The Fast, Easy, Simple and Profitable Way to Wealth
Do you want a ready-made market of motivated sellers who often sell at a deep discount — a market where you’ll have little to no competition at all? Probate real estate investing is the easiest and fastest way to find deals and a get check. I think it’s an ideal way for the beginning investor to make money when you combine this with the concept of “quick turning.”
WHAT IS PROBATE?
Probate: is the official proving of a will authentic or valid in a probate court
When a person dies, their estate – all their worldly belongings – often goes into probate court, where a judge appoints a Personal Representative (a.k.a PR ( Executor)) to oversee its administration. It is the PR’s job to make sure that the belongings are divided fairly and according to the decedent’s wishes. Depending on the state, the judge may also give the PR different levels of power.
Probate is the process of distributing the assets of an estate after the creditors have been satisfied. One of the primary functions of probate is to transfer the title of the decedent’s property to its proper heirs. Of course, the government wants the estate to pay any taxes that the deceased still owes first.
After the expenses are paid once all the decedent’s property is sold, the people who have inherited anything from the person who died, divide up the remaining money.
However, what often happens is attorneys get involved and then the process becomes complicated and expensive.
Why Are The Owners Of Probate Property So Motivated?
In many cases, when an heir inherits property, they inherit a burden. There are estate taxes to be paid, repairs that must be made, in some cases, a mortgage or second mortgage must be kept up to date. Add in the fact that there are often multiple ‘owners’, and many of them may live far away, and you have a situation where selling the house is the best, and sometimes the only option to make sure that everyone gets their fair share of the estate. Ready cash may be more important to them than any other factor. People who inherit the estate want the money and not the house, they will often take a quick sale at a discounted price.
There are some other reasons why I love probate investing…
It’s one of the easiest ways to find properties at less than 70% of market value, do a little fix-up and sell at market value; you will make lots of money.
The other reasons:
Little Seller Resistance Very Easy and Simple High Response Rate
Are you starting to see why probate properties are so attractive?
I discovered that 65% of the time, these estates contain real property, and these are the properties we are researching and making offers on. More often than not, If there is property it is most often it will be sold for cash to pay any outstanding debts and taxes. If there is anything left that sum is distributed to the remainder to the heirs.
Isn’t It Illegal To Sell Property That Is Being Probated?
It’s commonly assumed that sales of real estate in probate are extremely difficult, if not impossible. The truth is that, in most cases, the Personal Representative / Executor has the power to make a decision to sell – as long as he has the agreement of all the heirs to the estate. In some cases, he or she may also need the permission of the court, but even if that happens, the agreement of all the heirs will usually be all the judge needs to approve a sale of real estate. Research the laws in your state for any requirements.
How Do I Contact People About Buying Their Inherited Property?
Unlike foreclosure sales, where the owners are being forced to sell when they don’t want to, many heirs are eager to sell their property quickly so that they can use the cash realized. You can send out letters or postcards, make a phone call, and even pay a personal visit. Just keep in mind that you are offering a solution that they may not have considered – ready cash. In many cases, they’ll be happy to accept an offer for as little as 75% of the market value of the house just to get it sold quickly, and will do anything they need to do to help the sale go through.
The Probate process can take anywhere from six months to two years on average depending on the complexity of the estate and the intent of the attorney involved. Please don’t get confused here. IMPORTANT NOTE: It is not necessary to wait for six months to two years to purchase these properties.
Once a Petition for Probate has been filed, and a Personal Representative has been appointed. Generally, they will have the authority to act for the estate and sell the real property (or personal property) to you. In some states, the probate court may hold a considerable amount of control over the Personal Representative and selling of real property may require the court’s permission. By calling your county’s Probate Court, you can determine the procedures for your state.
The only thing you need to know is that the duty of the Personal Representative (Executor, Administrator, all the same thing). That the court has awarded him/her the authority to sell you the house.
What is called “The Letters Testamentary ” are the legal documents giving the authority to the PR and the “Petition for Probate” gives the name and address of the PR. These documents will both be found in the case file, (docket, index )in the Probate File Room at the courthouse.
