Probate investing - Posted by Pete

Posted by Mark on July 02, 2007 at 20:00:54:

Also remember the Executor is exempt from the Transfer Disclosure Statement but still has to disclose any property defects.

And there is a duty to disclose death which occured on the property with-in 3 years, if the nature of the death was material…

Good luck…

Probate investing - Posted by Pete

Posted by Pete on June 30, 2007 at 07:16:16:

Do any of our fellow investor invest in probate properties? I have read that I should look for the “notice to creditors” in the news papers…find the Trustee’s name and contact info, and mail to them. Has anyone tried to call them directly? Has anyone tried reading through the obituaries,mailing a letter offering condolances to the family, and offering your services when they are ready?? OR…would this be considered too tacky?/

Let me Disabuse you of a Few Notions - Posted by Jimmy

Posted by Jimmy on July 02, 2007 at 05:57:56:

I practices as a trust & estates attoney for 20+ years. It would really help if you educated yourself as to how probates work, how long they take, the key players to know, the people who will get in you way, etc. The more you know about how the process works, and how it DOES NOT work, the less time and energy you will waste.

  1. You are not looking for propate properties, per se. You are looking for opportunities to buy properties for less than FMV. Sometimes, this happns in a probate context. But the real phenomenon you seek is DISTRESS. either a seller in distress or a property is distress. you figure out how to consistently find these people and situations, and you will do well in this business.

  2. Sometimes, a probate will involve a property or a person in distress. If you find a beneficiary of a probate who is in a jam, you can cut a deal with that person to buy their interest. and when the probate closes (a year or so later), you get whatever they had coming. but you better have done your homework before you make that deal.

  3. a property can often be purchased durng the probate, as the Personal Representative (PR) often has authority to sell properties without court approval. Don’t expect bargains this way. the property will have already been appraised by an officer of the court, which appraisal is distributed to the interested parties. and the propopsed sale must be disclosed to each of the interested parties. and when a property which appriased at 500K is proposed to be Sold for 395k, you should expect one of the interested parties to object. when that happens, we have a little hearing with the judge, and the PR gets to explain herself.

  4. The PR will be represented by counsel, whose job is to keep the PR out of trouble. I would never allow a probate property to be sold for less than appraised value, without seeking a re-appraisal for sale. I had a $2M home in Menlo Park, CA (per appraisal on 6/1/04) on the market in early 2006. best offer was 1.7M. market had dropped. to protect my PR, we called in the probate referee again, and has a re-appraisal. sale went off at 1.7M.

  5. your best bets will be to find beneficiaries of estates and trusts, make deals with them at steep discounts, and hope you did your homework thoroughly and completely. there are others here who have done this effectively. very important to protect yourself. and also very important to have access to all pertinent documents.

Re: Probate investing - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on July 01, 2007 at 08:11:48:

I’ve been working exclusively in the probate and trust arena full time for over 17 years.

Well over 90% of my business comes by way of referrals from legal professionals, including probate attorneys, paralegals/legal assistants, fiduciaries, even tertiary sources like IRS and other unlikely sources.

For what it’s worth, I’ve also been the administrator no small number of times so I know what it’s like to be on the receiving end of solicitations.

As for working with referral sources, I make a point to be perceived as a team member and I’m very clear about what perceived added value my services offer when dealing with the attorney and her/his support staff. It’s the rare practitioner who is uncooperative and even those can be educated into the reality of what’s necessary to complete a transaction.

I stopped mailing to personal rep’s back in 1993 and had a 15 year hiatus, primarily because I was satisfied with the volume of business that I do as a result of my vigorous attorney referral marketing.

The beginning of this year I started up a new campaign and it has began to produce the desired results.

As for the letters and solicitations that I receive as administrator of estates, I can always tell when one of the so-called guru’s have come thru town as the letters increase. The people offering to buy my property have been largely idiotic and don’t know how to work a lead. One even had sophisticated call answering system, yet still messed up on the follow-up side. Most all just don’t know how to talk to a lead and were very unprepared for my call. So, I don’t think this is place for newbies to start. I could be wrong, of course.

On the topic of letters, specifically, I would not make any sticky-sweet condolences comments as they come across as insincere (at least to me they do), as we are strangers and not personally connected. We recently lost Gary Halbert, the great ad copywriter, and his advise was always to write like you were talking to a friend, if this is any help (even tho’ this comment might seem in conflict with the last statement).

Lastly, on the topic of services, I don’t think that many attorneys are too keen on dealing with a prospective buyer of a property directly without benefit of an agent/broker in the middle. Sure, I’ve bought properties without an agent (I’m no fan of most agents myself, even though I have a CA broker’s license!). So, should you have a deal-in-hand, be prepared for the attorney to press for more market exposure by having the exec/admin list first, and convincingly make your case why your plan is best.

Personally, I like the properties that are vested in the name of deceased owner and the heirs have not opened probate yet. Escpecially one’s where big, hard-to-solve problems exist. I have much more control over the outcome.

