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How People are Making Money on Probate
The probate process makes sure that the deceased’s debts are paid and that the heirs are all notified and located. It also ensures that the Executor (named in will) or administrator (court appointed) manages the probate estate effectively. Making money on probate is often possible because these properties are frequently sold below market value due to the motivation of the sellers.
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If the probate process does not go smoothly, properties can undergo literally years of legal action. Marilyn Monroe’s estate took 18 yrs to resolve. While this is an extreme example, it is important to steer clear of any probate that shows potential for difficulties.
Why Buy Probate Real Estate?
With over one million new probates each year, there will always be a steady stream of opportunity. But the main reason is that probate real estate usually sells at 20%-30% below market value. For a variety of reasons heirs are often in a hurry to sell the estate as quickly as possible. This provides the investor with a remarkable opportunity for profit.
Tactics to Avoid
Do not call the relatives of the diseased directly a short time after the funeral. Your interest will be better received if you allow a few weeks to pass. Also, make sure that when you do make contact that you are respectful and sensitive to their feelings.
How to Locate Probate Real Estate
If you wish to purchase probate real estate you will want to check daily newspaper obituary notices. You can use either a property ownership service such as Experian®, or visit the local tax collector’s office to check and see if the deceased owned any property. If you find a property that shows promise, wait a few weeks and then make contact with the executor or administrator of the estate
either by letter or phone, tactfully expressing your interest in purchasing the property if it comes up for sale.
You will also find leads in published notices to creditors, or notices of petition to administer estates. Depending on the laws of your state, it is usually required that heirs issue a published notice for creditors that a probate estate is being distributed to the heirs. These legal notices are usually found in a local newspaper, although in some communities they may be published in more than one source.
Visit the county or city probate records office to inspect the files for the name of the estate attorney, the name of the executor or administrator, names of the heirs, contents of the will, and real estate assets of the estate.
Opportunities to Purchase a Probate Estate
The least favorable setting for making a profit is an advertised public auction. If there is heavy bidding, the price of the probate estate can often wind up at full market price. Very similar to this is the public sale of a probate estate. Both of these situations involve competitive offers and may require probate court confirmation.
The best approach for maximum profit is to purchase directly from the estate executor or administrator without court confirmation. This provides the estate with a quick sale, and you with money in your pocket. Another opportunity for a good purchasing price is to buy from the heirs after they have received title to the property. Many times they do not wish to keep the property and want to liquidate the asset as soon as possible.
Some Important Tips on Making a Profit
Be very cautious of any probate real estate sale marked “as is”. This means that the estate will not pay for any repairs. Also bear in mind that many times in this situation the seller is unaware of the property deficiencies, and in some cases may be exempt from disclosure requirements.
Know what you plan on doing with the property. Will it require some repair before resale? Will it be more profitable for you to resell it quickly, or to hold onto it for a while until the market price builds? It is important to know how to make the most profit from the property.
Resources and Complete Probate Kits
If you do a search for “Buy Probate Real Estate” on the Internet you will come up with a host of many different sites offering complete probate kits, programs, and information of how to make money selling probate real estate. Any time you are investing money in purchasing a program or kit, be cautious and do your research. Here is an excellent article from well-known financial advisor Bob Bruce with a recommended book for around $20.
http://db.inman.com/bruss/columns/column.cfm?StoryId=050604BB2&Display=story. This site also offers a book for around $65 written by a lawyer on how to make money from probate. It also has a small free manual that can be downloaded: http://db.inman.com/bruss/columns/column.cfm?StoryId=050604BB2&Display=story.
A real estate agent who has successfully made a profit from buying and selling probate real estate since 1987 created this course which includes a complete probate kit for around $500: http://www.probate-realestate.com/.
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