Understanding Probate Real Estate: Investing Tips, Marketing Advice
Probate real estate investing is one of my favorite strategies. I have found the folks in probate to be one of the most motivated groups of sellers, as they almost always want to sell the property in the estate. This group of people is what I like to call a “captive audience” for your direct mail; in addition, probate investing is a much less crowded field than some of the other strategies like foreclosures.
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Like most other investing strategies, they key to success is having an ongoing marketing campaign. A lot of real estate investors send out one or two letters to the executor (or personal representative as it is called in some places), and then throw in the towel. Their excuse is often that they don’t want to continue to bother these people.
Understanding the Probate Process
The truth of the matter is that family members begin the probate process at different times. Sometimes the process is started almost immediately. Other times the family members just cannot deal with settling the estate until some time has passed. They need time to grieve. In so many cases, it is just an overwhelming task for those left behind.
Not only does the executor have to have to sell any property that is in the estate, but they typically have to sort through a lifetime of personal belongings. I know from experience — this is a very difficult job. These are items that were valued by the deceased. Often the family members have a sense of guilt over disposing of things that played such an important part of this person’s life, so they just put off the whole process. It’s not at all unusual for someone to contact me about selling property in an estate after a year or more has passed.
When should you begin marketing to them?
In my area, the probate information comes out in the local newspaper at the same time each month. I always begin working on getting these folks in my database when the information becomes available to me. Other real estate investors always ask me this question, “Shouldn’t we wait a while before contacting them?” I don’t believe you should.
First of all, it takes about 30 days for the information to become available in my area. And as I said before, in many cases a considerable amount of time has already passed before the probate process is even started. By the time I have done my research to confirm that there is indeed property in the estate, these people are entered into my database, and the letters are printed and mailed, several more weeks have generally passed.
What makes these sellers so motivated?
- Often times they have inherited a house in need of a lot of repairs. In most cases, they either don’t have the money to spend on the house, or they just don’t want to invest their cash fixing up this (inherited) house so it can be sold. These folks will be your best leads.
- There may be an existing mortgage on the property.
- It may be a “pretty house” and they just don’t want or need another house. Often these properties will ultimately be listed on the MLS.
What exactly do they want?
What they want can usually be summed up in two thoughts. “They just want the cash that is sitting in the house, and they want to be rid of the problem of selling the house to get the cash.” In other words, a quick solution with a payday is what they are looking for. If you can provide this, then you have just found yourself a motivated seller.
5 Tips for Marketing to Probate Executors
1. I always send a white professional looking letter that expresses my condolences, and I acknowledge that I understand this is a difficult time for them. I never call these folks unless they have first contacted me.
2. Be mindful in everything you say and do, that these folks are grieving.
3. Understand that if they are not ready to sell the property at this time, it doesn’t mean that you need stop your marketing efforts. Continue to check in with these folks to see how settling the estate is progressing. Let them know that you will be there to assist them at any time in the future when the time is right for them.
4. If they have furniture that they need to dispose of, provide the seller with a list of local charities that will gladly accept donations of this type.
5. If they have gotten to a point where they just can’t seem to move on, help them get “unstuck”. Offer to finish cleaning out the house if this is the problem. Many times they will get to a certain point in the process and just find that they cannot seem to get the job finished. Find out what the problem is and offer to help.
Probates more than any other group of motivated sellers, need extra hand holding.
For the best success with this investing strategy, think of ways to be of assistance to the executor and the heirs, especially how you can make this process easier for them. Then just be there when they are finally ready to take the step of selling the property.