Good luck to you.

Re: Probate investing - Posted by Mary Nichols

Posted by Mary Nichols on June 30, 2007 at 11:13:18:

I work for a probate attorney and can answer some of your questions.

Clients - sometimes executors/administrators and sometimes the heirs themselves - receive letters from investors re purchase of homes owned by decedents. I found them a little lame, but who knows?

A more sensible route to finding the “trustee’s name” is to go to court clerk and read the probate file. If you’re early, all you’ll find will be name of attorney, administrator/executor & heirs in the estate (though not what their interest is). If you wait until after the hearing appointing the exec/admin, then they will eventually file one or more inventories of the estate, including real property and its legal and possibly common description (street address).

I rather think that a vague letter to all the heirs in the estate is basically wasted energy. At the time of the original petition, the heirs have little or no knowledge of what they might inherit if anything (unless one person is sole heir). California requires notice to heirs of a certain degree even when they will receive nothing from an estate. I’m guessing other states have a similar requirement.

If an estate has real property and no surviving spouse a phone call or a letter to the attorney that you might be interested in buying the real estate should the estate or heirs be interested in selling should probably be noted in his/her file notes and conveyed to the exec/admin immediately, even if they may not have yet decided what to do with the property.

BTW, offering what “services?”

Tacky? I don’t know. Most attorneys are surprised at the aggressiveness of such contacts (but most attorneys are ultraconservative, too) but used to being bombarded by realtors with similar interests - getting a listing.

Hope this helps.


not opened probate yet - big problems - Posted by JT-IN

Posted by JT-IN on July 01, 2007 at 09:17:23:


How do you go about finding these properties and problems, if a filing has not been made. Are these also referrals, or otherwise…? Also, what kind of “big problems” do you refer to, that you specialize in handling…? I understand we are talking title problems, but give me an example of some that you refer to please.



Re: Probate investing - Posted by Pete

Posted by Pete on June 30, 2007 at 11:34:19:

Thank you Mary for your input. I agree that most attorneys are ultra conservative. As for “services”, I am considering offering my help in clean out/clean up of the property etc…there are soooo many things that need to be done, and sometimes the heirs haven’t a clue where to start, or who to turn to for help.( lends to creditability) I have not done any probate investing yet, buy I have some personal experience in helping a few friends in their time of need. It can be overwhelming at times, especially if they don’t live close by etc… any thoughts? Pete

Re: not opened probate yet - big problems - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on July 02, 2007 at 16:08:43:

Nowadays, most of the probate and pre-probates that come my way are by way of referrals. I cast my nets far and wide many years ago and now I’m reaping the rewards.

That won’t excite anyone who’s looking to make a quick buck today, however it’s the truth.

I agree with Jimmy’s post above. Just because a property owner is deceased is not necessarily a big problem. The owner doesn’t care anymore (!) and the heirs may not be in any particular hurry, or may not even be aware of the decedent’s passing.

I’m in the business of fixing big problems that other people don’t have the resources, expertise or capital to resolve.

I track many different lists (default, tax, etc.) as well as posture myself in as many places as practical. If I’m fishing for salmon, I position my nets in the salmon runs. If I’m hunting for rabbits, I place my nets in the rabbit runs.

I know that this practice works because I’ll frequently get calls from non-related sources concerning the same property. It’s a good way of cross-checking the effectiveness of marketing systems.

Re: not opened probate yet - big problems - Posted by Mary Nichols

Posted by Mary Nichols on July 02, 2007 at 12:57:23:

> How do you go about finding these properties and problems, if a filing has not been made.

Read the obits and check for property owned by decedents (or their trusts).

Better yet, hire a teenager to do it for you.

Sounds facetious, but it’s not.


Re: not opened probate yet - big problems - Posted by Curt Dalton

Posted by Curt Dalton on July 01, 2007 at 20:36:03:

Any response?

Re: Probate investing - Posted by Mary Nichols

Posted by Mary Nichols on June 30, 2007 at 13:07:22:

Then for your services - you’d contact the exec/admin, though if this is a business for you, then I think most probate attorneys would like to have a list of people who do that for their clients. Though an instantaneous thought came to mind . . . the attorney I work for now isn’t organized enough to keep such a list. But then he’s a bit of a luddite. : ) Hmm.

I suppose some might be.

I agree with the overwhelming part, though for some insane reason, cleaning other’s stuff is usually easier than cleaning out your own. But for an executor who’s dealing with various “gimme” and “I want that” issues all conflicting with each other, you’re certainly right. From a lawyer/law office perspective, we usually hope the executor secures the assets before they go missing.

We have one where teen daughter not living with deceased dad was driving dad’s car - no one bothered to tell the executor, so it wasn’t inventoried. (Luckily her step-dad had insured it.) Jewelry often disappears as well as portable antiques, etc.