You do need to become familiar with how this system works in your state. Every state is different. You need to call or visit the probate court and if possible find a clerk of the court to explain to you the process used where you live. In my city, they have 3 one hour classes on each set of steps and documents.
Breaking the probate process down into the four simplest ACTION steps
1. Find the name of the deceased
2. Determine if they owned Real Property
3. Locate the name and address of the person in charge of the estate (PR)
4. Mail the letter (HERE) to the PR. I like to send my probate letter out 90 days after the initial filing
5 Mail the Probate Follow Up Postcard 10 – to 30 days later.
DO NOT MAKE THIS ANY MORE COMPLEX. You do not need to know any more than this. You don’t need to know any of the WHY behind all this. You just need to know the HOW!!! Just get the how all together and you can make all the money you want.
Wills in Probate are a matter of public record. A little research at your local courthouse or ONLINE will get you a list of all wills present for probate. A little more legwork will turn up records of deeds to properties held in their name. It’s all a matter of a little research to find properties whose owners are eager to sell, and sell quickly.
I believe that any area with a population of 250,000 or greater will give you all the business you can handle. If you only live in an area of 50,000 you can still make a living, but maybe not millions of dollars per year as in larger areas. If you want to make more money, you just need to work in more counties.
Find out what paper publishes Probate notices for this area. This, by law, needs to be a paper of general circulation but probably will not be your daily newspaper. If you are not able to find a paper, call several probate attorneys offices (Google Search attorneys by (Probate+attorney+city+state)) and ask what paper they use to publish notices. It is the responsibility of the estate to publish the notice, not the county.
What you are looking for is known in the newspaper trade as a “Legal and Construction Notice” paper, and it does exactly what the title says.
This is a GUIDELINE: Every county and state are different; I will provide the GENERIC Guideline for you. Do some research! Get the general ideas in your head, and modify them for your location. PERSISTENCE is required. If you are going to be successful at this, you are going to have to be persistent. I sent out approximately 250 letters before I made any money. After that, my pipelines started to flow on a more regular basis. Now I have put together about two to three transactions every month. Lesson: If you don’t do the mailings on a regular basis you are not going to make any money.
Locating the properties in your area
My first suggestion is to call your local courthouse and ask for the probate division. Ask them if there is any way they could mail you the list of probates every week complete with the personal rep, attorney, and beneficiary information. Some states publish all this information online, which if that’s the case, you’re in luck. Your county could be different. Call and find out.
If not available, find the paper that publishes the Probate Notices (they may be called Death Notices, Estate Notices or Notice to Creditors, all the same).
If you cannot find the newspaper for the notices, don’t let that hinder you. The research at the courthouse is still the basic method of finding information.
If you don’t have the time or the inclination to go to the courthouse, my answer is to hire someone to do it for you. I have paid $2 for each lead they can bring me and a $500 bonus for each property I buy. They should be able to bring you 15 – 30 leads per week, and you should be able to close one property every month.
I persoanlly buy probate leads from www.UsLeadList.com. (Tell them Duncan sent you to get a discount)
The next step is to find out which of these estates contain real property. The reason I need to know about the real property is that I am only interested in the houses, not the personal property contained in them. If your motives are different, and you are interested in the personal property, you could certainly send a letter to all the estates. If you do decide to mail to all, you will need to modify the letter I have included with this book.
RESEARCH – Find out if the person named in the notice owned real property.
Here is what you do: IF the Probate notice you have just clipped out says,”Edward Fowler, has just died, and probate has been filed in Greenville County,” I can search on the internet to see if Mr. Stuart owned property in Greenville County. If he did, then it’s something I want to pursue. If not, I throw the notice away Now many of you will live in counties where you can directly access the tax assessor’s rolls online. You do not need to go through a title company website. In my case, the title company merely serves as a conduit to get to the county tax assessor’s rolls.
Let me emphasize another point here.
The title company does not help you locate probate information. Only the county can do that. The title company will help you with property information only.
If you can use this method of finding the notice, looking for property ownership online and also find the PR’s name and address in the newspaper notice……guess what??
You have now completed three out of the four steps I mentioned a few pages back.
