Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

Probate Investing: The Basics and Tips for Success

by Sharon Vornholt on February 4, 2014 · 31 comments

  
Probate Investing

I’m not really sure why, but probate investing remains a bit mystery for so many real estate investors.

Maybe it is that fact that these properties become available because someone has passed away.

While this is a sad time for folks, it is also a time when those left behind have to “take care of business”. They have the business of settling the estate to attend to. That may include selling the property, and it almost always involves disposing of the deceased’s personal belongings.

There is Just So Much “Stuff”….

I have learned both from personal experience and from working with a whole lot of folks in the middle of this process, that it can be a gut wrenching job especially if the deceased was someone really close to you.

There are a whole lot of personal belongings in almost every case, and it becomes the job of the executor or PR to decide how best to dispose of them. To an outsider, it is just “stuff”.

But, to the family member entrusted with this job, they are very much aware of the fact that these items were important to their loved one. These items were an integral part of their life.

The #1 Reason the House Hasn’t Been Sold

In most of the probate deals I have done, the number one reason they haven’t sold the property is the final bit of personal belongings that are still left in the house. They just can’t finish the job. If you can take over this task for them, you just may have sealed the deal.

Just remember this: It’s not just about the money.

There is always “something else” that folks need to make any deal work.

With probates, it’s cleaning out the house almost 100% of the time. I include finishing this process in every one of my contracts. Am I going to be the one doing the job? No. I am a wholesaler. But when I am figuring the repair costs for my end buyer who is usually a rehabber, I will need to include these costs in my figures.

The #1 Reason Real Estate Investors Can’t Get Started Marketing to Probates

Once they have a list, many investors just can’t figure out what to say in their letter. What I have found is that often times they will just send a generic “We Buy Houses” post card rather than to take the time to craft a letter.

I use postcards successfully in many niches, and I actually prefer them in some cases. But for probates, I just think postcards are not the right mail piece.

Stop and think about it for a minute; if someone close to you had just passed away, would you really want to get a “We Buy Houses” postcard next week? I hear a lot of complaints from the people I meet with. They just don’t like getting postcards in this instance. They feel like the people sending them are disrespectful and insensitive.

The #1 Mail Piece for Probates

I have been working in the niche of probates since around 2007. I have tried several different mail pieces, and white letters perform the best for me time and time again. They are personalized, computer generated, professional looking letters. I also have someone that hand addresses them for me.

Here’s a tip for busy real estate professionals. You can get a college student or stay at home mom to fold, stuff and hand address these for about $10-$12 a hundred. The gal that does mine is a college student getting her MBA. She will just kick back, pop in a movie and get to work.

The #1 Question About the Mail Piece

The number one question that I get about the mail piece is whether or not to mention the fact that someone has died. Or in other words, should there be condolences or no condolences?

I think that is just a matter of personal preference. Your letter should be a reflection of what you believe and how feel about the situation. You can be sure of one thing: It will come up when they pick up the phone to call you.

They will ask how you happened to contact them. So I guess the real question is, “When do you feel most comfortable addressing the issue”?

My #1 Tip – Just Get Started

Probate investing is a great niche to work in. By and large, these folks don’t want the house. They just want the cash that is sitting in the house. I have found them to be among the most motivated sellers of all.

No matter what your preferred investing strategy is, this is a great place to find motivated sellers.
Photo Credit: StevenM_61

Email *
  



{ 31 comments… read them below or add one }

Lindsay Wilcox February 4, 2014 at 9:33 am

I was kind of hoping the “basics” would include how to find the list!

Reply

Sharon Vornholt February 4, 2014 at 2:18 pm

Lindsey –

I have written about that a number of times. But in a nutshell; there are over 3300 counties in the US, and each one of those counties has a different procedure. You will have to figure out what the procedure is for your area.

The first step is to call your local probate court and see if a list is published somewhere. Here it is published in the newspaper. If it isn’t, then you will have to ask the folks at the probate court how you can get the leads. They may tell you that you have to visit the courthouse. You can get them online in some areas, but not in mine.

You will have to do a little detective work to find out what the procedure is for your county.

Sharon

Reply

Kay Khan February 4, 2014 at 9:37 am

Thanks for another great read Sharon. It is very difficult when it comes close to home and you are emotionally involved. It has been four years our beloved mother passed away and properties are not sold. Finally all the sibling decided to sell. The good thing is, it kept going up in value the whole time. I think it will be ok to be truthful upfront about the loss ( Mr./Mrs. Jones loss came to our knowledge through public records. We have real estate investors who specialize in purchasing these properties. Please call/email if you have any question or need any assistance in this matter) or however you like to word.

Reply

Sharon Vornholt February 4, 2014 at 2:24 pm

Kay –

Thanks for your comments. I have been through this myself, and it is not an easy process. At some point, the fact that someone has passed away will come up. This niche is not for everyone, but I love working in it. I am a problem solver for these folks.

