Probate Investing - An Overlooked Niche

A recent article at a popular real estate investing blog gives five reasons why probate investing is a great market niche. Depending on where you live, laws and court systems can complicate the process of locating great real estate in probate, but it’s almost always worth it. Let’s take a look at the five reasons why you may want to take a closer look at the probate investing niche:

1. Heirs are motivated sellers: once the property is at the marketing stage in probate, the heirs are normally interested in one thing, selling the property and taking out their cash shares. Seldom do they want to keep the property, with the main exception being vacation or resort properties. However, even those can be a problem to share among multiple heirs, so they want to sell anyway.

Many may have financial difficulties or want to pay down debt, so a cash infusion from the probate sale is a welcome economic event. The properties can be either in good condition or they may be in some state of disrepair. The good ones usually end up on the MLS, but that doesn’t mean they’ll sell there, as many probate properties enter the market overpriced due to unrealistic expectations of the heirs.

2. Deep discounts are common: for a number of reasons, those designated to dispose of the properties are also motivated like the heirs. Just about everyone involved wants to end the process and go home with the money. Reasons for discounting include:
a. The property needs a lot of work that they can’t afford or don’t want to do.
b. There is a mortgage, even though there is equity, and they don’t want to make payments.
c. Immediate financial needs of the heirs.

3. Drip email works great for probate deals: while some probate processes begin quickly, it’s more common for months or even more than a year to pass before the liquidation of the real estate is begun. Locating these potential deals early allows the investor to do a “drip” email campaign, scheduled emails over time presenting their services and desire to purchase the property. By watching the courthouse records or database, you can check to see if the property is sold, but until it is, your pre-scheduled emails can continue to solicit the opportunity to make an offer.

4. The question that gets deals: executors are not lawyers in most cases. Instead, they’re friends, family members or business associates who must interrupt their lives to handle the tasks of marketing and selling real estate and personal property. They want to get the job done and get back to their lives, so asking them “What can I do to help this process along” goes a long way toward building good will and an opportunity to make an offer.

5. There is less competition in this niche: in many cases it’s just a lack of knowledge or fear of dealing with distraught heirs (seldom is that the case). In most others it’s because the process to locate these deals is a little convoluted, as you’re working in the bureaucracy and court system. However, this just limits competition, so your chances to make some great purchases go up.

Check into probate investing in your area.