Today I want to talk about the difference between probate leads and inheritance leads. Both of these types of leads become available after someone passes away, but the process is different. Let’s start with probate leads.
When someone passes away, the estate will go through probate in most cases unless it’s a small estate or an estate with no property. Each state defines what the dollar amount is for an estate to be classified as a small estate. Generally speaking, estates containing property owned by individuals will go through probate.
Remember how the probate process works. If there is a will the estate is testate. The deceased named an executor who is someone to handle the estate in the will. If there was no will that’s called intestate, and the court will appoint someone (an administrator) to oversee the estate.
Before the probate can be closed a number or things must happen. The assets will be sold, the creditors will be paid, and finally the heirs get what’s left in the form of their inheritance. Investors can buy the property at a certain stage after the probate is opened, and it will always be sold before the estate can be closed. If you want to know more about the probate process you can download my FREE Probate Investing Roadmap.
Inheritance leads are different than probate leads. These are leads that didn’t go through probate, and there are a number of ways this can happen. Several ways that come to mind are
- The property may be held in a trust
- A property is inherited by a surviving spouse
- Or it could be the death of a joint tenant that wasn’t a spouse. That could be other relatives, business partners, etc.
When a property is in a trust that completely bypasses the probate process, it falls into the category of inheritance properties. As I said, this means that these properties are directly inherited and can be sold immediately by the heirs. You don’t have to wait for the probate process to be completed.
Inheritance leads are a great source of leads for investors. Like probates, the heirs may be very motivated to sell these inherited properties. If they are pretty houses there’s a good chance they will be listed. However, houses that are distressed properties needing repairs and/or updates, will likely be sold to an investor the same as a property in probate.
There are some folks that purposely want to keep their estate out of probate, and they do this through estate planning. This means that their assets including any property they own will be placed in a trust. In this case, the trust becomes the actual owner of the property. When the beneficiary of the trust passes away, these assets completely bypass the probate process and are directly inherited.
How Does This Affect Investors?
Both probates and inheritance properties are a great source of leads for real estate investors. In many cases, properties in trusts are often overlooked by investors because they don’t understand trusts and how the process works. Properties in a trust can actually be good leads in some cases.
Where Do You Find these Leads?
You can buy a lot of inherited properties in many areas, although in many cases the folks gathering these leads are working obituaries. I learned that from speaking to one of the companies that sells these lists.
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