Here are the four steps again:
1. Find the name of the deceased
2. Determine if they owned real property.
3. Locate the Name and Address of the person in charge of the estate (PR)
4. Mail the PR the letter I have provided you.
So you can see, the only thing left to do is write the PR the letter I will provide you, and you’re on to your next search. Do this 25-30 times per week and you WILL find estate willing to sell properties to you. The biggest challenge in this process is finding a paper that publishes with the links provided to you.
The reason the Estate is giving notice in a newspaper of general circulation is that if Mr. / Mrs. Smith has passed away and you have a claim against the estate, you had better come forward now because once the estate is probated, you cannot go back to the heirs with your claim.
Can you see why the title “Notice to Creditors” makes the most sense? For this reason, it would seem to me logical to me that all municipal bodies regulating Probate records would require this. However, I fully understand the risk of using “logic” and “government” the same sentence.
Now, let me tell you if you cannot find the paper don’t let that stop you. The more basic method of going to the courthouse (Probate File Room) as often as necessary and manually researching each file works. I closed four deals with the more basic method I have described.
Most counties post their Probate Notices online, so I don’t see going to the courthouse necessary in most cases. This is what I was talking about when I mentioned you would need to discover the process that works for you.
THE ROLE OF THE TITLE COMPANY
The title company is in business to make money just like any other business. They are always looking for new clients that can bring them additional revenue. Since you have the potential to bring them new business, here’s is what I suggest you do.
Call your local title company and introduce yourself. Tell them what you intend to do in Probate and let them know that if you had an easy way to determine if the deceased had owned real property, it would greatly speed up your process and ultimately increase your closings. Naturally, since Title
Companies are interested in closings that will get their interest. I’d ask them this question;
“Do you have any tools that could help me do my research to see if real property was involved in the estate?”
Almost all title companies have a Customer Service Department or a Business Development Sales Person. Ask for either one of those departments.
If your request isn’t successful at your first title company, try another. Try them all until you find one that will cooperate.
Since you will very quickly have some files that you will be working and it will be impossible to keep track of them all without a worksheet and or a computer system.
I would highly encourage you to use some Excel worksheet at the very least. I am including a sample paper tracking worksheet for data collection HERE
Once you have determined which of the notices of estates that has real property, start adding it into your tracking method.
You need to track the following:
2. Case or File number
3. Deceased name and address.
4. Personal Representative (Executor) name, address, and phone number if available
5. Date Probate filed
6. Attorney’s name, address and phone number.
You may or may not be able to gather all of them, and you probably won’t need to use all of them but if you can find them write them down. You never know if you might need them later. Most of this information is in the Probate notice. If you have been able to accomplish steps one, two and three, then all you need to do is mail the letter. If you are missing any of the first three, then it’s off to the courthouse.
If you do need to do research at the courthouse, the first thing you need to do is find the room where the records are kept. This will normally be called the File Room, but I have also heard it referred to as the Records Room, the Document Room, and the Probate Room. If there are no computers to use, the more common procedure is for you to fill out a request slip at the counter to pull the files you need. Each county is different, but it has been my experience they will allow you to pull 3-10 files at a time. These are filed by case or file number- not by name. The first time you go to the file room, ask one of the people who works there what their procedure is, and I’m sure you will find them very helpful.
When you are working in the probate office, please be pleasant and nice to the people who work there. These people are critical to your success, so you need them on your side. These offices are understaffed, and the employees seem to have more work than they can handle. Do exactly what they ask you to do and don’t deviate from their procedures. If they want you to look up case numbers on a LAN computer and write them on your request form, do it that way. If they permit you to access the files yourself, make sure you return the files in the correct order and on time. If you screw this up, you’re out of business. They are not going to be helpful anymore. You might even want to pick them up some donuts to get on their good side!!
Now that you have the file, you need to find the form called the “Petition for Probate.”
