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Investing in Probate Real Estate
For whatever reason, you will not find a great deal of competition in the probate real estate market (as opposed to foreclosure auctions for example, which these days are beginning to bustle with the frenzied activity of investors trying to capitalize from the slow economy). Perhaps it is the nature of dealing with legal and financial matters with a mourning family—no one wants to approach a grieving widow who can’t make the payments on her dead husband’s home, and start a conversation with, “Hey, I’ll give you 70% of market value for your house…”. It’s a very sensitive scenario, and many investors seem to simply shy away from this great financial opportunity.
As with all of these short sales and huge discounts, selling the property is what’s best for everyone involved. If you perceive yourself as ripping off a mourning family, and it is rubbing you the wrong way, then remind yourself that by buying the home, you are relieving a struggling family from an enormous financial burden, and you are assisting the bank or government to regain a substantial portion of the money they lost on a bad investment. If no one bought the home (even at such a big discount), the bequeathed would be financially crippled, and the financial institution would be stuck absorbing a huge loss. The buyer is the savior in these situations.
Once you’ve convinced yourself that this is a noble gesture, you will have to approach whomever the property was left to when the probate opens in court. The best approach in this situation tends to be making a low cash offer, which will often work since the seller will probably want to avoid the highly expensive cost of owning and maintaining a property that is in all likelihood not even their home. Most of the time, they will be much happier to just walk away with a stack of cash. As you can imagine, there is not usually a great deal of negotiating or competing with other buyers (which for you is a golden ticket and gives you all the leverage). Think low, and remind yourself that you are doing a service to all parties involved.
What do you think? J
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