Today we are going to talk about the basics to investing in probates. Now for those who don’t know what a probate is, it’s actually the method by which a deceased person’s estate is administered and processed to the legal system with or without a will. Usually what happens is the court or a lawyer will appoint an executor whose name is in the will and if they are not, they will appoint an administrator which is usually a close relative.
Collecting Remaining Assets
Now the sole responsibility to collect any remaining assets under the estate, pay up any remaining liabilities to the creditor and, of course, after everything is paid off, distribute all the assets according to the will. And of course, if there is no one in the will, they become the sole beneficiary.
Now we all know that unfortunate and bad things happen all the time to good people. But what that means is a lot of these properties are going through probate or are in pretty good shape and sold as is. So I do want you to keep that in mind but also, as it is a very sensitive topic, it requires quite a bit of tact. So it is very important that you keep that in mind.
Setting The Scene
Now before we really go into probates, I want to frame a picture before you. Imagine a person who owns their own property and is paying a mortgage, property tax and has their own expenses and has no experience in real estate. He receives an unfortunate phone call saying that a family member passed away and have left them their entire estate.
Now what this means is now this person has two property taxes, two mortgages to pay for. They have no idea what the condition of the home is, what are the required bit of payments or repairs. They don’t know what the markets like, they don’t know how to sell the property and pull the equity out.
So they are incredibly stressed out. And this is, a lot of times, the situation we are dealing with the probates. So want you to keep that, you know, mental picture in mind.
Now there are also legal fees that come with the processing of a probate and that’s going to be quite time consuming. There is a lot paperwork and legal issues and dealing with the lawyers. Which not a lot of people like to do. There is also emotional attachment and detachment to their estate. And a lot of these times these people are left a beneficiary or just kind of get the equity out of the home and just kind of move on with their life.
Now what that means is you as an investor with the experience are here to pretty much help them along with that process. You are that medium that will make it much easier for them. So, let’s just keep that in mind. Now all these stresses that are involved for this one beneficiary.
If you are going to make them quite motivated to sell that property. So there are lot sellers motivated, motivated sellers, when it comes to probate. Plus one thing I didn’t want to emphasize.
How To Find Probate Properties
Now how exactly do you find properties like this. You can actually look in the newspapers, blue sheets and obituaries. You can actually find these properties in MLS too. It’s a real share and very popular share of real estate and a lot of realtors will actually help and they will help to locate these properties for you. I don’t think you can do, what your own time is. You can actually go to your local court house. Go to the probate division. If you are not sure they have it, just simply call in so you do not have to waste that gas money. But what you are going to do is you have to search in the past week or anybody have to go as far as two to three months. The kind of, and search the records and inside these records they are going to provide you with the name of the deceased person, last known address, the beneficiaries, lawyers and the office address. Just document down this info and you are going to take the next step. You are actually going to contact the probate executives or administrators whatever it might be.
Now, what you are going to do is send them a letter of condolences and in this letter you are going to let them know that I heard about your loss, I am incredibly sorry. I just want you to know I have expertise in, of helping people out of this kind of situation, how to get the money, how to get out. But the real thing guys is you have to mind what you are saying because you are dealing with a grieving family member. All you are really doing is just offering your assistance and then if you are quite, give more time to them to, you know, figure things out, just send up follow up phone calls.
Don’t Be Annoying!
But do remember, don’t be annoying, feel this about the situation. But really, if you are going to build a rapport, offer them ways, you know, offer them free info and charities, where they can donate furniture and how they can gear up any remaining asset. Make it easier for them, you know, mention that how you can help, you know, how you can help to clear the house, how you can prepare it further for sale, how you can actually pull the equity out for them, make them, you know, the money that they want, how you can get them out of the deal and they don’t have to do a single thing. But really guys, you have to see that you are an investor but you are going to show them that I am here to help you. That is what you have to emphasize. What you really, really are doing.
Now, just like any deal or just because it’s a probate you still have to do your due diligence. Just like it is a for sale, buy owner type property. Do your market analysis, your CMA report, make sure they identify there are any leans, taxes that are up on the property because that is the responsibility for the seller to take care of as the beneficiary.
Having The Funds In Place
It is very smart guys to have your funds in place. Lot of a time, when you are talking to these people, they make a decision on the spot. So let me just go ahead and sell it to you. So it’s good to have your funds at place.
Probate will seem unappealing to many investors. They offer a great opportunity to work with motivated sellers. The key to probate is really just tact guys. You are practically buying a home from a person who is grieving a lost family member. Now the more you are able to kind of relate and sympathize, the lesser the sellers will be the more likely they are going to consider you over a money hungry investor and trust me it is very transparent.
Lee writes and blogs for The Property Group a letting agency from Plymouth, Devon.