This is where you can verify the information you took off the published notice. The deceased name, address, PR (Personal Representative) name, address and phone number. Write down any heirs name and addresses. Check to see if there is a will on file, check to see if the PR has “full authority.” If the PR has full authority, this means he/she can sell to you without court supervision. Sometimes there will be an estimate of the value of the real property—if so write it down. Once you’ve got all your worksheets filled out… that is all you need. Simple
The Personal Representative (executor, administrator) is the person named in the will to carry out the provisions of the will. If there is no will involve, one of the heirs can petition the court to be named the Personal Representative. This is almost always granted. The form used by the court to grant this authority is called the Letters Testamentary. This then names the Personal Representative who is the person who will have the authority to sell the real property to you.
Once you get home, then it’s simply a matter of sending the letter to each of the Personal Representatives.
Some people say not to send a letter if the address of either the personal rep or the beneficiaries is the same as the subject property. “Since they live there obviously they won’t want to sell” is the thinking behind that. There is some truth to that, but what if the other beneficiaries want that person out so they can sell? Send the letter anyway.
TIP: THE SURVIVING SPOUSE.
There are two options to choose between, neither of which is right or wrong. Often times you will find that the PR is the surviving spouse. How do you know this? You don’t. I assume if the PR has the same last name, lives in the address of the deceased and is the opposite sex, it is the surviving spouse.
So the dilemma is: Do you send a letter to this person if their spouse has just passed away? They are going to be in a very emotional state. That is up to you. However, my thoughts are NOT to send a letter, to avoid the risk of appearing to be an ambulance chaser. You choose what you are most comfortable with. If so, this is a better letter to send (HERE)
PROCEDURE FOR LETTERS
I Use nice stationary for the letters with matching stationary that I send out. I use a light cream color. I believe it makes a difference. No labels, please!! I do not, however, hand address them. I type my name address and phone number at the top so it looks like my personal letterhead and then use my printer directly to print the envelope.
I Don’t use a post office box. Your letters should be a reflection of your professionalism. Since my office is in my home, I have a separate phone line and fax. I feel the expense is necessary. You’ll have to make you own decision. Here is the letter that I am currently using. (download here)
Make sure and write a letter directly to the personal rep or executor and copy “CC” the beneficiaries. This will set you apart from the crowd. Sometimes the personal rep doesn’t want to sell but the beneficiaries do. Sending everyone a letter will ensure best results.
Please remember that when this letter is received emotions are still very high. You must very respectful of their situation and be very “soft” in your presentation. If you are too direct you will come off as an “ambulance chaser” and you will have zero success.
All my letters go out on Saturday as best results have shown that Monday is a good day for direct mail response. I generally have between 25-30 letters that I mail.
I do a follow-up postcard mailing 10 – 30 days after mailing the first letter to remind the PR that you are still interested in their property. I have included some suggested copy for the post card on my website, Probate Follow Up Postcard
There are other things you can do besides mailers to beneficiaries. They are as follows:
Send Mailers to Attorneys, They should read like this:
Your time is valuable. I will make this short and to the point: I would like to offer my services to liquidate the real estate in probate case #_____________ . I can have a check written promptly and close within a couple days. My cell phone number is NUMBER. I would also like to arrange a meeting with you to discuss how we can both help each other!
Sincere Regards, NAME
OR MY LONGER VERSION HERE
The next things you can do:
PHONE CALLS to Personal Representatives
Call the PR will definitely separate you from any competition. Most investors do not do this. You will find 50% of these PR’s can be found simply by searching on www.superpages.com.
Ask them if they received your letter. Express your condolences and offer to buy the house located at the such and such address as a service to the estate. Some people will be so thrilled to hear from you and some people will curse you. Be tough and don’t let this bother you.
Here is my script I use;
YOU: “Hello Mrs. Fowler, this is NAME calling. I sent you a letter a couple of weeks ago….do you remember receiving it?”
THEM: Most of the time the answer will be, “No, what was it about?”
YOU: “It was about the property on 123 Main St.”
THEM: “Oh, yes….now I remember.”
YOU: “I would like to buy the property as is. I can close the sale very quickly.”
THEM: , How much I will pay for the property YOU : Until I can look inside the house, I really can’t tell you what the property is worth”.
