Breathe Life into Your Real Estate Investment Portfolio with Probates

Wednesday, February 10th, 2010 | Uncategorized

Probates represent one of the most overlooked areas of real estate investing for finding motivated sellers and big profits. Probates offer you a very consistent source for leads, and there is generally little or no competition. But what is a probate in terms of real estate investments? When someone dies, their estate will often go into probate court. A judge then assigns an executor whose job it is to make sure the person’s assets and belongings are divided fairly and according to their wishes, after any creditors have been satisfied. Many times, a house or piece of real estate is part of the asset list.

When a house goes into probate, the heirs can be very motivated sellers. Because of this, they are willing to sell you the property at a big discount, below market value (often 30-40% below). They may have no choice but to sell the house quickly, and they’re not as concerned about getting full market value for it. There are many reasons why this may be:

The heirs don’t have the money to maintain the house payments.
They have homes of their own already.
Too many repairs are needed, with not enough money to pay for them.
The house is heading to foreclosure.
They need or would rather have the money than the house.
Too much baggage attached with the house – estate taxes, utilities, insurance, ongoing maintenance.
They live too far away to maintain the house.
It holds a negative emotional attachment.

As a knowledgeable real estate investor, you’re taking a burden off their hands and providing a solution to a problem. A real estate probate sale allows them to move on and focus on other things that need attention. The executor often has the power to decide to sell the house. If there are multiple heirs, they need to get everyone to agree before proceeding. The executor will be the one signing the contracts, too.

Finding property probate opportunities is not difficult, just involves an investment of your time. Start with your local courthouse records. Wills in probate are public record. Use that list to conduct a property or deed search on the decedent to find any real estate they owned. Then it’s a matter of making some phone calls, sending out letters or knocking on doors to contact the estate administrator or executor. Be sure to research probate laws in your state. For example, some states require that probates be listed through a realtor.

You’re in a great position to offer a win-win situation to people going through a very difficult, often lengthy process. The payout for your time invested in a probate sale can be a quick turnaround and huge profits. To learn more about different real estate investment strategies and how you can become a stronger investor, sign up for our free Silver Membership today.

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