What to do with Probate Leads

[Jeremy Rotert]

I am active in the Indianapolis market. As a franchise owner specific to the investing world, I'm working diligently every day to locate new ways to identify properties to buy, either as wholesale transactions or to possibly flip, occasionally I may hold a rental if it's low-hanging fruit. One avenue I've not intentionally explored as a lead source is probate leads. That changes tonight. I've been given a rather robust list of "fresh" probate leads covering July-September 2019 for my local areas. My acquisition manager and I feel as though we are pros at cold-calling and generating buy appointments, given our combined 40+ years in all manner of competitive sales, but we don't like going into something new without some advice and direction from those smarter than us in specific arenas. I would appreciate some relevant feedback specific to how best to approach these.

1. Who exactly am I contacting? These leads have names, numbers, addresses, etc. Is it the court, the executor of an estate, etc.?

2. What is the most appropriate way to approach these folks by phone? We love proven scripts, and use them in our current practices.

3. Once the ball is rolling on an appointment to make offers, are these "deals" more complicated to usher to the closing table? Do they take longer to close (like short sales as an example)?

4. What exactly is the role of the probate court in relation to me making offers and placing properties under contract?

5. What pitfalls/mistakes do I need to be aware of specifically for probate leads?

6. Are there specific pieces of information I need to be asking for on these calls that I wouldn't normally on any other type of seller lead?

Thanks to all of you in advance for any help and advice you can provide!

Cheers!

[Jan Kerr]

@Jeremy Rotert Hi Jeremy, Just a quick overview of Probate. When a person dies, even if they have a will, their creditors are able to open probate on thier estate in order to get paid any amount owed to them by the deceased In the old days, their heirs could just write "Deceased" on the bills and send them back, never to be hear from again. Not so anymore. Now they can demand payment out of the assets in the estate. In Probate the courts assign a Probate Attorney to look at and handle the case. They are required to take 'Inventory" of all the assets. They work with the family or heirs to essentially liquidate all these assets and then the courts decide who gets what or how much based on the number of claimants. The courts usually make sure all debts are satisfied out of the assets.  The assets are usually liquidated in order to generate the cash to pay the debts and the heirs. Then the courts may or may not honor the wishes of the deceased if there is a will and the remaining cash or assets are disbursed to the heirs. To answer your question, you are allowed to talk to the family (executors) and their attorny. The family can ultmately decide on whether or not to accept your offer. They will often defer to their attorney for advice. The benefit to us as investors is that both the heirs and the attorney are usually looking more for expedience rather than top dollar. The family usually wants both. 

Think of it this way... If you knew you were the heir of a decedent and were promised some sort of inheritance, human nature is such that you want it NOW, not later. Most people have already spent it well before receiving it. That works in your favor in negotiations. The attorney gets paid when the estate is settled and the probate is closed, so they are also looking for the fastest way to accomplish this. The faster the assets are sold, the faster the creditors can be paid the faster the heirs can get their inheritance and the faster the attorney gets paid for their efforts. They will often sell at liquidation prices, especially if the house or real property is in a state of disrepair and in need of cash to update it to make it ready for sale and fetch top dollar. The family is not always in a position to be able to lay out any cash to make repsirs, so they will usually let it go cheap in that case. The Court clerk can tell you the name of the probate attorney, if one has been assigned. Sometimes that is the easiest way to get the ball rolling.  Attorneys are in the phone book. Probate can sometimes take years if the estate is complicated or the courts are back logged. Sometimes an heir has to wait to officially be named executor by the courts, which can take months. It's ok, to make contact now though becasue if they want to sell to you, they will work with you no matter how long it takes. They cannot legally sign a contract with you until they are legally declared to be the executor by the judge, even if the will states it. Estates that are held in trusts do not o into probate, because the assets are owned by the trust and the trust entity survives the person.  Good luck!