Probate real estate investing refers to buying properties from probated estates. Probate is the legal process used to validate a decedent’s last will, pay outstanding debts, and distribute remaining assets. Probate can extend from three months to three years. During the probate process the estate executor is responsible for paying all expenses associated with the property.
Probate real estate investing provides the opportunity for estate executors to sell real estate held in probate. This is especially helpful for estates with inadequate funds to pay mortgage loans or maintain upkeep on the property while held in probate.
Investing in probate properties requires visiting local courthouses where probate cases are handled. When estates are placed in probate, the decedent’s last will becomes a matter of public record. Pertinent information about the estate can be found within the Will including contact information for the estate executor and address of probate real estate.
When decedents die intestate (without executing a Will), probate records will provide the name of the individual assigned to administer the estate. Most often this is the surviving spouse or direct lineage relative. If the decedent had no living relatives or none accept the position of probate administrator, the court will assign an outsider to manage the estate.
The second step of probate real estate investing requires a search of deed records. Records of Deed reveal if the property has a mortgage loan or if it is owned outright. If a mortgage exists, the estate is required to continue making payments throughout probate. Otherwise, the property could fall into foreclosure.
If a second mortgage exists, chances increase for the need to sell the property to pay off outstanding debts. If the probate administrator has obtained court confirmation they can make the decision to sell the property without court approval. In some instances, the administrator may require permission from the judge to sell real estate holdings. If multiple heirs are entitled to the real estate, they must all agree to sell the property unless ordered by the court.
After locating court records, investors will need to contact the probate executor. This can be done by mail, phone, or in person. When making contact it is crucial that investors be respectful and offer sincere condolences.
The majority of probate executors and heirs are unaware they can sell real estate during the probate process. By offering to purchase probate property, investors can alleviate financial challenges for the estate while purchasing properties below market value. Often, probate real estate can be purchased for pennies on the dollar if the estate is in need of immediate cash.
Probate real estate investing does not require special training. However, investors who participate in buying probate real estate should possess strong communication and negotiating skills, along with a sense of compassion.
Investing in probated real estate offers a variety of opportunities to locate profitable deals. Although this type of investing requires some detective skills and the ability to negotiate with grieving heirs, when conducted properly probate real estate transactions provide a win-win for all parties involved.