How Does Probate Real Estate Work?
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Originally Posted On: https://dreamsofalife.com/how-does-probate-real-estate-work/
Less than half of Americans have a will. Why is this important for real estate agents and investors to know?
It presents a great opportunity to capitalize on a section of the real estate market that many people overlook. The probate real estate market is a chance for investors and real estate agents to find new clients and opportunities to purchase investment properties.
Probate real estate works differently than other types of real estate. You have to be knowledgeable about it to find the right opportunities and increase your income.
Don’t worry, because we’ve got you covered. Read on to learn what a probate real estate sale is and how you can leverage them to grow your real estate business.
What Is Probate Real Estate?
When a person dies without a will, their estate goes into probate. Probate is the process to distribute the assets of an estate.
During probate, a judge gets appointed to the probate case. They’ll assign an executor and oversee the distribution of a person’s assets.
This includes investments, bank accounts, personal belongings, and real estate.
Does a person need to have a will to avoid probate? If the deceased has a will, they’re less likely to enter probate. However, if there are disputes over the will or if the will wasn’t updated in years, the estate could end up in probate.
Benefits of Probate Real Estate
What are the opportunities for real estate agents and investors? If a property is in probate, you’re looking at highly motivated sellers who want to unload the property.
This is a great thing for both real estate agents and investors. Agents can have a steady stream of clients who need to sell properties quickly.
Investors can anticipate when properties are going to hit the market. They can make an offer below market value. Since probate sellers want to sell these properties quickly, they’ll be more willing to accept an offer below market value.
Investors might come across properties that weren’t maintained over the years. These are great fix and flip projects that can turn into profits with the right property.
The Probate Real Estate Process
The probate real estate sale isn’t one for people who want to buy properties in a week. It’s a lengthy process and there are a lot of people and entities involved.
Plus, the steps of probate real estate sales get overseen and approved by a judge. Any missteps could be very costly if you don’t know what you’re doing.
When a person dies with a will, they probably named an Executor. If the Executor doesn’t want the responsibility, or if the will didn’t name an executor, the probate judge will name one.
A probate real estate sale cannot happen until an Executor gets named. They’re responsible for the listing and sale of the real estate property.
The probate court assigns a probate referee to appraise the value of the property. A real estate agent with experience in probate real estate gets hired by the Executor of the estate.
Between the probate referee’s appraisal and the real estate agent’s expertise, they’ll come up with a fair market value price for the property.
The agent and Executor prepare the property for sale and the agent lists the property. Real estate agents are under pressure to get as much interest in the probate real estate sale as possible.
It’s important for agents to have a strong real estate marketing strategy to get offers quickly.
Investors and potential homeowners can make offers on the property. While it is possible to get an offer below market value accepted, you can’t go too low.
It’s the real estate agent’s job to get the maximum value possible for the property. The judge has the final say on the amount of the probate real estate sale.
They’re unlikely to approve offers that are below 85% to 90% of the appraised value.
When a Probate Real Estate Sale Offer Gets Approved
Once a probate real estate sale gets approved by the Executor and the probate judge, a letter gets sent to the heirs of the estate.
This is a Notice of Proposed Action. This letter details the terms of the sale and gives heirs about two weeks to review the terms and make objections.
If there are objections to the sale, it cannot move forward. The buyer will get a notice to inform them of the objection. There will be a court hearing to resolve the matter.
If there are no objections, the sale moves forward with no issues. A public notice of the sale gets published in the local newspapers.
The estate attorney confirms the court date for the confirmation hearing. It is possible for offers to get submitted right through the confirmation hearing.
The highest offer usually wins out. Once the sale is confirmed, it goes to escrow. The sale gets closed about a month and a half after that.
How to Find Probate Leads
Do you see the opportunities in probate real estate? You’ll want to know how to find opportunities without much effort.
The good news is that most of the information you need is publicly available. You can find probate real estate leads online.
You’ll want to check with probate courts, county, and municipal records. You’ll also want to build relationships with estate planners and probate lawyers.
This can take a lot of work. If you want someone to do the work for you, buy probate real estate leads and get a head start on opportunities.
Probate Real Estate Sale Guide
What is probate real estate? It’s an untapped market for real estate investors and agents. It’s a lengthy process where a deceased person’s estate gets distributed.
This guide showed you how probate real estate works. You’ll be able to understand the process and make the most of market opportunities.
Head over to the Real Estate Talk section of the blog for more real estate insights.