How Does Probate Real Estate Work for Real Estate Investors?
Jonathan Khorsandi on Apr 06, 2022 posted in Real Estate Investing
44.1 million Americans are renters. 27% of Americans living in houses are also renters.
If you're a person who's always been intrigued by the idea of getting into real estate investing, then these statistics should be encouraging.
Yet, real estate investing often requires some capital that proves prohibitive for some investors. Probate real estate may allow these investors to get started.
Are you wondering how probate in real estate works? How is a real estate probate buy different from purchasing from an owner?
Read on to learn more about probate real estate.
What Are Probate Assets?
Probate assets are those assets left behind by the deceased who has not designated in a will who their assets should go to. The assets must first go through probate to be transferred to heirs or sold.
Assets can include anything from cars, cash, jewelry, or property. Probate real estate is when the deceased was the sole owner of a piece of property when they died.
If the deceased failed to set up a fully vested living trust containing all assets, the property enters a probate court process. Probate is the process the court uses to distribute the assets of the deceased.
They would do this by either signing them over to an heir or selling them.
What Is Probate Real Estate?
Probate real estate is the market of selling or buying a piece of property that's in probate.
It's not uncommon for a piece of property that's in probate to go up for sale. However, if the property is being passed to heirs, they often don't want or need the property.
They may already have their own home, or they may not want the responsibility of managing the property as a rental.
Often the heirs would prefer to sell the property and get paid out from the sale of the property. If the estate has significant debt, the property could be sold to help cover the debt of the deceased.
Why Is Probate Real Estate Good for an Investor?
For real estate investors, this can be a good opportunity to buy a property that might not otherwise be an option.
You might wonder why? There are a few scenarios that make purchasing this type of property worthwhile.
First, the heir may want to put the ordeal of inheriting the property behind them. If they don't want the property for themselves, they might just want to get it sold quickly.
How do you sell a property quickly? Basic real estate rules tell you to price it low. The probate court will not want a protracted sale either.
They also tend to price properties to sell. The properties are almost always sold as-is, meaning someone isn't doing a lot to prep the house for being on the market.
This means that the house has to be priced to accommodate any repairs or quirks the house presents with.
Steps in the Probate Real Estate Process
Laws and probate rules vary slightly from state to state. But the probate process for real estate follows some basic steps.
Probate can be intimidating to some people, the legal documents, and the courts' involvement. If you're interested in investing in probate real estate, it would be smart to understand how the process typically works to sell a property that's in probate.
The probate process first requires the property's estate to have an executor. If the deceased has a will, the executor is named in the will.
If there's not a will, then an administrator for the estate is named through the petition for probate. Often this administrator is a family member or friend of the deceased.
The administrator then makes decisions about what to do with the property. often opting to sell it.
The property must be appraised and listed. This is typically done with the assistance of a real estate agent who is familiar with the probate process.
The property gets listed through a probate real estate agent, and they do the marketing like they would for any house that's up for sale.
When an offer comes in for the property, the real estate agent will work to get the parties to agree on a price. Then the court will send the heirs a notice that a potential sale is pending, and they have a small window of time to object.
Assuming the heirs don't object, the sale can proceed with a standard sale between the seller and buyer. Occasionally, depending on the circumstances, the sale will proceed through the court.
Probate Real Estate to Buy
If you're interested in buying a probate real estate property, there are a few avenues you might pursue.
Often there are probate real estate agents. These are real estate agents who specialize in the real estate market for probate. They understand the probate process and guide buyers through it.
Some sales will go directly through the court. The buyer makes an offer on the property, and it goes to the court without an agent in the middle.
Understanding the Role of Probate in Real Estate for Investors
The role of probate in real estate is often a good thing for real estate investors. It gives them the chance to purchase a property priced low for a quick sale. The real trick for investors is to get the leads to find these probate properties.
If you're a serious investor or a real estate agent looking to get into the probate market, you might be interested in the services of Probate Data. We provide a variety of plans that provide you with the probate leads you need to get started.