Generally properties will fall into two distinct categories; those that should be listed on MLS, and those that need work and/or updating and will be investor properties. I am the first person to tell someone they should list the house rather than take a low ball offer. It looks like waiting to sell has worked out to your advantage. Good luck.

Sharon

Reply

Jill Norman February 5, 2014 at 8:41 pm

Sharon,
Please clarify when you tell a potential seller to list with an agent versus accept a low-ball offer. Investors make low-ball offers all the time as part of their normal operating procedures, from what I have been reading.
Jill

Reply

Sharon Vornholt February 6, 2014 at 8:24 am

Jill –

I make low ball offers all the time, but they are almost always houses that need work. I get calls from sellers all the time especially probates that are beautiful homes that need absolutely nothing. They are perfect. These folks are never going to sell their house to an investor for 60-70 cents on the dollar. Those houses need to be listed and sold for full retail price. Folks like those that call are looking for a top dollar retail price.

Sharon

Brian L February 4, 2014 at 10:11 am

Thanks Sharon! I’m getting ready to mail out some probate letters for the first time this week so these tips are helpful. I was going to use my standard yellow lined paper but I think I’ll give the white paper a try. I plan on politely mentioning the death in my letters, I am a nurse so I do pretty well with this type of conversation and I prefer to just get it out of the way up front.

Reply

Sharon Vornholt February 4, 2014 at 2:25 pm

Good luck Brian.

Let me know how your mailing turns out.

Sharon

Reply

Merrick February 4, 2014 at 8:31 pm

Excellent post Sharon. I have been using postcards for all of my marketing for a few years now and my Probate list is scheduled to got out tomorrow. All of my direct mail response rates have dropped drastically over the past 6 months, so I’ve been thinking of other pieces to mail out. It’s interesting that you say postcards are viewed as insensitive, I’ve never heard that, may be something they’re thinking but just not saying to me.

Would you mind sharing the letter you use?

Reply

Sharon Vornholt February 4, 2014 at 8:50 pm

Merrick –

I think that might be true. A number of people have said that to me (the non-postcard probate person). I would be interested to hear if direct mail response rates have dropped for others.

Send me an email.

Sharon

Reply

James February 6, 2014 at 11:00 am

Great read, Sharon, thank you for taking the time to write this article. I currently market to absentee owners with a postcard that sends the caller to a voice mail greeting. The caller listens, then is instructed to leave a message. I find that it really does a good job weeding out a lot of unmotivated people. However, I understand that the motivated seller that is in probate should receive a more formal letter, but should I:

1) send them to a voice mail greeting or should I take the calls directly as they come in ??? I can do either or, it’s just that I would prefer to only speak with “motivated” sellers.

2) remove them from my list if they ask to be removed or say that they will list it on the MLS??? I never remove Absentee Owners from my list, BUT, I can see how it can make sense to remove a probate seller from the list if they request it. Just curious of your thoughts.

I appreciate any of your thoughts greatly.

Reply

Melvin Jackson, II February 6, 2014 at 12:06 pm

Once again another great post Sharon. People need to know some of the better ways to go about marketing to PRs that are handling properties in probate. Dealing with properties in probate is not for the average part-time investor that just wants to dabble or stick their toe into real estate investing.

Reply

Sharon Vornholt February 6, 2014 at 12:44 pm

Melvin –

I think it is good if you at least have some basic experience with real estate investing. The big thing is that you don’t want to be uncomfortable talking with folks especially those that have just lost a loved one. It’s already hard enough for them, without having to deal with an investor that just doesn’t know what to say or how to handle that type of situation.

Thanks for your comments.
Sharon

Reply

Sharon Vornholt February 6, 2014 at 12:10 pm

I would only use white, computer generated letters (hand addressed) for probates.

In general, probates are more motivated than most. They don’t want the house. But you will still get your fair share of folks that want a quick sale at retail price. I always ask folks that intend to list on the MLS if I can leave them on my list; if I can be their “plan B” if things don’t work out. They always say that is fine. I generally leave them on unless they ask to be removed.

As far as the voice mail goes, they will most likely leave a message if it is the right message. I have tried to answer my phone for the most part, but sometimes that just isn’t feasible. I wouldn’t weed probates out though by voice mail (without talking with them). I would however just say simply that “I am out looking at property at this time. Please leave your name, phone number and the property about which you are calling”. I wouldn’t try to qualify them via voice mail or ask for a whole bunch of details from this group.

Sharon

Reply

Jill Norman February 6, 2014 at 4:33 pm

Thanks for your reply and many insights!
Jill

Reply

Sharon Vornholt February 6, 2014 at 4:45 pm

Jill –

You are very welcome.

Sharon

Reply

James February 6, 2014 at 5:09 pm

Thank you for your quick response Sharon. Very much appreciated.

