Probate real estate involves property which belonged to a person who has died. Probate is the legal process used to validate decedents’ last will, settle outstanding debts, and distribute remaining inheritance assets to heirs. The process can be prolonged with heirs contest the Will or if the decedent died intestate (without a will).
Probate real estate must be purchased through the estate administrator. If the administrator has received court confirmation they can sell the home without permission from court. Otherwise, a judge must authorize the sale.
If multiple heirs are entitled to the property, they must all agree to the sale. Once court approval is obtained investors can negotiate the purchase price with the estate executor.
In order to locate probate properties investors must visit local courthouses to review public records. When a person dies their last will is submitted to the court. The Will then becomes a matter of public record and is available to anyone who wishes to view it.
Wills contain information about estate assets and provide the executor’s name and contact information. Real estate holdings are documented within the will and include the property address.
After reviewing Wills, investors will need to locate property records to determine if the home has a clear title or if a mortgage is attached. Experts recommend seeking out probate properties with clear titles or those with substantial equity.
After obtaining a list of potential properties, investors must contact estate administrators to discuss purchasing the home. There will be occasions when Administrators have no desire to sell. Offer sincere condolences for their loss and move along to the next property on the list.
Selling probate real estate can be a huge financial burden for estates that do not possess adequate funds to cover expenses related to the home. During the probate process the estate is responsible for all expenses including mortgage payments, property taxes and insurance, homeowner’s association dues, and general maintenance. These expenses can quickly bankrupt the estate, leaving nothing for heirs.
Plenty of administrators need to quickly liquidate real estate holdings to eliminate financial burdens. Offering to purchase these properties can offer the relief they are seeking and allow them to expedite the process to settle the estate.
Investing in probate real estate can provide an exceptional return on investment. Although locating probate properties requires more research than other types of real estate, it is usually well worth the time and effort.
Homes held in probate are oftentimes in good to excellent condition. Most are sold at 20- to 30-percent below market value in order to expedite a quick sale and reduce expenses for heirs and beneficiaries.
Investing in probate real estate is virtually an untapped market. Investors who take time to become educated about the proper protocol can reap enormous rewards. To better understand this niche, seek out investors who specialize in buying and selling probate properties or conduct research online.