As most everyone knows, probate investing is one of my favorite strategies. If this is a strategy that you decide to pursue, there will likely be some challenges during this process. It is important in probate investing that you have the correct mindset right from the beginning.
It doesn’t matter whether your strategy is probates, REOs, absentee owners, foreclosures or one of the other types of investing strategies. You are still looking for the same thing. A motivated seller! The only difference is that in dealing with the folks that have the task of settling the estate, you will need exceptional people skills. Of all of the problems you try to solve for any seller, this situation is by far the one where there will be the most emotion.
The vast majority of real estate investors are familiar with this strategy. And for the most part, people understand that you are providing a valuable service. But there will be some folks — you know the ones — that will proclaim loudly that you are taking advantage of someone at one of the worst times in their life. In reality, this couldn’t be further from the truth.
The Seller’s Viewpoint
Try to put yourself in their shoes. Often times they have inherited a property that they don’t want. It may be because the property needs a lot of repairs, and they either don’t want to spend their money doing them or they just don’t have the needed cash. It could be that there is an outstanding mortgage and in order to secure the equity is in the house, they will need to keep up the monthly payments.
You can usually sum up what they want in these two thoughts. They just want the cash that is sitting in the house, but they don’t want the problem of selling the house to get the cash. They are looking for a fast, easy solution with a payday. If you can solve this problem for them, then you have just found yourself a motivated seller!
Contacting the Seller
I only use direct mail letters to contact these folks. I never use postcards, and I never call them on the telephone. The key to working with these folks is to be respectful of their current situation in all of your dealings with them. Many of these people are still grieving long after the death of their loved one. It’s not unusual for them to take a year or more to even get around to selling any property in the estate. When I have someone call me to say that it will be a while before they get around to dealing with the property, I tell them that I understand completely; I know that it is a big job they are facing. I take that opportunity to ask their permission to keep them on my list so that when they are ready to sell, I can help. I have never had anyone tell me no.
Keys to Success
When it comes to probate investing and the correct mindset, the key to success is pretty simple. Put yourself in their shoes. Acknowledge that you know they are in a difficult situation. Treat them with respect and allow them to take action when they are ready. You just need to position yourself as the person that will be there to help when they are finally ready to sell the property.
{ 29 comments… read them below or add one }
Just brought a probated course and looking for leads in NYC
Goo luck Tanisha. It’s a great niche. I have written about it a lot on my blog.
How do you get leads Sharon
Tanisha – In my area, the leads are published in the newspaper. In some areas, they are even online. What you need to do is call your local probate court and ask them. They will be glad to tell you. In some towns you actually have to go to the courthouse and pull the records.
Tanisha – in New York you have to actually go down to the courts since there isnt any information available online.
Sharon – Thank you for all the information, I have been thoroughly enjoying reading your articles and they have been very helpful so far in getting started in my Real Estate Investing Career.
That sucks NYC… This lady from the course I took said they can give me 25 leads a week for 12 weeks for $499. . Should I do it?
The Seller’s Viewpoint. As an heir with an interest in a property I’ve been there and not knowing what the PR (stepmother) had decided, I had to hire my own attorney as this was the 3rd attorney involved representing my interest in the estate. With that experience I am now investing not only as an investor but as a r.e. agent to provide a service with those estate’s I am now contacting. One must remember that you cannot come across as pulling wool over the families eyes.
Contacting an heir about a property to see if you can help, is certainly not pulling the wool over their eyes. I am always completely straightforward about what I do. Most of these houses need a ton of work, and that is why they are selling to an investor. Additionally, I only work with top knotch closing attorneys.They are very thorough with the title searches, and they always make sure they have all the appropriate paperwork for probate closings.
I am the first person to tell folks that “their house is too nice for an investor and they need to list it”.
You have to be very careful when you are an agent/investor (which I am not) to be sure you make the proper disclosures. That’s a slippery slope.
Howard -
Thanks so much for giving Tanisha that information. When are they ever going to get this information online? It would be so much easier for everyone. And also, thanks for reading! I really appreciate it.
Sharon
Tanisha – No Way. That’s way too much. Call down to your local probate court and see if there is any other way to get them. Maybe something has recently changed.
Tanisha-
I’ve spent time recently in the various probate courts in the different boroughs, as far as I know and from asking the people assisting in each borough, nothing is online, that excludes the numerous hours that I spent trying to find the information I needed online.
The only solution I could find was actually going down to the courts.
I can’t comment on the course you’ve taken since I don’t know anything about it. It depends on what your time is worth to you and how much time and money you have available. You also won’t know what information you are getting for your $500 and how reliable it is. I tend to be a skeptic.
Once you know how to use the system and find the information you want it should take you between an hour to two hours to get 30 leads. I would then rather use the $500 to pay for envelopes and stamps.
ok so i went down there and got some leads but idk what to look up to see if they have real estate…than i had a lead but the house was listed already…..how will i know if they house is not sold yet? thanks
Tanisha-
When it is sold, the new owner will appear on the tax assessor’s site. I pay $25.00 per month for access to this site in my county. I just wholesaled a house that had been listed for 15 months. I kept mailing to them during that time. When it hadn’t sold they called me and I bought it for 30% less than it was listed for (which was what it was really worth). So the fact that it is listed doesn’t mean that I won’t mail to them.
