Houses can be purchased from wholesalers or through short sales. They can also be purchased at foreclosure auctions after the properties have been foreclosed upon like the Arizona Probate courts.
The houses can be purchased as REO properties if there haven’t been any bids on them, or if the homeowners are trying to get out of the home quickly due to a job move or a divorce.
Did you know that there is another way you can look for properties that are below market value? There is, but few investors know about it. You can actually buy probate properties.
Probate homes are homes that deceased people own. When an owner dies, there may not be a will or an heir. They simply go to probate court where the state is in charge of selling them. They will attempt to sell the homes for as much as they can get, which many times will still be below their actual market value. Flippers should be able to find valuable properties at relatively inexpensive prices.
If there are heirs, then these homes would be handed down to them. Don’t be discouraged, though. You still have a good shot of buying the home. If an heir feels that their deceased loved one’s home is too much of a burden or they already own a home of their own, they could sell the property quickly to avoid spending excessive money on insurance, taxes, or maintenance, to name a few.
Searching For Probate Properties
You’ll sometimes need to do more research on a property to find out whether the home for sale is probate or not. Your local newspaper’s obituaries are a great place to start, as some of them include information about where the person used to live. You can also visit where the deceased person once lived, or go through court records to see if they may have had any property while they were still alive. Additionally, you can visit a local office in your area that deals with last wills and testaments to see what kind of information you can find there. Wills are actually public which means anyone can access them, therefore making it simple to find people who have properties listed in their names.
If you can afford it, private companies have information you can purchase regarding probate properties for a nominal fee. If you still aren’t able to get any information from any of our previously suggested methods, you can contact a real estate broker to assist you. They have access to a variety of information and have a wealth of knowledge and experience about probate properties.
Probate Properties: The Cons
While it is true that probate properties can be bought inexpensively through numerous different resources, there are also some disadvantages as there are in so many other facets of real estate investing.
If you go through a probate court to purchase a property, you’ll have to wait a couple of months because that is how long it takes for a probate case to be processed. If a will wasn’t left by the deceased person, the process could even take years. It would not be recommended to go through a probate court to purchase a probate property if you’re looking for a quick sale.
If, however, you are willing to wait, especially if you feel the property could be worth something after you get it fixed up, you should make sure you have other properties lined up on your flipping to-do list.
The good news is you could significantly cut the waiting time down by telling the court you can close quickly on the property. If you offer cash for the purchase of the home and can provide proof of funds, this will get a personal representative and the probate court’s attention.
Before you decide you really want the property though, find out as much about it as you can. The first thing you’ll want to know is if there is any debt attached to the property. The last thing you’ll need to know is if the property had an existing mortgage that may need to be paid off.
In the end, if you still feel that you’ll make a profit off of the home, you can still purchase it. Around 67% of the houses in probate court don’t have any existing debt, which makes them a great purchase for flippers who can close fast and have access to private money.