October 18, 2011 in Probates/ Probate Investing
Probate investing is one of my favorite and most lucrative real estate strategies. But there are still a lot of real estate investors that find it hard to understand. They also find it kind of “creepy”. Personally I have found that this group of motivated sellers is grateful for your help and easy to work with in most cases.
Why are these sellers more motivated?
When an executor finds himself with an estate to settle that has property, it will need to be sold before the estate can be closed out. And in so many cases, the house has been neglected or is just terribly out of date. It’s not going to be easy to list this type of property on the MLS for a retail price. The executor is faced with a property that needs work that the estate is rarely in the position to do. Even if there is money that could be used for repairs, they usually don’t want to do them. It’s not their house. They just want this problem and the work that goes along with it to be gone so they can get on with life. Some of these folks can be very motivated sellers right from the beginning.
How soon do they usually want to sell the property?
The answer to this question varies greatly. In some cases, the executor which is usually a member of the family moves forward very quickly. In other cases a considerable amount of time can pass. How each family handles the death of their loved one is an individual matter.
In cases where a probate attorney is the executor, they have no emotional attachment to the property. For them it’s just about getting the estate closed. If you can make a case for your offer that is based on the condition of the property, then it’s just about dollars and cents. The probate attorney will often be able (and willing) to take your offer to the heirs and explain that this is a reasonable offer based on the condition of the property.
I once got a call from a man who had inherited two properties. He told me that he filed the probate paperwork the day after the funeral; he said that just wanted to be rid of these houses. But it actually took him a couple months to understand that his asking price was unrealistic for the condition of the houses.
I found out after working with him for a while that he was quite angry with his father for leaving him with these houses that were full of junk and needed a lot of work. In the end, not having to deal with removing the rest of his father’s belongings was one of the things made him accept my offer. What was the other thing? He just wanted to be done with the estate.
On more than one occasion I have spoken with sellers that have waited 12 – 18 months to even begin to work on the estate. It took this long for them to begin what is often a painful process. When you find a seller like this, once they have finally made the decision to close the estate they often move very quickly. Find out what you can do for them that will help make the process easier.
There really is no rulebook for working with probates. Each situation is different. But here are a few things to keep in mind:
-When marketing to these folks, be very mindful of their situation and their grief in everything you say and do.
-If they contact you and say they are not ready to sell the property, ask if you can contact them at a later date that would work better for them; possibly a few months down the road. More often than not, they will say yes.
-Let them know that when they are ready to work on the estate, you will be available to help them.
-If you are willing to help dispose of any unwanted property or clean out the house for them, let them know that you provide these services.