The purpose of this call is twofold: 1. To find out if there is any interest in selling 2. If there is interest, make an appointment to see the property. NOTHING ELSE!! If you think about, there really isn’t much else you can intelligently say.
A lot of times when you make a call, the seller responds
“This isn’t out of probate yet.” “We can’t sell it.”
Here is your rebuttal –
“Mrs. Fowler, I totally understand. I have however purchased many properties that were in probate. I am very familiar with the process. While we can’t actually close on the property until it is released from probate, there is nothing stopping us from coming to an agreement on the price and putting it in a contract
PHONE CALLS TO to Probate Attorneys
Since the Attorney’s contact information is in all the probate files, just call them and say this script:
“Mr. ATTORNEY, Is this a good time? I will be very brief. I’m calling in reference to the estate of NAME, Case # such and such. I’m interested in buying the piece of property located at this and that address which the estate is controlling. I was wondering if you knew if the beneficiaries were accepting offers.” – Then shut up.
The attorney usually will tell you to fax your offer over. You are welcome to do that, but you would be much better off if you could get in touch directly with the personal rep (executor).
Remember the first rule of negotiation – “He who names the first number loses.” It’s always better to get an asking price. Probate deals, as a rule, are the hardest to get asking prices out of because usually the people have no idea what the property is worth. Do everything you can to get at least a general range of what they are looking for.
I usually call these attorneys in the cases where I am unable to track down the beneficiaries. So my personal goal was always to use the attorney to get in touch with the main decision maker – the personal rep (executor).
Usually, the lawyers will not give out the contact info so you’ll have to just ask them if they would be so kind as to have the director of the estate to call you. Keep track of these, though. If you never get a phone call back then call again, and just ask if you can fax an offer over. Remember the key here –
You have to be making LOTS of offers every day all day in order to be successful!
VIEWING THE PROPERTY
Take a clipboard with you. Use this property inspection form HERE. Look at every room noting the repair work that needs to be done. After you have finished your inspection, tell them that you will get back to them shortly and you provide them with an offer. Do not give them any indication of price. Your job now is to consult with a contractor as to what the fix-up total cost might be.
After you have some experience you will probably be able to do this on your own but not in the beginning. The fastest and easiest way to do this is call up real estate agents . Start working on putting your team together now. Start developing relationships with real estate agents that understands what investors are doing. Call up an agency and simply mention that you are looking for an agent who has experience in certain areas for selling houses. This will get their attention every time.
CALCULATING THE OFFER PRICE
As a general rule, Offer 70% of the ARV – Repair Cost – Holding and Selling Cost – (Your Wholesale Profit) = OFFER
As an example, if I estimate the market value to be $200,000, take that figure x 70%, then Subtract your estimated fix up costs. Let’s say I think this property will take $14,000 to fix up. Also, my RE agent will charge me 6% to sell so that’s another $12,000. So my total expenses are now about $26,000. If you plan to wholesale the property , figure in your profit when you assign the contract
So if my offer says $140,000 and my expenses are another $24,000, that totals $151,000 and that’s where I like to be. Ideally, this would give you a profit of $29,000 if you sold the house for $180,000. Believe me, this never happens.
200,000 x 70% = 140K
– 14K – repair cost
– 12K – selling cost
– 10K Wholesale profit
$104K is your offer
You can choose to either fix up and retail or flip to a rehabber at this price and still make a pretty nice sum either way. Remember, as a rehabber, there are always costs you do not plan on. I suggest wholesaling the property until you get some experience under your belt.
GO TO THE WHOLESALE / RETAIL MAX OFFER SOFTWARE HERE
Other forms to help you analyze property HERE
On average I bet you are only going to buy about 10%-15% of the houses you actually look at. You will see many you are not going to be interested in. You do not want to do rebuilds, etc. You are interested in houses that only need cosmetic fix up. For me, I make the best use of my time marketing and locating these properties hen letting someone else doing the work on them. Take the money and run. Enjoy your time and your life.
Practice living the four hour work week in advance. Your objective is to locate, buy and sell one property every 30 days. Sure you may buy less, but then your life is not about working hard.
