Probate properties are existing real estate assets that must be sold to pay for the deceased person’s debt or distributed between closest living relatives, depending on specific national laws. In most cases, if the deceased died without leaving a will, the real estate will enter the probate court. Investing on probate properties can be profitable in some ways. However, like most investment opportunities, probate real estate investment comes with its pros and cons.
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What is Probate?
The probate is the process supervised by the court to distribute the assets of a deceased person. Assets that are not passed directly to the beneficiaries, whether or not the person has a will at the time of death, must go through a probate process.
In theory, the process is very simple. For will or testament, the Probate Court will collect and list the deceased’s assets, appoint a representative to pay unpaid debts, invoices, taxes, and fees, and will then distribute the assets to the beneficiaries in accordance to the Probate Court. Probate attorneys are usually held to help guide a representative (called an executor or administrator) through the probate process.
Pros of Probate Real Estate Investment
One great advantage of investing in a probate property is the potential of the profit after resale. Usually, the closest life relatives are most interested in receiving the check. They are not interested in the improvement of property or waiting down the line for years to get the probate process done.
Because they often live in other places, they don’t intend to use attributes as a residence. They want to sell as quickly as possible and continue their lives. This is the best case scenario for savvy investors seeking profit. This is because, as an attempt to sell away quickly, the heir may be willing to list the property significantly below its market value. This provides you with an opportunity to enter, do some necessary repairs and resell this property with profits.
Cons of Probate Real Estate Investment
As with everything else in real estate investing, probate properties too has their own disadvantages. Consider the following when you are willing to invest in a probate property.
Marketing to probate officers and administrators is specialized. This is especially true if the real estate agent is trying to reach directly to the heir. In addition to the typical steps of offers, acceptance, inspection, and sales, there are other milestones. The steps of court norms mean strict compliance with deadline and continuous legal proceedings. Everything is approved by the court based on the legal requirements of each state’s asset transfer.
The seller’s agent is not the only individual involved in the process. There are additional parties to communicate with which is not always easy. It might get difficult to bring all the parties together, or some parties might not be willing to sell.
Despite these cons, probate real estate remains a gold mine for investment largely due to the facts that it is a growing niche and the profits can be huge. So, if you are looking to invest in probate properties and searching for authentic probate listings, you can always get that from us.