Probate real estate investing involves buying a property from probate estates. Probate is the process used to inventory and distribute the property belonging to a deceased person. Depending on the complexity of the estate, the probate process can take anywhere from six months to three years. During this time, the estate is responsible for maintaining the property and paying for mortgage payments, utilities, and insurance.
Probate real estate investing offers real estate managers the opportunity to sell real estate. This is especially beneficial for administrators who find it difficult to pay mortgage payments or maintain upkeep of property held in probate.
The first step in probate real estate investing requires a visit to the local courthouse where probate matters are dealt with. When an estate is submitted for probate, it becomes a matter of public domain. Most of the information about the inheritance can be found in the last will and last will of the deceased. Typically, the will designates the executor and describes how the deceased wishes to see their personal effects and financial assets distributed.
If the deceased dies without having executed a will (intestate), probate records will indicate who has been entrusted with administering the estate. Usually this is a direct lineage parent. However, if the deceased has no living relatives or if no one accepts the position of administrator of the estate, the estate court appoints a foreigner to handle the estate.
Once the administrator's contact details are located, the next step requires a deed registry search to locate real estate held in the name of the deceased. Deed registers record land ownership and transactions. When real estate is transferred or sold, a new deed is registered. Deed records reveal if the property has a mortgage. If this is the case, the estate is required to maintain payments for the duration of the probate.
If the property has a second mortgage against it, it is likely that the heirs will have to sell the property in order to pay off the outstanding balances. The domain administrator is authorized to make decisions regarding the sale. However, if there are multiple heirs, they must all agree to sell real estate held in probate. In some cases, the estate may require permission from the probate judge to sell real estate.
After compiling a list of potential probate real estate transactions, investors will need to contact the executor. This can be done over the phone, by mail or in person. When communicating with the administrator of the estate, it is imperative that investors be respectful and offer their sincere condolences.
Most administrators and beneficiaries of the estate are unaware that they can liquidate real estate during the probate process. Offering to buy their property could solve their financial problems and provide investors with instant equity in their investment. Often times, real estate can be purchased well below market value when the heirs need immediate cash.
Probate real estate investing does not require any special training. However, investors who engage in the purchase of probate properties should have strong communication and negotiation skills, as well as a sense of compassion.
Investing in probate real estate offers multiple opportunities to secure profitable deals. While it does require a bit of detective work and negotiation with distraught and grieving heirs, when conducted properly, probate real estate deals provide a win-win situation for all parties involved.