Probate real estate investing is an area that appeals to a select bunch of investors. And rightfully so. This is one of those property types that promise the best deals in real estate.
Probate properties are everywhere, and what makes them such a delicious proposition is that they usually tend to fetch less than the market value. The reasons for this vary, but by and large, the sellers are motivated to get rid of the property quickly, no doubt good news for the investor.
This is not to mean they have low value. Quite on the contrary actually. Typically, these properties do not have liens, neither do the titles, and they usually have been owned for many years. This increases their value and equity, with most probate properties boasting quite a high equity value.
If you are looking to get into probate real estate investing, there are certain procedures you need to follow to make the process simpler, because it can be murky especially when the home is in a probate court.
You see, when someone dies, the law requires all their possessions to be placed in probate. This process becomes more entangled if the decedent (deceased) did not leave behind a will. Their possessions are sold during the process – from homes, to farms, to land, to vehicles, to businesses and so on – and any outstanding debts, if any, settled before the remaining monies are distributed among the beneficiaries.
This is usually an emotional period for the family, and when negotiating with them, it is paramount to bear this in mind. You need to approach sellers in a thoughtful manner.
Tips for Successful Probate Investing
Here are additional tips that will ensure your forays into probate real estate investing are a success.
- Make it a point of knowing who the legal representative of the estate is. Get their name, phone number and address.
- When you first interact with the bereaved, don’t forget to offer your commiserations and show that you understand that they may be going through a difficult time.
- Inquire as to whether an attorney is involved. If they are, make it a point of getting their name and contacts.
- Inquire about the home. Don’t let it be all about business. Granting the seller the opportunity to add personal anecdotes pertaining to the property builds a positive feeling which plays to your advantage as it generally boosts your chances of purchasing the property.
- Find out if the home is empty and take note of the asking price.
- Something else you need to inquire about are liens, if any, as well as annual property taxes and the value of the property.
- Do not forget to let the contact person know that you won’t be stalling when it gets down to the real business – the purchase. Rather, make it clear that you will be in a position to close the deal quickly, and pay on the spot. When you do immerse yourself in probate real estate investing, you will quickly realize that the ability to close quickly could make a huge difference, and in most cases, it could be the difference.
Many real estate investors tend to overlook probate properties. If you can make them a key part of your portfolio, there is no reason you shouldn’t succeed in this industry.