HOW DO PROBATE REAL ESTATE SALES WORK?
Probate is simply the legal process that settles a deceased person’s debts and formally passes their property’s legal title to the intended heirs. That is, of course, if there is a will to properly identify the intended recipients.
The parameters of a will typically dictate who the property will go to, but I digress. Not every scenario is as transparent as we would like to assume. It is all too common for homeowners to pass away without officially naming who will receive their property. iF a homeowner passes away without naming any heirs to receive the home, the state steps in to administer the sale of the home through a special probate court.
Probate real estate sales that make it to probate court are a result of the vacuum in ownership that is created when someone passes away. Better yet, homes will be sold through a probate court when the deceased homeowner doesn’t bequeath their asset to anyone or never got around to making a will.
Fortunately for real estate investors looking to capitalize on probate real estate sales, each scenario (whether the home was bequeathed to heirs or brought to probate court) offers an opportunity to acquire a deal at an encouraging price.
If the subject property is bequeathed to an heir and/or heirs, it stands to reason that you may be able to acquire the deal if you play your cards right. If for nothing else, most heirs would rather receive cash for the property (which you can offer with the help of a private lender) than deal with a home that could have a number of undisclosed costs and issues. In fact, most heirs would jump at the opportunity to sell their inherited properties, and are motivated to do so before they turn into a headache. Therein lies the greatest benefit of probate real estate sales: motivation.
More often than not, those that receive property through a will are motivated not to deal with the hassles that have become synonymous with homeownership. Their motivation, therefore, can serve as an opportunity for you to intervene an offer an “alternative solution.” If their motivation is strong enough, and your negotiation skills graceful enough, you could end up with a great deal on your hands.
If, on the other hand, the property makes it to court, you’ll have to change your approach. Instead of dealing directly with the heirs of a probate court will typically market the subject property just like any other. According to Zillow, “The probate attorney or the estate representative will hire a local real estate agent, sign a listing agreement, and show the property, just as they would a traditional listing.” Not unlike a traditional sale probate real estate sales that make it to court will base their listing prices on comparables, listing agent suggestions and independent appraisals. Either way, the original offer and sale date is subject to the court’s confirmation.
According to Zillow, “Once the sale date is determined, the parties now must wait a minimum of 30 to 45 days. During this time, the court requires that the property be properly advertised and marketed with the new accepted price.”
It is worth noting, however, that each state has there own probate laws, so there is no 100 percent, process to abide by. This is information is more of a broad overview than a specific process. At the very least, it should be enough to get the ball rolling on your next probate real estate sale.
PROBATE REAL ESTATE FAQS
If you have any more questions, I urge you to look at two of the most frequently asked questions regarding probate real estate:
How Long Does The Grant Of Probate Take?
Of course, for the probate process to even take place, a grant of probate must be given to the individual tasked with administering the estate and handling the disposal of their assets and debts. In other words, someone needs to be granted access to do so by the Supreme Court. It is the Supreme Court that will give the proper authorities the right to distribute the deceased person’s assets accordingly. That said, the grant of probate doesn’t happen overnight.
Again, each state has become synonymous with there own laws regarding the probate process, so be sure to identify the rules set in place for the state you intend to work in. Typically, however, the will executor must apply to the Probate Office of the Supreme Court to receive the grant they need to move forward. In the event their application is approved, they will be given a grant of probate to confirm the deceased has, in fact, died. What’s more, the grant of probate will make sure the will is authentic and the executor is who they say they are.
Once probate is officially granted, the process moves forward much like a traditional sale, but the length of a grant of probate will vary from state to state. Just know this: probate is a lengthy process. If you are looking to buy a property in probate, expect it to take some time. It’s not uncommon for the process to take months.
How To Find Probate Real Estate Listings
The more familiar you are with the probate process, the easier it is to understand how to find probate real estate listings. That said, homes subject to probate court are public knowledge, meaning anyone can find the information if they just know where to look.
If you are looking for probate real estate leads, look no further than your local courthouse, as it will have records of all the nearby probate properties. You could pay for a list online, but said lists come at a price and tend to be a little delayed (they don’t have the most recent information). I personally prefer pulling probate listing at the courthouse; if you know what to do, it’s the most effective and efficient way to find a probate deal in your area — and it’s free.
Upon arriving at the courthouse, ask an employee to direct you to the estate sales or probate properties. That way you won’t waste time wondering around what can be a confusing labyrinth if you aren’t prepared for what’s in store. Once you arrive, tell the clerk your specify criteria (location, dates, prices, etc.), and they should be able to provide you with the appropriate documentation that has already been filed by the probate lawyers in charge of each home that is in the system. What’s more, it’s these documents that will point you in the right direction. More often than not you’ll be able to find out everything you need to know. Most importantly, get the address, the name, the status of the property; that way you have something to work with when you initiate a marketing campaign.
The content of your direct mail campaign should be tailor-made for those in control of probate properties and strike a chord with a specific audience. In the event you find a motivated seller, you may find yourself with a great deal.