Probate Real Estate Investing

Buying Real Estate in Probate

Pros and Cons of buying investment property in probate by Betsy Gourley

     Probate is something most of us have not experienced however understanding it is important.  Companies such as ReloTeam LLC are real estate investors in Austin Texas that will purchase real estate in probate.  Based in Austin Texas ReloTeam LLC focuses on making purchase offers on homes in probate that need to sell quickly. Regardless if you are an investor who buys property in probate or just a family member of someone who owns real estate, probate might cross your path.  Anyone could be in probate so I thought a quick refresher would be helpful.  Not to mention the insight if you plan on investing or buying real estate in probate.  So, before we discuss the Pros and Cons of probate real estate investing, let us get a little primer on the process in general.  Death is an unpredictable phenomenon. When someone dies, he or she might leave behind family and property. Since death is abrupt, uncontrollable, and unpredictable, one can die before leaving his or her will. From the point of death onwards, all the property left behind technically changes ownership.    

     One purpose of probate is to provide a way through which titles; previously owned by the dead person (the descendent), can be transferred to a new owner. The second purpose of probate is to make sure the decedent's property if fairly divided among the beneficiaries. To ensure free and fairness in the division of the wealth, the county court must be involved in the probate process. Today, the process of selling out a decedent's property especially a home or a real estate is called Probate. If you are a real estate agent, probate is a jargon popular to your discipline. You may have heard the term probate sale. 

Pros and Cons of Probate

     Probate sales may be a good opportunity to buy a home. This is because their prices are well below the normal home sales. However, they are also disadvantageous in that they usually take a very long time to process than a traditional real estate home. As a real estate investor, buying a house in probate is a lucrative way of investing in a property. However, problems are sure to come up during the long and tiresome process.   Considering the period of time it takes to process probate in court, many other problems may develop along the way.  Potential probate buyers may pull out of the deals along the way. Thus It becomes easy and very likely for the personal representative of the decedents to get mentally and emotionally frustrated. If this happens, he or she may be forced to pull out of the process and sell the property anyway. This opens a big door to opportunistic real estate investors to get the house at a profitable price.

THE PROS:  Benefits of Probate Investing

Here are Three benefits to probate real estate investing:

 1) Due to the long process involved in preparing a probate, many potential buyers keep away hence the property sales exhibit very low competition.

2) Most probate homes do not have any liens attached to them. And unlike foreclosed homes, probate homes are normally in very good condition and they may never need any repair in the near future. Due to all these, the value of a probate property is usually very high.

3) The investors or home buyers interested in buying a probate home do not have to put some of their capitol during the processing period of probate properties.

THE CONS: Probate Real Estate Investing  

   If probate properties have such impressive benefits, then why do people still keep away from these properties? Let us now have an insight into some of the well known demerits of probate properties.  The biggest challenge that face the parties involved in a probate revolves around the extensive amount of time and the tiresome tasks that it takes to process a probate sale. 

• he property is in really bad shape which will need much of your own personal capital to make improvements.   

• Location, Location, Location!  Buying a home in an area where the homes usually take longer to purchase.  

• Buying the property for less than the actual value of it.

• Multiple heirs for the property you are purchasing.   

    These cons can easily be limited by doing your research.  Research is the most important part of buying homes in probate.  Make sure to have a home inspector check out the property for structural damage, interior damage and exterior damage.   You obviously want to spend the least amount of money on improvements.  Making sure the most expensive aspects of home improvements are okay is a good start.  Your inspector will give you a list of items that need to be fixed or replaced.   The location of the property is also important because it usually gives you an indication on how long the home might sit on the market before it sells.  You want to make sure the real estate you buy in probate can quickly sell so you don't get stuck with the property for too long.  Each month that the property sits on the market is costing you money.  One more con to look out for is if the property has multiple heirs.  If the heirs cannot agree on a price or dividing up the proceeds, it might lead to a long probate.  You can avoid this from happening when there is only one heir.  If possible, find the property with only one heir.  It could make things a bit easier for you.  

Here is a great video with more information on probate investing...

     Considering all the pros and cons involved in probate real estate investing, doing your research is crucial. If this is your first time, consider partnering with someone who has experience with probate real estate investing.  I don't recommend buying property without understanding how probate works and researching the property and location.  If you have any questions please feel free to leave us a comment.  Thank you and I hope you now have a better understanding of probate real estate investing.