April 18, 2014 in Investing In Real Estate
Probate investing is one of the most lucrative niches of all. Folks that have inherited a house almost always want just one thing; the CASH that is sitting in the house.
The primary thing most real estate investors get hung up on doesn’t have anything to do with the actual process of working with estates and houses in probate.
It has to do with the mindset of the investor. Most real estate investors are hesitant to jump into the arena of probate investing because of a perceived negativity that goes along with working in that niche.
In reality, nothing could be further from the truth. The executors and heirs have a house they must sell to settle the estate. It just doesn’t get any simpler than that. They need sell the house or buy out the other heirs, and they have a timetable to get that done.
Know that You Are an Integral Part of this Process
The vast majority of people involved in the probate process have to deal with all of this during what is a very emotional time their lives. They are also confused and overwhelmed by the entire probate process most of the time. They are dealing with the legal aspects of settling the estate, and they have house to sell that is most likely crammed full of the owner’s belongings.
When they find someone that is knowledgeable in probate investing that can step in and help navigate this whole process they are grateful. In most cases, by the time they get around to selling the house they just want the whole process over; they want to be done and move on with their lives.
Position Yourself As the Expert
It’s important that you position yourself as the expert right from the beginning. Once you have educated yourself on the probate process and you know how to structure any real estate deal, you can begin to work in this probate investing niche. There is not really any specialized knowledge that you need. I believe that you need to know the basics of how this process works in your state. Once again, this goes back to positioning yourself as the expert. If the executor or the heirs ask you a basic question, you need to be able to give them an answer.
The only thing that is really different in a probate deal vs a regular deal is that you may face some delays in the actual closing date due to the court process.
However in most of the probate deals I have closed, there has rarely been any delay at all. I do add a little additional time in the contract for the actual closing date in case we run into a glitch that delays the closing.
Some People Will Be Embarrassed
You will find that quite often the person you meet with to inspect the property will be embarrassed by the appearance and condition of the property.
One of the first things that you need to do is to put them at ease; tell them that this is actually pretty common (which it is). In the niche of probate investing, most of the properties that investors come in contact with will be the home of an elderly person. I like to say that these folks are “keepers”. They keep everything they come in contact with the last decades of their life. There are also cases where they are actually hoarders, but that’s another story.
One of the biggest stumbling blocks people settling estates have is actually cleaning out the house. Often times they will spend months and months looking through personal belongings for important personal papers, pictures and other items that are important to them. After all of these months have passed, then the sellers look up and they haven’t really removed anything at all.
They are likely to just walk away without finishing the job. I have found this is the number one reason folks still have the houses in the estates to sell one year after the person is deceased.
It’s Your Time to Help
If it is cleaning out the house that is keeping them from moving forward with the sale of the property, you can offer to take care of that job for them. It may also be something entirely different.
Whatever it is that is holding them up; preventing them from selling the property, that is the problem you need to solve. After all, we are not really in the “house” business. We are in the problem solving business.
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