You are also going to have lots of offers rejected. Don’t swear it. There are PLENTY of deals. Our baby boomer population is dying. You should figure that 80% of your offers will be rejected. Now you know. I am telling you upfront. Most people think I am going to offer full or very close to the full market value and that’s what they want to get. WRONG. You can do that and make any money. You make your money UPFRONT. Buy it RIGHT
You are going to get your deal sooner or later. Some people are going to be more motivated than others. It’s a numbers game. You need to look at a lot of houses to find one or two that will make you a wonderful life.
Let’s make some realistic goals. I want to give you a little idea what it takes numbers wise to determine the amount of effort needed. Adjust your own numbers accordingly.
GOAL – 1 house per month. Your system in place 2 Months
Purchase one house out of every ten you look at, then you are going to have to inspect around 3 houses per week.
When you follow up with a phone call after you send your letter out, around 15% will ask you to come look at their house. That means you need to get out 25-30 letters every week to get 3 appointments each week.
So here is the summary;
Letters sent to PR’s each week 25-30
Phone calls to PR’s each week 10-15
Houses inspected each week 2-3
Deals closed each month – 1
Average Profit per deal $15-20,000
Average yearly income $120-150,000
I am not guaranteeing any income figures. I am purely trying to give you an idea of the work required.
THE OFFER PROCESS
I write up my own Purchase and Sales Agreement, get them signed by the PR and then send to the Title and Escrow Company. I have included a sample P/S Agreement for you HERE. If this is your first deal, I would recommend some assistance by a real estate professional. If you do ask an agent for some help, be sure to give them the listing when to sell. Their knowledge is extremely valuable and they deserve compensation for helping you.
If you live in a state that uses attorney’s for closing instead of escrow companies, then I would consult with an RE attorney before writing my first agreement. There may be something unique about your state.
I also recommend LegalShield.com for only $24.00 a month. They will review up to 8 contracts a year free of charge.
I recommend private lenders to do deals if you are going to be a rehabber. Read our other section of this online course on how to raise private money quickly. There are people everywhere wanting to invest in good real estate deals. NEVER worry about money. If the deal is good, you will have investors lined up around the block.
I am a “wholesaler” myself. As soon as I have a property under contract, I contact my buyer’s list by both email and voice blasting. If they are interested, I let them go by the property and almost 100% of the time they buy it. I write up a contract selling the property to them, with a $10,000-$15,000 profit for me.
I then deliver both of these P/S contracts to my title and escrow company for closing. I simply assign the contract to my new buyer. This means I do not have to arrange any financing and have no costs for money.
I have encountered some resistance a few times from lenders who require “seasoning” before they will finance a new purchase. So I only deal with CASH Buyers FIRST. Working with buyers who require financing from banks is just too frustrating for me.
The other method people can use to buy your deals is called “Hard Money Lenders.” These are companies who have money to loan on real estate on short notice and for the short term. They are far more concerned with the value of the house than they are with credit history. Normally they will loan 60-65% of the market value for relatively short periods of time, usually 2-12 months.
With that in mind, and you want to rehab and resale for bigger profits, do that math, you can see if you are able to buy your property at a 50% discount ltv, fix it, and flip it , then the cost of borrowing hard money is not that bad. i.e. $5,000/$6,000/$7,000, You can still make a nice profit.
Let’s review a couple of items and then go buy a house
1. Get this “motto” in your head – “SW, SW, SW” – (Some Will, Some Won’t, So What) Most estates will not be interested in working with you but some will. That’s OK. Your job is to find the few who will
2. You need to develop your resources; your title company, your accountant, a good professional real estate agent and at times you may even need a real estate attorney.
3. Be Persistent!! This system works 100% of the time but sometimes you it takes a few months. You need to develop your pipeline. Put the effort in on one end and money will start falling out the other.
4.Attorneys are not always going to be your best friend. Network anyway!
Below you will find a selection of videos on how to find probate leads.
Finding Probate Deals On the MLS
FINDING PROBATE DEALS ONLINE COURTHOUSE RECORDS –
Using Online Court Records
This is the sample of Orange County CA. The process should be similar in your area.
Probate Marketing and Investing is the easiest way to find great deals and have a great life!