Probate real estate refers to property owned by a person who has died. Probate is required when decedents do not have inheritance assets protected through a trust or if they die without a last will. The probate process typically extends for three to six months, but can be prolonged if heirs contest the will or if decedents own extensive assets or have high levels of outstanding debt.
Probate real estate can be purchased through the estate executor responsible for managing decedents’ estates. If the executor has obtained court confirmation they can elect to sell real estate held in probate without appearing in front of a judge. Otherwise, a probate judge must authorize the sale.
When multiple heirs are entitled to real estate held in probate, they must each agree to the sale. Once court authorization is obtained real estate investors can negotiate the purchase price directly through the estate administrator.
Investors need to scour court records to locate potential investment properties. When a person dies, their last will and testament must be submitted to probate court. This document then becomes a matter of public record.
The first step of locating probate real estate is to review each will submitted through the court. Last wills contain information about estate assets and provide the Administrator’s name and contact information.
Next, investors must conduct property record research using the address of probate real estate. Property records provide information regarding the title status. Experts recommend seeking out probate real estate with clear titles or those with substantial equity.
Third, investors must contact the probate executor to discuss the sale of property. There will be occasions when Administrators have no interest in selling. Offer sincere condolences for their loss and move along to the next property.
Probate real estate can create substantial financial problems for estates that do not have adequate funds to pay related expenses. During probate the estate must continue making mortgage payments, property taxes, insurance, homeowner’s association fees, and general maintenance. These expenses can quickly bankrupt the estate and leave nothing for heirs.
There are plenty of estate administrators who need to liquidate real estate holdings quickly. Offering to buy probate property can offer financial relief and expedite the process so administrators can settle the estate.
Probate real estate investing can provide an exceptional return on investment. Although locating properties requires more research than other types of investment properties, it is well worth the time and effort.
Probate real estate is oftentimes in good to excellent condition. Most properties are sold at 20- to 30-percent below market value. The reason is to induce a quick sale and reduce expenses for heirs. Estate expenses include attorney fees, court costs, administration fees, and in some cases, travel expenses.
Investing in probate properties is a virtually untapped market. Investors who take time to learn proper protocol can reap substantial profits. To better understand the process, seek out private investors who specialize in this niche or conduct research online.