So I get the lead first. Secondly I look on the PVA (tax assessor’s site) and see if they own property. I qualify that property. Is it within the parameters where I want to buy (not in a really bad area, and also not too expensive)? If it meets my criteria, I begin mailing to them. Buy the way, if it looks like there is a surviving spouse I take them out.
Sharon -
I want to make sure I understand your strategy for probate leads. Is this a good procedure: take probate leads, look on tax rolls to see if decedent has property, check last date of sale to insure some equity, then send letters to those qualified leads. Is there a time where you would send letters to those who do not appear on tax rolls?
Also, how long do you send letters and/or postcards to personal representative?
Thank you.
Howard – That is my opinion also.
Tanisha, there is a lot to be said for learning “the system” in your area like Howard has done. It will make you much more knowledgable in the long run even though it’s a real pain to do it now.
@Kelly P -
I look to be sure they own property, but I don’t really care how long they have owned it. They might still have a mortgage on a property purchased many years ago (due to refinancing), or they may have purhased the property for cash just a couple of years ago. The length of time they have owned it doesn’t necessarily tell you whether or not they have equity.
If they are not on the tax rolls, then they probably don’t own any property unless they own it in a trust. I don’t mail to these people.
I check periodically to see if the property has sold especially after one year. But in today’s market, I would mail to them for 2 years or so if they still own the property. I buy property from folks all the time that don’t even think about selling it until a year or more has passed.
Hi Sharon,
I’m just starting out and found a few properties so far. the problem I seem to be encountering is not so much the emotion of “sensitivity/grieving”. The “new” owners of the properties all seem to have a “lottery” emotion. They all feel that they have come into the money and have just received a property for free, and in New York, the value could be anywhere from $200,000 to over $1mil. They see this as easy money and their expectations of what they should get for the property, even with the required repairs, is generally well above even market rates.
Do you tend to encounter this? How do you deal with it and bring the person gently back down to earth? No one likes to pay tax on a lottery win and in these scenarios no one wants to receive less from their “probate” win.
I’m hoping this doesn’t come across as insensitive but this is what I’m encountering.
I think what you are finding Howard is possibly properties that are just a little too nice; ones that don’t need major repairs.
In my area, those usually get listed and then when they don’t sell I end up getting another call. Sometimes it is after they have been listed for more than a year. It’s a numbers game, so don’t get discouraged. Always leave the conversation on a good note and leave the door open. Tell them “that you will leave them on your mailing list just in case things don’t work out as planned if that’s OK with them”.Then just keep marketing to them.
Sharon,
Have been doing this for some time(marketing to motivated sellers) I am just on my second month of mailings to executors. The first month I only got five calls, one appointment and no deals. I have already received a call today regarding my second mailing. My only concern so far is I have had six calls and three of them they just absolutely cursed me out. I am a big boy but that is 50%. Have heard others say they have been doing it for ten years with a handful of these calls. What do you say to the person that just starts calling you every name in the book?
Thanks In Advance!
Jim
Jim – I can honestly say in 4 years, I have only had 2 or 3 angry callers. My next question would be what marketing piece are you using? That might be the problem.
Hi Sharon,
I’m wondering if you have any data on your lead success rate? For instance, if you get 50 “notice to creditors” ads and see that 40 of them have property attached to them, and you mail all 40 – what % turn into deals? Is it possible that a majority of them have a surviving spouse and therefore, might not be selling? Thanks for the article – very helpful!
Erica – We do not mail to those folks that have surviving spouses. I have found that a large percentage of them don’t have a spouse. You can’t send out one or two mailings and gauge results. Results come with mailing to them over a period of time. Depending on the quality of your list, you will have to take 15-20 calls from sellers to get one deal. (Of those calls, you might look at 3-5, and get one deal).
Thanks for the reply, Sharon! What is your mailing schedule? I was thinking once it’s advertised in legal paper, then 2 weeks later, then another 4 weeks later but if you’re mailing them up to a whole year, maybe it’s only once every couple of months after the initial mailing?
Erica -
Once it’s in the paper, I go ahead and enter everyone in the database. They also have to be checked on the PVA to be sure there is actually property before they get in the database. This process takes a week or two depending on what’s going on in my business. Then I mail to them about every 4-5 weeks. I wouldn’t recomment skipping months. If you mail every 5 weeks. that is about 10 letters a year or $4.50 for stamps plus the cost of your mail pieces. That’s pretty cheap even if your list isn’t big and you only get a few 10k deals each year.
Sharon,
Thanks for all the valuable tips insight to help us out here. Do you share you marketing letters with subscribers?
Thanks Tony. I have sent you an email.
Sharon
I really enjoyed you post about acquiring properties through probate. I’m getting into REI because I inherited a house so I realize the hassle that may cause some people. Thinking about doing short sales and dealing with people that put themselves in distresssed situations does not appeal to me whatso ever. People going through the loss of a loved one and the probate process may be up my ally. Thanks for the idea and continued contributions
Gary,
Good luck.
It’s a great niche Gary where you can help a lot of people.
Sharon