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Probate Investing: Bust Your Self Limiting Beliefs – RIGHT Now!

by Sharon Vornholt on June 24, 2014 · 16 comments

  
Probate Investing: Bust Your Self Limiting Beliefs - RIGHT Now!

Probate investing is one of the best, most lucrative niches to invest in.

What other niche has folks that want to sell their property almost 100% of the time? Yet when I talk to folks that don’t invest in this niche, they have a whole lot of reasons why probate investing isn’t right for them. Most of them simply have to do with their mindset, not the actual niche itself.

There are dozens of excuses we tell ourselves at any given time about why we can’t do something.

  • I don’t have the experience
  • I don’t have the knowledge
  • I don’t have the money
  • I don’t have the time
  • I just need to read one more book

These are all reasons that could slow us down or even sideline our investing careers all together if we let them. We get overwhelmed by the big picture or that great big goal sitting on the finish line. But in almost every case we just need to take that “one next step”. That is no different with probate investing.

1. I Don’t Know How to Talk to Those People

This is one of the most common objections that I hear.

It is as though there is a special language you need to speak. In reality there is one; it is the language of compassion. When dealing with this particular group of motivated sellers, you just need to be aware that they are often still grieving during the time they have the enormous job of settling the estate. You need to handle them with a little more care, and it is usually a little quieter negotiation.

Related: Overcoming Fear of Talking to Sellers and Their Objections

Settling the estate will often involve not only selling the property, but cleaning out a lifetime’s worth of personal belongings. This is a job that the personal representatives often find overwhelming.

What do you do with your loved one’s “treasures” that were such an important part of their life, but you have absolutely no use for?

At the end of the day these folks have a problem and you are in the problem solving business; they have an unwanted house they need to sell.

2. I Don’t Know the Language of Probate Investing

There are some terms that are specifically associated with probate investing that you will need to be familiar with.

Here are a few common terms you will come across when working in this niche:

  • Testate:  A person dies and they have a will.
  • Intestate:  Someone dies and there is no will.
  • Personal Property: This is anything that a person owns that can be moved such as cars, jewelry, stocks and bonds, money and antiques.
  • Real property: Real estate and land.
  • Probate:  The legal process of administering a will which is overseen by the Probate Court. Matters concerning wills and estates are handled by the probate court. This would include money, property and any other assets in the estate.
  • Beneficiary:  The recipient of a “gift” of property which may be an individual or an organization.
  • Guardian:  When there is a minor involved, the court will appoint a person to protect any minor children personally and also the financial affairs of these minors.
  • Fiduciary: The person or organization that has the legal responsibility of managing a person’s property such as the personal representative (Executor or Administrator) or a trustee.
  • Petition:  A written formal request that is filed with the court, for a specific order or action such as a petition for probate.
  • Letters: This is the court document that establishes the right and the authority for a person to act as a personal representative (executor or administrator) or conservator in an estate. In the case of an estate, the executor’s letters are called “letters of testamentary” and an administrator’s letters are called ‘letters of administration”.

All you need is just a basic understanding of some of the more commonly used terms in the probate process when working in this niche.

3. I Don’t Know Where to Begin

The first place to begin no matter what niche you’re working in is to determine how you get the leads.

Probate investing is a little different, because there are approximately 3300 counties in the US and each and every one of them has a different procedure. Here’s the thing; you don’t have to worry about all of those other counties. You only have to worry the counties you intend to work in.

Plan to do a little detective work to gather this information. When I was first starting out I just picked up the phone and called my local probate court. They were able to tell me exactly how the procedure worked in my county.

Related: Getting Started in Real Estate With Less Than $1,000

Final Thoughts

The niche of probate investing is a little more crowded than it was a few years ago, but it is still a whole lot less crowded that most other niches.

One thing to understand is that very few real estate investors are willing to see the process through over time. So if you just hang in there and do the work, you will find that “the crowd” gets smaller month after month.

Probate investing is a very lucrative niche for those investors that are willing to do the work. I love probate investing, and some of my best deals come from this niche.

 What about you? Do you work in the niche of probates?

Be sure to leave your comments below!

 

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{ 16 comments… read them below or add one }

Rachel June 24, 2014 at 9:04 am

Great tips, Sharon!

Probate investing is definitely a mysterious yet untapped niche. You definitely seem to have mastered this area. Personally, I’ve had some encounters in this field but not enough to warrant expert status on the subject. I’m still learning more as I go along.

