Probate properties provide good investment opportunities for real estate investors and wholesalers. Even though it is a little more risky than other types of properties, it also promises a high return on investment.
To find probate properties in your target areas, you can buy leads from LeadVine. Alternatively, you can also get probate leads from the local probate court, local real estate agents, local auctions, online listings, and local newspapers. Moreover, you'll also find probate leads by doing property walkthroughs, building your own network, and marketing yourself as a probate investor.
Ready to know more about how to find probate properties? Read the rest of this blog!
A probate property or a probate estate is a property that is under the control of the probate court. This happens when someone dies and they did not leave a will behind. The probate court will assign an executor to administer the sale of the property and identify the heirs. Typically, this executor is the late owner's closest relative or surviving spouses.
Many real estate investors prefer probate properties since they are sold at a reduced price. This is because most of the relatives just want the estate to be sold so the late owner's debts can be paid and the remaining money can be divided among them. The relatives don't usually make an effort to maximize the potential of the property to increase its value as it will lead to further complications like who will finance the repairs, who will work with the contractors, etc.
In some cases, properties in probate are sold at 50% less than their market value. However, expect that most probate properties are fixer-uppers.
Before you find probate properties in your target areas, you must first learn about these facts and statistics. Knowing all these can help you make a better real estate investing business decision.
To further weigh whether probate sales are worth it, you should also look into its pros and cons. Here are the major benefits of a probate sale:
Meanwhile, here are the risks of probate sales:
In addition to the benefits and risks we discussed in the previous section, there are also some things you have to keep in mind when purchasing probate properties.
First off, you have to pack a lot of patience and manage your expectations when it comes to the timeline of the probate sale process. There are a lot of court hearings involved in this type of sale and the involvement of the heirs can further complicate the probate process.
Second, if you buy a probate property, you cannot demand the seller to make repairs. The house doesn't have a warranty so if you discover major issues after the probate sale process is done, nothing can be done.
Another fact you should remember is that anyone may outbid you during the estate's final auction. Even if you already paid a deposit which is usually 10% of the property's selling price, you may still not own the property in the end. The deposit is also non-refundable.
If you are willing to take the risks of probate sales and the whole probate process, you'll be happy to know that the probate market is unsaturated. Here's how to find probate real estate!
LeadVine offers superior marketing lists for every real estate investor. This platform can identify the highest-value opportunities in your target area including probate properties. They can search probate estates out of their 200,000+ monthly obituaries nationwide.
Moreover, they also provide lists of DPOs or widow, pre-probate, and pre-inherited leads. They also have divorce and tax delinquent leads if you want to further improve your portfolio.
Since probate properties have their own niche in real estate, not many investors know where to look for them. But one thing is for sure, real estate agents know probate sales in their localities. Probate representatives and executors primarily contact real estate agents to sell the probate estate so communicating with a local real estate agent would definitely land you a deal.
Since the local probate court is facilitating the probate process, you should also contact them to get ahold of the probate court records. If you request correctly, the probate court clerk will provide you with a detailed probate list real estate of recently filed cases.
You can bring home this record and sort through the estates and identify houses that are for sale. You can then contact the estate representative to put in an offer, get further details about the property, and start the purchasing process of the probate home.
In order to liquidate probate properties, they are sold in auctions. Attending these auctions can land you a probate sale pretty fast, however, remember that there will be a bidding process during these events and so you may buy it at the property's market value or above it. Not a great option if you want to get a higher ROI for a probate home.
The MLS is often saturated with probate listings you may want to check out. However, only licensed real estate agents usually have access to the MLS. So the question is: how to get probate real estate listings in a legal process.
You may have to partner with a licensed agent so you can sort through all the probate real estate listings. If you don't want to do this, you can also check out several platforms that pull information from the MLS for probate property. Note that this comes with a fee, too.
If you have the time to find probate property, you may want to visit neighborhoods and do property walkthroughs or property search. Using a driving for dollars app to identify property information on the spot. Many of the properties you'll find are probably not listed yet on the MLS or are still in pre-probate. If you are able to give an offer first, there's a high chance you'll get the property.
