For real estate investors, probate properties are one of the most underrated and under-appreciated sources of leads in the real estate world.
But, if you know what you’re doing, you can uncover a TON of opportunities both now & in the future.
As these properties come onto the auction block, you’re able to submit bids that typically let you buy them for significantly lower than their ARV.
The key to making them work, though, is understanding what they are, how to buy them, why they make such amazing opportunities and what some of the potential pitfalls are that may be hidden inside of them.
In this guide, we’re going to break all of that down for you as well as show you exactly how to start finding these properties and uncovering highly-profitable gems in your local market.
What Are Probate Properties
Whenever a homeowner passes away without having a will in place or leaving their home to an heir, the assets they owned will enter into the probate process.
The state’s probate court will take control of their remaining assets and appoint their closest living relative to administer the sale.
Probate properties are any homes that have entered into the process once an executor is assigned.
Buying probate properties comes with one massive benefit: an extremely reduced price.
Since the heirs typically want to have the home sold as quickly as possible, this urgency can lead you to finding deals that are priced upwards of 40% below their real market value.
How Buying Probate Properties Works
The process of purchasing a property in probate is going to vary from state to state.
If the property is being sold directly through the court system, it will be placed in an auction with the listings published on the court’s website.
You’ll typically be required to submit your bid on the property in advance so you can attend the auction.
Then, if you win, you’ll need to pay for the property with cash or a check.
However, if the property is being sold by an executor, you’ll need to work directly with them to submit offers and negotiate the deal.
Properties in this situation are typically listed using a real estate agent, making the buying process similar to the traditional purchasing route.
The key difference, though, is that the sale will need to still be approved by the probate court — which can typically take several weeks to be finalized.
The Pros & Cons of Probate Properties
Now, before you get into the process of finding and buying probate properties, you’re going to want to understand the pros and cons that are hiding inside of them.
As with any investment consideration, if the pros outweigh the cons, you’ll want to consider not moving forward on the property or the strategy.
However, if the benefits are greater than the risks, probate properties can be incredible opportunities.
- Low Price — Since executors or heirs typically want to quickly sell the property, it sets up an environment where you’re able to get it for a price well below actual market value.
- Less Competition — Many investors simply do not want to deal with the lengthy probate process which makes the competition significantly lower.
- Good For Beginners — Probate properties make great first investment opportunities and help beginners start their investing journey..
- Hidden Potential — A lot of times, these homes hold hidden potential in them, waiting to be tapped into during rehab and renovations.
- Huge Upside — With the lower price, the opportunity to generate a significant return on your investment is greater with probate properties than other properties.
The CONS of Buying Probate Properties
- Property Sold “as is” — When it comes to probate properties, what you see is what you get since the executors and heirs usually don’t perform repairs before selling.
- Long Closing Timeline — The probate process and getting approval through the court system can take an incredibly long time in some cases.
- Bidding Process — Since you’re forced to bid on the properties in auction, often sight unseen, it can be hard to accurately predict repair costs so it’s easy to overbid on the property.
- Potentially Lost Deposit — If you fail to complete the purchase, the chances of losing your deposit are significantly higher.
- Spiraling Costs — By purchasing the property “as-is”, there’s a chance you uncover issues with the property that are more expensive than you initially thought.
How To FIND Probate Properties
If the benefits outweigh the potential downsides (and they do for most investors), the next step is finding properties in probate so you can start getting familiar with the process.
Here’s how to find probate properties:
Step 1: Find Probate Properties on Propstream
Since probate properties can sometimes be challenging to find, let alone buy, you’re going to want to use every tool possible to locate and acquire them.
Propstream is one of the best tools available for finding probate properties, especially pre-probate properties, helping you get a headstart on them before they’re swarmed by other investors.
Properties that are in pre-probate are in the period between the owner’s death and when the home is transferred to a beneficiary or executor, making it a perfect time to get involved in the conversation.
With Propstream, you’re able to pull pre-probate data and filter cross-references between the county’s death records and the property owner records to identify homes that are in this phase of the process.
This helps you reach out to the market segment before other investors are notified of the sale and acquire properties that are bypassing probate or monitor properties as they move through the probate process.
Something to keep in mind, though, is that while the tool is incredibly powerful for helping you locate these properties, you need to keep the situation in mind and maintain a delicate touch.
Having difficult conversations with heirs and executors while they’re in a grieving period can be hard to do but, if you’re able to navigate those conversations, these are amazing opportunities and you will typically find that the families want to sell the home as quickly as possible.