Enjoyed the article, thanks for sharing! :)

Reply

Sharon Vornholt June 24, 2014 at 9:48 am

Hey Rachel –

There is nothing that is really too mysterious about this niche.

Once you understand how it works in your area you just do what you already do; make offers. I leave it to my closing attorney to tell me if there is something that still needs to be done to settle the estate. All that legal stuff if for them.

For us, it is just find the properties and make offers as usual. Thanks for reading.:)

Sharon

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Geoff Van Dusen June 24, 2014 at 9:16 am

I liked the article, this is when I wished there was a way to follow the thread, looking forward to reading what gets posted.

Reply

Sharon Vornholt June 24, 2014 at 9:49 am

Geoff –

I have written about this topic here and also on my blog a number of times. So just look on these sites for more probate information. Thanks for reading.

Sharon

Reply

Joshua June 24, 2014 at 9:42 am

Please provide more information on #3. Regardless of the area, I would think a high-level overview is possible?

Reply

Sharon Vornholt June 24, 2014 at 9:53 am

Hi Joshua -

You just have to determine how to get the leads in your county. You can call your probate court, or you can actually go there and have them tell you what their process is. You can also try searching online to see if your area is one that has the leads online.

Someone I am know just looked for his county online; he searched for Harris county probates and found the site. There really is no way out of doing the legwork yourself.

Sharon

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Joshua June 24, 2014 at 11:13 am

Thanks. Legwork is something that I do a lot of… Will the county have a list of properties that are in probate? If so, I can just get teh list and then do direct mail marketing to the estate? Or a phone call.

Thanks,
Josh

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Jerry Puckett June 24, 2014 at 1:08 pm

It usually works the other way around. They will have a list of probate cases and you will need to cross reference tax data or any other database you may have access to in order to find if the decedent owned property. A further cross check against the MLS to see if it’s been listed and you’re gold.

Reply

Sharon Vornholt June 24, 2014 at 2:53 pm

Joshua -

You can’t get a list in all areas. In some areas you have to actually go to the courthouse and pull files. In my city, they are published in the newspaper. You will have to find out how they do it in your area since they are all different.

Don’t cold call probates. You want to send them a letter.

Sharon

Reply

Ian June 24, 2014 at 11:25 am

What aspects of a probate property make it attractive as a real estate investor seeking deeply discounted properties? There seems to be a difference between testate properties for sale and intestate property for sale. From what I’ve gathered, it’s the testate properties that have the best potential because you don’t have to mess around with the rules of courts (you deal directly with the executor defined in the will). I’ve read that intestate property that is overseen by the court must sell within 90% of the listed price and requires a 10% deposit.

Reply

Jerry Puckett June 24, 2014 at 1:05 pm

What makes it attractive is the deep discount you’re able to get. For many of the folks I deal with the property is a real unwanted headache. Tey just want someone to make it go away. For many others, it’s “found money” and the amount you offer them blows them away.

Also, not true of all counties where there is no will. Many have an application process to become appointed as an Executor, and still others will have an Agency that will usually be called something like “Guardian of the Estate” or some such. Get a contact from that department on your team and it’s much like getting a pocket listing from a REO Agent.

Reply

Sharon Vornholt June 24, 2014 at 2:49 pm

Ian –

There is no difference. They both have a property they don’t want that they need to sell.

The executor was named by the deceased; the administrator was named by the court. They both have the same responsibilities. In the end, they all want the same thing; the cash that is sitting in the house.

Sharon

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Tom June 24, 2014 at 11:52 am

Thanks for opening this idea up to me(newbie!). I will investigate this!

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Sharon Vornholt June 24, 2014 at 2:50 pm

It’s a great niche Tom.

You just need to familiarize yourself with the way your county handles the probate process.

Sharon

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Stephanie June 26, 2014 at 6:55 am

Sharon

Thank you for the article.

It seems that this area calls for a full service company that can take care of all hassles associated with the property, e.g. Real estate, cleaning, auction and appraisal, storage, moving.

Very interesting. You have given me much to think about.

Reply

Sharon Vornholt June 26, 2014 at 7:38 am

Stephanie –

It usually just involves the house and a dumpster. Most of the time at least in my area, the family has taken anything of any value.

Sharon

Reply

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