The short answer
How do you know if a trust property is priced right?
A trust property is priced right when the successor trustee can show the evidence behind the number. In a trust sale the price is a fiduciary decision, not a marketing preference, and it is judged by the process behind it rather than by hindsight. Two or three independent opinions of value, an honest record of condition, and a dated note explaining the choice will protect a trustee far better than a number that happened to be correct.
In an ordinary sale the seller can price a home however they like. A successor trustee cannot.
California Probate Code section 16040 requires a trustee to administer the trust with reasonable care, skill and caution. Section 16047 applies the prudent investor standard to the decisions that follow. Section 16004 requires the trustee to act in the interest of the beneficiaries rather than anyone else.
None of those sections names a pricing method, and that is the point. What the code asks for is a careful process. A trustee is not judged on whether the price turned out to be perfect. A trustee is judged on whether the number was reached with care, and on whether the file shows it.
The three numbers families confuse
Most pricing arguments inside a family are really an argument between three numbers that were never meant to be the same thing.
- The date of death appraisal. A valuation as of the date the trustor died, used for the stepped up basis and for tax reporting. It looks backwards, and it is often months old by the time a listing is discussed.
- A broker opinion of value. An estimate of what the property would sell for in current conditions. It looks forwards, and it moves with condition, timing and strategy.
- The list price. A decision, not a measurement. It is the number the trustee chooses in order to produce the best result reasonably available.
A beneficiary who says the house is worth what the appraisal said, and a trustee who says the market disagrees, are usually both right about their own number and talking past each other.
The question to ask before you accept any opinion of value
Ask what the number assumes.
Every opinion of value carries assumptions about condition, preparation, timing and marketing. A figure given for the property exactly as it stands today, with no preparation and a quick close, is a different figure from one that assumes a cleared and presented property on the open market in Newport Beach or Irvine.
A trustee who does not ask this ends up comparing two numbers that were answering two different questions, and then choosing between them as though one were simply higher.
What belongs in the file
- More than one independent opinion of value, with the comparable sales each one relied on
- An honest description of the condition at the time, photographs included
- The options considered, including selling as is and preparing the property, with what each was expected to produce
- A short dated note of why the trustee chose the number, kept with the trust file
- Every price change during the listing, with the reason for it
That file is not paperwork for its own sake. It is the difference between a trustee who made a decision and a trustee who simply accepted one.
Priced above what the evidence supports, the property sits, the early offers stop coming, and the eventual sale price is frequently below what a correctly priced listing would have produced. Priced below what the evidence supports, it sells quickly, and a fast sale at an unexamined price is exactly the shape of a claim that the trustee did not act in the beneficiaries’ interest. Speed is not, on its own, a defence.
Before you set a number
The pricing decision is the one a trustee gets asked about years later
If you are administering a trust in Orange County and the property is the largest asset in it, this decision is worth making with a specialist who understands both the fiduciary standard and this market. Paula Aragone is one of the few CPRES certified agents in the area.
Frequently asked questions
Who decides the list price of a trust property in California?
The successor trustee does. An agent gives an opinion of value and an appraiser gives an appraisal, but the decision, and the responsibility for it, sits with the trustee. That is why the trustee needs a record of how the number was reached, not only the number itself.
Does a trust property have to sell at the appraised value?
No. The date of death appraisal establishes value for tax purposes, in particular the stepped up basis. It is not a list price and it is not a floor. The trustee’s duty is to get the best result reasonably available, not to match a figure on an older report.
What if the beneficiaries disagree about the price?
Beneficiaries are entitled to be kept reasonably informed and they can petition the court, but they do not set the price. Disagreement is usually a documentation problem rather than a pricing problem. When the trustee shows the comparable sales, the condition analysis and the marketing plan behind the number, most objections lose their footing.
Is one broker opinion of value enough to justify the price?
One opinion on its own is thin. Two or three independent opinions, the comparable sales behind them, and a written note of why the trustee chose the number is a defensible record. The Probate Code does not prescribe a method, so what protects a trustee is evidence of a careful process.
Trust series, step 6 of 9
- The successor trustee guide
- As is or prepare the property
- Can a trustee be sued
- The full trust series
About Paula Aragone. Paula Aragone is the founder of Aragone & Associates, a real estate firm in Newport Beach, California specializing in probate, trust, divorce, luxury and senior downsizing transactions. With 23+ years of experience, 900+ closed transactions, $900M+ in sales and five professional designations including CPRES and SRES, Paula brings legal precision and market mastery to every deal. Reach Paula at aragoneassociates.com or call 949-415-4784.
Paula Aragone, CPRES, SRES, DRE #01364746, Aragone & Associates at First Team Real Estate, 4 Corporate Plaza Dr #100, Newport Beach, CA 92660. Telephone (949) 415-4784. This article is general information about California trust administration and is not legal, tax or financial advice. Trust terms and county practice vary, so confirm your own situation with your attorney or your accountant before acting on anything here.