If you’re not comfortable having those conversations, or you want to see how Propstream can help you pull other types of lists that are full of highly-motivated sellers, check out the video below:
Step 2: Contact Local Real Estate Agents
In real estate investing, the network you build (or have built) can be one of your best sources for new leads and information on upcoming opportunities.
This is especially true with real estate agents in your area.
It’s their job to keep track of different properties in the area and they tend to get the first wind on properties that are about to enter into the probate process.
And when it comes to managing the network you’ve built, using a CRM like REsimpli can help you store their contact information so you can quickly contact them when you’re seeking out new opportunities.
While it’s incredibly powerful for helping manage your network, it’s also a full-featured, comprehensive and intuitive CRM that lets you manage your lead and project flow, too.
With it, you get access to:
- Built-in Phone System
- Complete CRM
- Comprehensive Dashboard
- Vast Communication Tools
In terms of our own business, we’ve shifted our operations over to REsimpli because of how much easier it has made life — and growing our portfolio.
To see how we’re using it, check out the video below:
Step 3: Look in Local Newspapers
Just like other public home sales, probate properties are typically listed in local newspapers.
Executors are expected to market the home to the best of their ability which typically starts with buying a listing in the paper. They’re also promoted on social media and local bulletin sites.
Taking a glance through the obituary section in the newspaper can also provide you a lead on homes that may be entering into the probate process so you can get ahead of them.
Step 4: Research Local Public Records
A local public records search may be more time-intensive than some of the other strategies on this list but, if you’re willing to invest the time, can be a great source of probate and pre-probate leads.
Since probate cases are public information, you may be able to access these records online. In most cases, though, you’ll need to physically visit the courthouse to access them.
Then, when you receive the records, you can sift through them to determine which assets are going to be listed and make contact with the executor of the estate to begin the conversation.
Step 5: Check Your Local Probate Court
Your local probate court will be able to provide you with a full list of cases that were recently filed, too.
When you get the list, you can scan through it to determine which cases are still active and, if the case contains a property, you can make contact with the executor or heir.
Similar to performing a public records search, accessing case information through your local probate court can be a time-intensive process but it’s one that is worth the effort you put into it.
Since the amount of time it takes to uncover leads can be higher than other strategies, many investors simply won’t spend the time needed to find them — which lowers the amount of competition you face.
Step 6: Visit Local Home Auctions
With probate properties being auctioned off, attending local home auctions can help you uncover properties that may be in probate.
If you’re not familiar with how to access these auctions, you’ll want to speak with local realtors to find out if they know of any auctions that may be happening soon.
You’ll need to keep in mind, though, that by the time a home reaches the auction process, many other investors are already aware of it which can create bidding wars, driving the price up.
Step 7: Invest in Lead Generation
One of the best, most consistent, and most profitable ways to grow your real estate investing business is by investing in your lead generation.
Not only will this help you uncover probate properties, it will also help keep your pipeline full of other motivated sellers so you’re able to get more deals done every year.
And one of our favorite methods of lead generation is the tried-and-true, classic direct mail marketing.
Especially when you’re coupling direct mail with social media marketing — a potent combination that generates more leads for us every year than any other strategy we’ve used.
When you generate leads on social media, you’re proactively getting people reaching out to you instead of you having to reach out to them first.
Then, you can use a mailer (like the one below) to stay in contact with them, stay top of mind, and be the first investor they think of when it comes time to sell.
These handwritten, personalized mailers are incredibly effective at generating new leads and converting those leads into prospects that are open to entertaining your offers.
And as calls start coming in, unless you’re OK with sitting by the phone as it rings all hours of the day, you can use a service like Call Porter to answer your calls, pre-qualify your leads, and put those qualified prospects directly onto your calendar so all you’re doing is meeting with motivated prospects.
This system has become the backbone of our investing business and the system we can attribute a large majority of our success to — especially when it comes to finding and buying probate and pre-probate properties.
For investors, especially beginner investors, finding and buying probate properties can be one of the most profitable strategies you’ll use.
Even though they tend to take longer to move through than other strategies, being proactive in your approach, investing in your lead generation, and building systems in your business that help you uncover these opportunities as they come up (as well as others, like foreclosures) can help you grow and scale.
The key there, though, is being proactive and open to as many different investing strategies as possible, while learning the in’s and out’s of each so you can effectively (and profitably) navigate through them.
Then, as you implement those strategies and your business grows, use a service like Call Porter to handle your incoming call flow so you’re able to spend more of your time connecting with prospects and less time dealing with tire kickers and time wasters.