Power of Sale 80% Rule?!?!

[Mike Smith]

I am in the process of purchasing an off market home in which the owned is deceased (in Ohio). The son is the executor and there are multiple siblings involved. We are working with his probate attorney to get the purchase agreement signed. They have verbally agreed to our offer price. Today, the attorney asked me whether or not the offer was at least 80% of current market value. Can someone explain why this matters? I did a quick google search and see comments relating to Power of Sale (sounds like it bypasses the probate approval process) and that it must be 80% (or more) of market value. The ARV is $150k and we are purchasing for $50k. It needs a significant amount of work (including foundation repair). We are estimating $60k in repairs. If if doesn't hit the 80% threshold is there a way to bypass? Does it just mean that it must go thru probate fully before it can be sold? Any help would be greatly appreciated!

[Rick H.]

I don't know OH probate law but in CA, the rule is 90% for court confirmed sales, unless sold at auction where market is determine by competitive bidding.

Short answer: if it's the law, then that's the reason. 

As to the logic behind the law, it's public policy to provide the greatest exchange of value to the estate. 

The estate consists of more than just the heir(s). It also includes creditors and perhaps other claimants.  Creditors may be secured, such mortgages and other lien holders, as well as unsecured such as burial costs, state benefits reimbursement, and other persons and companies who are entitle repayment.

There may be ways to complete the sale if you can address all of the issues if the attorney and his client  and all heirs and claimants are all in favor of the sale. 

The big issue is that it's off market. Attorney needs to protect his client, the PR from those with a claim who are at risk of receiving less that might be received if a listed or public auction sale.