Thus part of their hesitancy to hire an outsider. I suppose if you were bonded? Are you sure you want to walk into the middle of family feud?

Still, it sounds like a good idea for a business. Just get around to the probate attorneys with flyers, business cards or maybe go to probate court hearings and introduce yourself.


Re: Probate investing - Posted by Pete

Posted by Pete on June 30, 2007 at 13:43:09:

Hi Mary…My thinking is more like offering a sort of all inclusive / one stop shopping service for the family. NOT to get in the middle of family disputes.(although sometimes this could be where the $ could be made…no one else wants to deal with it) The family can go through everything, and divide the various items in the estate, and just leave behind every thing else that they don’t want or don’t know what to do with. Many times the house would be in need of repairs, carpet, paint, updating etc BEFORE it could even be listed and shown. The family doesn’t need to go through all that when they are still grieving etc… My thinking is to put together a creative offer,…CASH, owner finance, sub 2, equity split etc…and offer these other services as an added bonus! They don’t have to do anything! Just move on with their lives. Any thoughts? Pete

Re: Probate investing - Posted by Mary Nichols

Posted by Mary Nichols on July 02, 2007 at 12:53:39:

Actually sounds a good idea. I wouldn’t bet on it being a full time business unless you’re in a large area. Market it to the attorneys who handle probates and at least a few of them will keep your name/biz card/biz flyer in their files and possibly refer other attorneys/executors to you.


Re: Probate investing - Posted by Pete

Posted by Pete on July 02, 2007 at 14:05:23:

Hi Mary
I’m fairly new to investing, about a 1 1/2 yrs. I’ve been working with pre foreclosures with another investor, and have been involved in 8 deals so far. I want to expand my marketing and not put all my eggs in one basket. From what I have read, probate/estate investing can be very profitable. There is the opportunity for creative finance, owner finance, equity splits etc… If I understand correctly, when someone dies WITHOUT a will, then the estate goes into probate.(which is where the bigger profits can be made especially if there are problems) BUT what about all the other properties where there IS a will?(or house is in a trust) The heirs may still want to sell etc…a lot of the same things may still apply, needs work etc… In addition, if the property is in a trust, we could assign the beneficial interest etc… My thinking is that probate/estate investing is helping people SOLVE THEIR PROBLEMS (similar to pre foreclosure investing. Any thoughts? Pete

Re: Probate investing - Posted by Mary Nichols

Posted by Mary Nichols on July 03, 2007 at 15:04:18:

> when someone dies WITHOUT a will, then the estate
> goes into probate.(which is where the bigger
> profits can be made especially if there are
> problems) BUT what about all the other properties
> where there IS a will?(or house is in a trust)

The word “probate” comes from the Latin for proof - as in proving a will. So both estates for people with AND without wills go into probate; the intestate ones (no wills) to be distributed by the legal rules for the location. You can avoid probate (and all its publicity) by putting all your assets in trust or alternatively - not having any assets. (or less than some $ amount set by state law.)

One of the points of holding property in trust is that it’s private. Still if you’re checking out obituaries, and checking tax assessor for properties owned by the trust in that person’s name, you may be able to find the trustee to see if they have property for sale. Of course if they name the trust something like “The Royal Dominion Trust” you may never find them (as planned?).

Often the problems with probate properties are one of the following:

  1. House sits abandoned after death of decedent and either just suffers from lack of care or worse ends up being vandalized

  2. A family member ends up living there rent free and all the other family members end up fighting over the lack of rent (paying the mortgage for the dead beat?)

  3. Family members fight over who’s going to get or live in the property; or fight over who’s getting the proceeds; or fight over the price if it’s being set for sale; or object to the attorney’s fees, the executor’s fees, the realtor’s fees, accountant’s fees, or???

If item 1 is appropriate, you can get a deal on the house because most people don’t want that much of a fixer. One I saw last month was appraised in the estate at $250k (early 2006?), deadbeat friend was living in it before & after death of decedent, so estate had to do eviction, then clean up property to some extent, then estate accepted $112k through a realtor, with overbids at the hearing and ended up with first offeror for $117.5k. By then the market value probably dropped to about $190k. Don’t know how much repairs would cost. So a possible deal.

As far as assigning a beneficial interest in the trust, in a normal grantor trust, that wouldn’t work since all the decedent’s assets are most likely in the trust. They might want to sell you a house, but they don’t want to sell you the stocks, bonds, personal property, businesses, cars, boats, etc. Though if you found someone with a separate land trust of some kind for the property, you’re right, you probably could do that.

The other problem with getting a great deal on a probate property is that the property will be appraised near the outset of the estate for near to FMV, so in a declining market, the value at time of sale may be less requiring an additional reappraisal since the sale had to be for 90% of the Inventory value. (see Mark’s msg)

PS, besides a sale, if the real property is the only asset in an estate, you might get the heirs to assign their interests in the estate to you, and then it would be distributed to you.

Does any of that help?

gtlcafe at yahoo dot com