling the property not because they choose to but because they have to. In all of these cases, there may be many parties receiving the monies and ensuring that there is a double check on any decision making can avoid conflict among the parties as well.
In the case of a bankruptcy, it will depend on the judge whether there will be overbidding or not. Sometimes the judge just wants to double check the deal on the table and the requirements will vary from situation to situation.
In the case of a Trust or Probate sale, a property has to have an offer accepted with a 10% cashiers check. This check is forfeit should the buyer back out for any reason. The check and the offer are held for court confirmation and a hearing is held about 8 weeks after the offer is first accepted. This hearing and the “overbid” price is advertised a specified number of weeks.
The 1st overbid is 5% plus $1000 more than the accepted offer. If people show up to overbid at the hearing, the court sets the bid increment and people literally stand up in court and bid. I won for a buyer last year on the 1st overbid. The accepted offer was a developer who just wanted it if it was a bargain and my client was the tenant occupying the building. It was very dramatic and emotional in this case I can tell you!
For my buyer clients, I generally recommend that unless it is their one and only dream home, or they are an investor who is (like the one above) just hoping for a good deal, that we go to court and overbid and do not seek to be the offer held for confirmation. The problem with being the offer held for confirmation is that you can miss an entire quarter where the market is changing and still end up not getting the house.
For more info, contact me!