Probate sale investments offer high money-making opportunities; however, it’s vital that one invests mindfully. Unlike regular property sales, the sale of probate properties is lengthy and time-consuming. As a result, investors should be patient and calculative about the probate properties they are willing to invest in. Owing to the history involved with probate properties, they are priced lower than the standard market rates, making them a lucrative option for investors.
As per the standard laws, every property owner must write a will to dispose of their assets after their death. In many cases, the property owner dies without leaving a will behind that creates the need for a probate sale. Probate, in general, refers to the legal process of reviewing the assets of a deceased person, determining its inheritors, and clearing debts, in case any.
What is a probate sale?
In legal terms, when a person dies without a will, their property also referred to as dying intestate is transferred to probate for its sale to repay debts and distribute the remaining money among the beneficiaries. This complete process of property sale is overseen by a probate court to ensure that the proceeds from the sale are used to pay the outstanding debts and taxes before its given to the legal beneficiary.
Probate Sale: The process
Unlike other property sales, a probate sale process is typically lengthy and has legal interventions. So, if you’re planning to invest in a probate property, it’s vital to know the complete process in detail to avoid hassles. Much like any real estate deal, investing in probate properties can be risky as one doesn’t get a chance to inspect the property conditions before making a bid.
However, there are varied advantages of probate property investments that often outweigh the limitations. Before we get into the pros and cons of probate sale properties, let’s take a quick overview of the sale process to have a better understanding.
- Appointment of an executor – As soon as a probate property is identified, it is moved to the probate court to get the sale process started. The probate court appoints an executor who is either the next kin or the closest living relative to carry out the entire sale process.
- Hiring a real estate agent – As soon as the executor is appointed, it’s important for he/she to hire an experienced real estate agent to get the process going. Since the executor may or may not have sufficient knowledge about probate sales, it’s always best to have a professional by your side for assistance throughout.
- Appraisal & property listings – Your real estate agent will get a property appraisal done to determine the best value of the property and its sale price. Once the appraised value is obtained, the agent will list the property on multiple sites to get buying offers. There is multiple listsource that acts as a reliable way to reach out to interested property investors.
- Court Approval – Once the executor receives a genuine offer, he/she can move it forward to the probate court and wait for approval. Post this, it is again sent to the probate court to get a date for finalizing the property sale. After maintenance, it may take 30-45 days to get a date during which the executor is open to accepting new offers.
- Contract & Deposit – On the court hearing day, all interested buyers should be present in the court and participate in an auction, and outbid others until the judge confirms one. As soon as the bidding ends, the winner has to present a cashier’s cheque for 10% of the winning bid amount instantly. Following this comes the contract signing between the executor and the buyer.
- Property inspection & Closure – As soon as the contract is signed, the buyer can opt for a property inspection before making the remaining payments. In case there’s some structural default or other negative items are revealed, the buyer can retract their purchase. However, it’s important to note that there’s no reimbursement for the deposit amount. On the other hand, if the inspection report comes positive, the buyer can make the final payment and close the deal.
Is probate sale investment a good option for you?
Sure, it is. A large number of buyers and property investors are attracted to investing in probate properties as they are priced lower than the market value. Since the inheritors of these probate properties are motivated sellers, they are open to negotiations and likely to settle on discounted rates.
Moreover, buying probate properties is easier for investors as the competition is comparatively less. Many real estate investors are hesitant to buy probate properties due to longer timelines and court involvement. All in all, a probate sale investment can turn out to be profitable only if one is mindful and have a good understanding of the real estate market and terminology.
