Investing in Probate Real Estate

Finding Diamonds in the Rough

Did you know that there is a hidden market of real estate opportunity that is growing but has always but has been sort of a secret?

Did you know that in this hidden market, there of highly motivated home sellers – these are home owners willing to take a deep discount on the market value of their property, just so they can get out from under it?

Well, if you are ready to work with these homeowners, you will be in a market with much less real estate competition. This secret market full of diamonds in the rough is the market that has made many real estate investors their fortunes. The market is Probate Real Estate investing.

Why is Probate Real Estate Great for Investing?

You see, probate real estate is a growing market. Baby boomers own a great percentage of homes in the US. According to probaterealestatesales101.com, here are some interesting stats about the growth of this niche. “Baby boomers control 67% of US wealth.”  ”A baby boomer dies every minute.” “80% of probate real estate is owned free and clear or has a large amount of equity.” Finally, “85% of homes owned by individuals would end up in probate courts if owners died.”

So what exactly is probate real estate and why is it great for investing? Probate real estate involves the transfer of property upon the death of a homeowner. When a homeowner dies without the home being in a trust, the home and all of the deceased’s other assets end up going to probate court.

In probate court, a judge reviews the estate, all of the assets owned by the deceased, and appoints an administrator known as the Executor.  Sometimes the judge will act as the executor.  The executor manages the deceased party’s finances, divides and disburses the assets among the heirs as desired by the deceased.

Often, the new heirs or new property owners are not prepared or in a position to own the newly inherited property. A complex probate process can last for months or even years.  This process can be a detriment to the new heirs.

For many, the inherited property is distributed between more than one heirs.  The new heir(s) might live in another state or at a distance away from the property where it might become difficult to manage. The property might have a mortgage or two. It could carry a tax burden, and/or it might be in need of physical repairs.  Financially, many of these homeowners might not be able to make repairs, or spend the time and energy necessary to manage the property.  All of these issues can overburden the new property owners.

It is these property owners who are often looking for a quick way out. These are the motivated homeowner seeking to sell the property and get out from under the ownership. Many would rather cash in on the value of the property, and they are often willing to discount the property in order to quickly avoid a cash pitfall.  This is where probate property investing comes in.

Why not Invest in Probate Real Estate?

Why not invest in probate real estate? Many investors believe that purchasing a probate property is difficult.  They know that these transactions are tied to courts and that these transactions can have complications. They are often aware that a complex estate can make the probate process last for months or even years.  Since investing in probate property involves purchasing directly from the estate, many investors are either intimidated or unwilling to learn the steps necessary to invest in this niche.

However, what most investors don’t realize is that the Executors of the estate are empowered to make selling decisions.  Sometimes the selling decision must be approved by the judge overseeing the estate, but usually as long as the sale is agreed upon by all heirs, the judge will allow the transaction.  Since the laws differ from state to state, it is best for both the heirs and investors to work with probate certified licensed real estate agents to make sure all the transaction steps are met.

What is the Best Way to Find Probate Real Estate Properties?

What is the Best Way to Find Probate Real Estate Properties? Public records is the answer.

The first thing to do in probate investing is to the visit local courthouse. When an estate begins the probate process, the estate including the Will becomes a part of the public records. The Will usually lists the Executor and provides the information for the estate. Even if the decedent dies without a Will, probate records will show who will manage the estate.

Local courts can provide a list of all Wills in probate or to be presented in probate court. Armed with this information, an eager investor will quickly find property deeds in the name of the deceased persons. With the requirement of doing a little research, a potential investor can quickly create a list and find probate property owners to reach out to and possibly properties for sale. Learning the steps in this research process is another deterrent that limits the amount of probate property investors.

What is the Best Way to Contact Heirs about Purchasing Their Inherited Property?

The very first thing that must be considered is that the heirs have lost a loved one. They are probably burdened with both emotional stress and the stress of managing the inherited property.  With this new stress, these Executors are dealing with new duties that they may or may not be prepared to handle.  Many may not realize that they can sell their property during the probate process. By reaching out to these property owners, you can present them with an offer that they might be hoping to find.  Simply calling the administrator, sending a letter or visiting the person may find them ready to make a decision.

Letting the heirs know that you can help them solve their financial problems, you will be doing them a service. Many will be very happy to have the problem quickly taken from their hands and will settle for selling below market value. These owners will probably be willing to help the sale go through quickly for the return of instant cash.

Investing in Probate Takes Communication and Effort

As you can see, investing in probate properties does not take a great deal of training, however it is best to work with a real estate agent who is certified and trained in this niche.  To succeed in probate real estate investing, you will need to be part detective to find properties. You will need to be part negotiator and communicator.  You will also need to communicate empathy for the property owner’s situation.

Probate real estate investing can be beneficial for probate property owners and investors.  Probate real estate is a growing niche and is providing many opportunities for real estate investors. You will be in a position to succeed as long as you are well prepared and know the current market values.

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