Like birth, death is a matter of public record. Probate public records reflect a court-supervised process of gathering a deceased person’s assets and distributing them to creditors and inheritors.
Many investors and Realtors consider probate real estate to be one of many life events that can be a source of leads, often categorized as motivated sellers. This is good reasoning as life events can and do result in property transactions.
Things to know
Here are five points to know about probate real estate in public.
Homes worth buying are protected from probate
The first thing to know about probate deals is that the good ones are very rare. Most people who own properties worth pursuing as an investment put their home in a revocable living trust, established beneficiary designations, or resolved by joint tenants with rights of survivorship.
People are more financially savvy than ever, and we’re also living longer. These facts translate to an increasing amount of property owners divesting themselves of assets as they approach their last years and protecting their property from probate by streamlining the dissemination of their assets to heirs.
These factors alone immediately reduce the number of worthwhile leads derived from probate public records as suitable investment opportunity pursuits. Realtors who know and cultivate relationships within their market have previously established themselves within that family’s sphere of influence are likely to be the first to become aware of a deal.
Probate sales are complicated
Probate sales almost always take longer than traditional sales and reduce the value of pursuing them because, as all investors know time kills deals. While the occasional lower price can attract investors, know that Realtors are encouraged to price homes as they would any other listing.
Offers on a probate sale must be accompanied by a 10% deposit, then confirmed by the court, and then assigned a sale date usually a month or more from when the offer was submitted.
Upon confirmation of the date, courts often raise the price per state law to attract more bids. An auction process then ensues. Sometimes the original bidder walks away with the property, sometimes a competitor takes the title. Real estate investors should also know that their 10% deposit is not always refundable.
Obituaries Are the Better Lead Source
Real estate investors and Realtors® are interested in probate public records because it represents a life event and the potential for finding motivated or court-appointed sellers. Distress in a life event can be a sign that a deal is imminent.
Obituaries tend to run a few weeks after a person dies, a timeframe that is much more advantageous for the real estate investor or Realtor® to research the real estate assets of the deceased and identify the relationships that need to be established.
Probate attorneys are often better probate lead
Real estate investors and Realtors who develop relationships with estate attorneys are at an advantage to discover probate leads long before the probate public record is made public.
Probate proceedings can result in bankruptcy, further delaying a real estate transaction until the bankruptcy is complete. At the same time, bankruptcy proceedings are visible and will likely attract even more competition to a yet-to-be certain deal.
Often it is worthwhile to track the property and the individuals long after. This is the process of putting yourself into a sphere of influence by demonstrating your willingness to determine the ups and downs.
Know your market and direct marketing
Even with sound attorney relationships in place and a habit of checking obituaries, nothing will prove more fruitful than using a tool to identify your market, glean insights from market intelligence, and routinely direct the market to targeted local lists.
We’ve found that real estate investors and Realtors® who work the occasional life event deal find it through direct marketing and the relationships they’ve cultivated over time. Then they use tools to build lists and track activity. Direct marketing with postcards, letters, and neighborhood canvassing by way of door-knocking to perfect your lists all consistently proves to yield results.
To sum up, the real value in finding probate-related real estate deals is not found in probate public record lists, it’s the actual life event that triggered it. Not blindly mailing to probate public records.