Checking out local newspapers can also lead you to a deal or two. Read the newspaper's obituary section to find details of people who passed in your neighborhood. Chances are, they left property behind. Aside from the obituary, probate auctions are also advertised in local newspapers so the interested market can attend. Check the local newspaper religiously so you don't miss any of these events.
Attend networking events of real estate professionals in your target area so you can build a solid relationship with them. This way, when they find probate leads that they aren't interested in, they can contact you and provide you with details. Moreover, develop a great relationship with probate attorneys since they are dealing with probate cases all the time.
Marketing yourself as an investor in a probate sale will also help you land a lot of probate leads. All you have to do is promote yourself digitally using social networking sites like Facebook and Instagram and send out newsletters or direct mails to your contacts mentioning that you focus on probate sales. Next time they need to sell a potential probate property, they'll recall your name and contact you.
Now that you already know where to look for probate homes, it's time you start closing on your first probate sale. Here are the steps you need to take.
As is with any real estate deal, the first thing you have to do when you find a probate property for sale is to make an offer on paper. The appointed estate representative accepts, counters, or rejects offers for the probate sale or the remaining property of the estate.
When the offer is accepted by the seller or the estate representative of the probate property owner, the sale of the deceased person's estate will then be confirmed by the probate judge and the long process begins.
Since purchasing probate property does not allow contingencies, you have to request an inspection of the probate property to identify all the damages both minor and structural. Even though you aren't allowed to back out from the sale once you've put in an offer and it was accepted during the probate process, you can still cut your losses. Note that this may mean you'll also lose your 10% down payment.
As mentioned, when your offer is accepted when buying probate property, you have to pay 10% of it to the seller. Probate sales require deposits in almost all states. But if the executor of the will counteroffers, the 10% you'll be paying would be based on the amount he set or the newly proposed amount.
If you discovered issues on the property after the inspection and you no longer want to continue with the sale, you would lose the 10% you paid.
After you made an offer to the probate property, probate courts will set a court date to finalize the sale of the probate real estate. This is the trickiest part of a probate sale when buying probate properties as other interested buyers and real estate investors can attend the hearing and outbid you for the property. They may make an offer higher than yours and the court is required to accept whichever is the highest.
Usually, when you buy probate property, the bid increments depend on your state probate laws. But if you want to secure the property, you may have to overbid to match the highest bid of the buyers who attended the hearing. If you fail to bid a higher amount than the market value, you'll lose your initial 10% deposit or down payment.
Once you are able to secure the property during the probate court hearing and you did so through over bidding process, you have to settle your remaining deposit due.
This is because the 10% deposit required from you may have increased when you overbid for the property. Don't worry, though, as the court will give you ample time to settle these. You'll have enough time to get a cashier's check from your bank if you want.
Of course, no home sale closes without paperwork. The probate court may request a lot of documents from you including proof that you can pay the remaining amount before you sign the purchase agreement.
In connection with this, you should have a secure financing source before the contract signing. This is so you can provide proof to the court that a lender will make the sale possible. If you fail to do this, the sale may very well fall through, and once again, you'll lose your deposit amount.
Once you've submitted all the documents required by the court, the signing of the contract or purchase agreements will then be scheduled. The contract is typically prepared by the executor of the probate real estate with the help of the probate lawyer, but there are instances wherein the probate judge provides it and the signing is done before you and the seller exits the courthouse.
After signing the contract, the house is already yours and other buyers can no longer go on a bidding war with you. However, it won't be handed to you immediately as it will still be subjected to regular probate proceedings. This is super time-consuming and can take 12 to 36 months to complete.
Finding probate properties is not as difficult as finding a burned-down house. You can get probate leads from a lot of sources including real estate agents, probate courts, newspapers, home auctions, etc.
Nevertheless, if you want to get probate leads fast and don't want to go through the complicated process of buying a probate property list somewhere else, you can just buy probate leads from online platforms like LeadVine.
Meanwhile, if you are also looking into other types of properties to grow your investment portfolio aside from probate homes, you may want to purchase motivated seller leads from Property Leads. Our leads are generated from SEO and we sell them exclusively to lessen your competitors!
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