Why Probate Properties Could Be The Best Deals In Real Estate
If you want to be a successful house flipper, you need to find good properties to purchase. It’s just that simple.
Want more articles like this?
Create an account today to get BiggerPocket's best blog articles delivered to your inboxSign up for free
If you look hard enough and network enough, you might find these houses below market value through some unconventional means.
For instance, you can purchase a house through a short sale.
You can also find them from wholesalers as well.
Alternatively, you can buy the house at a foreclosure auction if it has already been foreclosed…although those are a little tough to find these days.
You can also purchase it as REO property if it hasn’t received any bids or you might just score a great deal if the homeowners are going through a divorce and want to get rid of the property as fast as possible.
There is, however, another way that you can search and find property that is way below market value that many real estate investors do not know a whole lot about: purchasing probate properties.
What Exactly Is Probate Property?
Probate property is property owned by a deceased person. Two things happen when the owner of a house dies:
1. There’s No Heir or Will
Properties of people who die without leaving a will or an heir to their house usually go to a probate court to be sold. In this case, the state is in charge of selling the property. They might try to sell it for the highest price possible but it will still be below market value. This is a great place for flippers to find valuable property at a cheap price.
2. It Is Handed Down To The Heirs Of The Deceased
If this is the case, you might still have a chance at purchasing the property. Sometimes, the heirs might feel that the deceased relative’s property is a burden because they already have their own home. If this is the case, the heirs might want to sell the property as fast as possible to avoid profit through maintenance, taxes, insurance and other costs.
How To Find Probate Property
It’s almost impossible to know whether a house is probate property or not when you look at real estate listings so you have to do a little more research. One place you can find probate properties is by going through obituaries in your local newspaper.
Alternatively, you can visit the deceased person’s area and go through court records to find out if they owned any property. You can also look for an office in your local area that deals with testaments and last will. Wills are public documents and are easily accessible so you can use this advantage to find deceased persons who had properties to their names.
If you have some money to spend, you can buy information from private companies regarding available probate property. if none of these methods works, you can always turn to a real estate broker to help you out. They are quite knowledgeable and have access to plenty of information.
Cons Of Probate Property
It’s true that probate property can be bought cheaply and thee are resources that you can use to find it.
Unfortunately, like every other part of real estate investing, probate comes with certain disadvantages as well.
If you are planning on purchasing the property through a probate court, you might have to wait several months. This is because probate court processes last for several months. If the deceased person did not leave a will, the process could take even longer; years even. So if you are hoping to purchase property fast, probate property might not be for you.
But, if you have the patience and think the property is worth the wait, you can wait it out. But as you wait it out, make sure you have other “irons in the fire”.
The good news is that you can hasten the process by telling the court that you can close the sale quickly. All you have to do is provide proof of funds and offer a cash purchase to get the attention of the personal representative and the probate court. When you make an offer, you oftentimes have to pay 10% deposit.
Find out as much as you can about the property before you decide that you truly want it. One of the things that you should find out is if the house has any debt attached to it. The last thing you want is to wait an entire year only to find out that the house has an existing mortgage which you will have to pay off.
But you can still purchase the property if you think the house will still make a profit. Fortunately, 67% of homes in probate court do not have debt attached to them making them an ideal purchase for a house flipper who has access to private money and can close fast.
What do you think? Leave a comment below and tell me what kind of results you’ve had with probate properties!