Probate Real Estate Investing

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PROBATE PROPERTIES: any real estate or real assets held by a person at the time of his/her passing, when said property has not been excluded from the estate by contract or trust.

When a person passes on, the executor of their estate (either appointed in the person's will, or chosen by a probate judge) has the task of ensuring that the terms of the will are met, and all of the decedents' property is properly disseminated and/or disposed of and all the decedents' obligations are met, i.e. his debts are paid.

Assuming the deceased did not take steps for his real assets to avoid probate (by contract or trust, for example), the real estate will probably pass directly to a surviving spouse, if one exists, or to the heirs. If there is no will, or no surviving spouse or heirs, the property would be ordered sold, and the funds distributed according to the probate court. In cases where the property is left to more than one heir, such as two or more siblings, the court is still likely to order it sold, so the proceeds can be distributed among the heirs.

This is where the person who invests in probate properties makes his entrance.

Because the court and/or executor and heirs want probate to be done with as soon as possible, they are often willing to sell the real estate to the first person who makes a reasonable offer - even if that offer is well below market value. And they are more apt to consider "creative" offers that benefit all parties.

Bear in mind that in many cases, there are liens on the probated property, and they must be paid. So any offer that is less than the amount owed will simply not be considered. The investor is well advised to research the probate property to learn of any liens prior to making any offer.

The important thing to note is that probate real estate is purchased exactly the same way as any other property, either with a "straight" purchase, option, lease option, contract for deed, etc. The methods of buying are not altered simply because the property in question is probate property.

Muddying the waters somewhat, many "infomercial gurus" have begun touting their courses on probate real estate investing. They make it sound like probate properties require "specialized" knowledge. They do this as a way to induce people into paying the guru to teach them, because he is the "only one" who can show them these "special secrets".

Of course, real investors know that is just hooey! Probate properties are not a "method" of investing - they are nothing more than a type of seller motivation. The methods used to invest in probate real estate are no different than the methods used to buy any other property. What IS different is where you locate probate properties. While most other properties are found in the MLS, probate properties are found in the public legal notices posted at the county courthouse and in the newspapers. That's it! That is basically the only difference between probate properties and other real estate on the market.

Of course, being probate real estate, the investor can often negotiate a better deal that he otherwise could, simply because probate properties are in a distress situation. The seller (executor of the estate) is pressed for time, and may not be "profit motivated" as much as an owner would be. And the court wants to move on with other cases on their overloaded docket. But the actual methodology of buying real estate, whether probate properties, foreclosures or any other property - do not change.

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