Reply

Sharon Vornholt February 6, 2014 at 5:17 pm

James-

Thanks for reading.

Sharon

Reply

Dawn Anastasi February 7, 2014 at 4:38 pm

I agree with you 100% that getting belongings out of the house is the #1 reason why these houses don’t sell. I speak from personal experience, it’s very difficult even being in the house that a loved one occupied, let alone going through their belongings. Yet some people don’t want someone else to just go through the things either because they haven’t gotten to go through and look for family heirlooms and pictures, etc.

Reply

Sharon Vornholt February 7, 2014 at 7:24 pm

Dawn –

It has been my experience that most of the time they will take things that are important to them; pictures, special objects, and things of value. They almost always reach a point when they just want to walk away from the rest. When we can finish the job for them, we can usually strike a deal if we aren’t too far off on price. Has that been your experience?

Sharon

Reply

Scott Costello February 10, 2014 at 3:09 pm

Hey Sharon!

I couldn’t agree more about your points. My probate letter mentions the passing of love one briefly in my first paragraph. I always find it best to get that out of the way right in the beginning. Though most of the time it brings out the question….how did you get my information? Tricky question to answer as you don’t want to seem like an ambulance chaser. I usually will just say there address was part of a list I got from the public records.

How do you usually handle that question Sharon?

Reply

Sharon Vornholt February 10, 2014 at 3:15 pm

Hi Scott –

That’s exactly what I say (in a very matter of fact way). Then I move on to ask them about the property. I find it more uncomfortable not to just get the “elephant in the room” out in the open myself.

Sharon

Reply

Scott Costello February 10, 2014 at 7:46 pm

woohooo!!

Reply

Sharon Vornholt February 10, 2014 at 8:26 pm

You’re hilarious Scott.

Sharon

Nathan Hearns February 11, 2014 at 6:17 pm

Hey Sharon,

After reading some of the comments for this posting, it seems like starting out investors like myself could have some difficulties with probate investing. I dont have any investing experience at this point, however, I have had to handle/deal with probate before with property of loved ones I’ve lost and I remember that experience. Additionally, I think I am an excellent communicator (written and verbal) able to talk with people about this type of topic. I like to think of myself as a problem solver as well and feel this might be a niche I could be successful in and provide value service to those trying to sell. Any other additional tips or advice you might give to someone looking to move forward in this space?

Thanks again and great post!

Reply

Sharon Vornholt February 12, 2014 at 9:55 am

Nathan –

This niche is not really any different that the others except for the delicacy of the situation. It takes a little more “hand holding”. There are a lot of articles here and also on my blog about probate investing, and marketing in general. I would just read everything you can find before diving into probates.

Sharon

Reply

Nathan Hearns February 12, 2014 at 6:29 pm

Thank you Sharon. Absolutely plan on absorbing as much knowledge as I can before I get started with this niche.

Reply

Melvin Jackson, II February 12, 2014 at 11:35 am

I agree Sharon and the problem Nathan is people treat real estate investing like a hobby when it actually a profession. People think they can read a book or two and call themselves an investor. It’s like me reading a book on Chemistry and then I start to experiment and learn from the school of hardknocks at someone else’s experience. That’s what a lot of people do when they deal with foreclosures or probates. They really have not been trained at all and figure they can learn at a home owner’s expense.

With that said I suggest you get out and talk to investors face to and there is nothing like getting trained from or by others. I suggest what Sharon said to keep reading all of the posts but in your local market I suggest get out and pick the brain of an investor. It might come with the cost of a cup of Starbucks or lunch though and meetup.com and REIA groups or mastermind groups are just a few sources to find these people.

Reply

Nathan Hearns February 12, 2014 at 6:34 pm

Melvin,

Thank you for the response. So much of what I have been reading and trying to educate myself on is time consuming. And I do it because of exactly what you mention, which is I want this to become a profession. To do that, I feel like I have to spend a decent amount to time up front here at the beginning building a solid foundation in education and trying to find a mentor. However, you also read a lot from people saying just “jump in” or “dont wait…take action” and I just get the feeling I might be falling behind in some respect. Its a very interesting and strange balance trying to start out investing in real estate but I am pushing forward and taking careful insights away from these discussions/fourms. Thank you again!

Nathan

Reply

Sharon Vornholt February 12, 2014 at 8:59 pm

Nathan –

Some people jump in without any knowledge at all. Except for a few lucky ones, most of those will be out of business before they even get started. They make mistakes that they can’t recover from. The other thing that happens is they get a bad reputation along the way and other investors don’t want to work with them.

It’s a balancing act; you need to get educated. But at some point you will need to jump in, take a deep breath and take action. Will it feel comfortable? Heck no. But if you have prepared yourself, you will be OK.

Sharon

Reply

Emanuel February 15, 2014 at 5:48 pm

Would anyone share letters that wrote to PRs Personal Representatives

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: