Making an Offer on a Probate Property - help!

4 Replies

Hi All – I am looking for some advice. I am fairly new to RE investing. My partner and I recently started marketing to Probates in our area. We got our first call and have scheduled the appointment to meet at the property with the will executor (the decedent's daughter). The information I have about the property is that there's no mortgage attached to it, it's a 4 bed 2.5 bath 2900 sq ft SFR in a nice neighborhood near a lake. The house next door is pretty similar to the one we are looking at (same beds/baths and sq footage and it was in great condition), it sold for $315k in May 2016. Everything else in the area sold in the $290k's but they are smaller properties. The county's assessed value is $289k. From what I gather a lot of upgrading is going to have to be done, the decedent had owned the house since the 1970's, but we really haven't seen the it yet, so we don't really know how much in repairs we are looking at. Any suggestions on how I can structure an offer for this property? I don't want to screw this one up! We would like to wholesale it to another investor. Thanks in advance for your help!

Yes, many ways. Are you a real investor of just a "wholesaler?"

It's a free and clear property? What are you stuck on? 

Name a price and terms that you could assign to someone else.

Most probates make better sense as selling financing deals.

@Michelle Ayala This is a great oportunity for your first wholesale deal. No mortgage is a wholesaler's dream. If you can find out how much they are asking, that would be great. If they have no idea, then make them an offer. If you plan to wholesale it to a cash buyer, you need to be on point with your numbers.

So here is how you figure out how much you can pay. First, get some comps on sold properties in the last 90 days if possible within a 1/2 mile of the property. If you can't find any or enough, extend the range to 1 mile. If you can't get enough comps within the last 90 days, extend it to 6 months. You need 2-3 similar properties(beds/baths/square feet) to figure out the ARV(after repaired value). Once you have the ARV, then you take the ARV let's say $315,000 for example. So $315,000 and subtract 35% right off the top. That is what cash buyers that are rehabbing a property expect. This will cover the rehabber's profit, cost of money, holding costs, etc. That leaves us at $204,750. Now subtract the cost of the repairs the house needs. Let's say it's $50,000 for this example. That leaves us with $154,750. Let's say you want to make $20,000 on this deal, so subtract $20,000 from $154,750 leaves us with $134,750. That is the most you can pay for the property if you want to wholesale it.

If you don't know how to estimate repairs, have 2 or 3 contractors come look at the property with you. Set-up consecutive times for each contractor to look at the house with you and give you an estimate. That will give you real numbers on the repair costs. If you don't have a way to get comparable "SOLD" properties, find a realtor that will pull comps for you. The key to a successful wholesale deal is having solid numbers.

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@Rick H.

I was stuck on the components of the offer I should consider, I’m a newbie so I wanted to make sure I was taking the right approach to on the offer. I found a boat load of information online and Chris’ response (above) helped a lot too. Thank for responding to my post.

@Chris Piper

Thank you so much for this information Chris, it is tremendously helpful. This is exactly the advice I was looking for. We did some research and your approach pretty much sums up all the information we found on the subject, so it’s nice to have an actual wholesaler confirm we’re taking the right approach. We feel pretty confident about the numbers. The appointment with the seller is in 3 hours and we are confident in our numbers now. Thanks again!