Probate Sale: A Guide To Lucrative Real Estate Investment

December 15, 2022

Real estate investments pave the way for high money-making opportunities. Whether buying properties for residence, flipping, or investing, doing it right can assure significant profits. Locating properties with an absentee owner or going through foreclosures is the most feasible buying option as properties under these categories are often priced lower than the prevailing market rates.

The term ‘probate sale’ is quite frequently used in the real estate market. Investors with limited capital and market exposure are often suggested to begin their investment career with probate sales as the risks and uncertainty involved are minimal. Since probate sale is a legal process, it is overseen by the probate court and assures ownership credibility.

So, if you are planning to get started with probate property investments, it’s essential to know what probate properties are and what the sale process involves.

Probate Properties/Assets

A probate property is an asset left behind by a deceased owner without any will. These assets can be anything ranging from houses, lands, jewelry, stocks, etc. If any of these assets are owned by a single person who has died without transferring the ownership, the assets directly go to the probate category.

The probate category is a court term used for properties and assets of a deceased owner that need to be distributed or sold. Once a property is identified to be under the probate category, the court either appoints an executor or oversees the sale process all by itself.

In either of the cases, the primary intention remains the same i.e. to sell the properties at the earliest, repay any outstanding debts, and transfer the remaining amount to the closest living aid of the deceased person. Since the probate court aims for a quick sale of properties, real estate investors can take advantage of this and buy properties at the most reasonable market value. Generally, investors can refer to a listsource to find probate property leads in a given geographical region.

The sale process

Once the property is identified and put under the probate category, the court follows a standard process to find a suitable buyer and transfer ownership. Despite the fact that probate laws differ from one state to another, there are universal standards that remain the same. The following discussed are the basic yet vital to know steps involved in the probate sale process.

1. Appointment of the executor

Typically, an executor is the closest relative of the deceased person who is appointed by the probate court. The executor is handed over the responsibility to determine a fair value of the property, look for suitable buyers, and make a deal before seeking the court’s approval. This executor is also entrusted with the responsibility to repay any outstanding debts of the deceased owner before keeping the remaining amount with themselves.

2. Property listing & Appraisal

Property listing through varied channels such as listsource is done by the appointed executor to attract potential buyers and investors. But before that, a property appraisal is carried out to determine the present market value of the property while considering all damages and the property condition. Appraisals are essential for any residential, unoccupied, or properties with an absentee owner as they assist in the correct evaluation and market pricing.

3. Buying offers

Once the property is well evaluated and listed, the executor receives buying offers from interested buyers and real estate investors. While investing in probate properties is similar to buying any real estate property, investors must note that their buying offers must be backed by 10 percent of the amount as a deposit for their bids to be considered by the executor.

4. Court approval

After both parties i.e. the buyer and the executor agree to an amount along with the 10 percent deposit clause, the executor petitions the court for approval. The court approval may take time while the executor is open to receiving other buying bids. Once a hearing date is announced, all interested buyers are requested to show up and make their final bids. In such cases, the highest bidder gets the property ownership.

There You Go!

Probate sale investments are always a good option as the properties listed under this category are likely to be priced much lower than the present market conditions. The heir or appointed executor is a motivated seller who wants to unload the property as soon as possible to get rid of paying taxes and property maintenance charges. This is another key reason why probate properties are often termed as priced to move.

Also, since probate property sales are overseen by the court, there are no risks of fraud or discrepancies in pretty ownership. Probate property sellers are least involved with the property making negotiations easier and more profitable. With the low base price of such properties, one can fix and flip i.e. renovate and resell them while keeping high-profit margins.

 

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