Profits In Probate Real Estate - Part 3 13.
State law determines the method used to sell any real estate in the
estate being probated, whether or not there is a detailed will. Bargain
purchases may be found with any of these methods of sale, but the very
best opportunity will be found in #4, the private sale.
In many states the administrator of the estate can sell any real
property from the estate without advertising or without the approval of
anyone, including the court! Be sure you grasp this, because it is the key.
The PR has complete authority to sell real estate. That means no red tape,
no legal entanglements, no bidding wars, and no delays. You make the
deal and you buy the property. Without any advertising other investors
won’t even know that there is property available. There will be no
competition for the property.
In most states if the will includes the power to sell, the executor
(through an attorney) will apply to the court for independent authority. This
is usually granted as a matter of course. Then the power to sell is in the
hands of the executor. Usually the executor can negotiate the sale without
the approval of any heir. This means the deal for the property can be quick
and clean.
In California the executor’s power is granted by the Independent
Administration of Estates Act. Most states have a similar law.
Even if the PR is not granted complete power to sell real estate doing
so can be relatively uncomplicated. You make your offer, the PR accepts
it, the attorney submits the offer to the court for approval and the deal is
done. Routinely the court will approve the sale if no heir has an objection.
THE SEARCH
From here on keep in mind that each state will have some variation in
the way they handle estates and probates. Most will follow the same
pattern, so once you have learned what we present here it will be very easy
for you to work your way through any state’s laws.
Watch newspapers for Notice Of Death (or Notice Of Petition to
Administer Estate, or Notice to Creditors, etc.) in the section where legal
notices appear. It might be called something different in your state, but it
will be easy to identify when you see it.
14.
In some areas the notice will appear only in a publication that
specializes in legal news and notices. If you have trouble finding the
proper publication in your area speak with someone at your local public
library. Larger libraries have research librarians who can find the source
you need. Or you can talk to someone at the probate court.
Be aware that you are not looking for obituary or death notices.
Those are not “legal notices". They are simply the local newspaper
reporting the “news” of a person’s death.
(If you have the time you can gather the names of these deceased
persons, check public records to see if they own real estate and mail a
letter to that address. Some of these people may have had their property
in trust and the beneficiary of the trust may be interested in a quick sale of
the property. Properly structured trusts are often used to avoid probate. If
a spouse inherited the property he or she may be interested in selling. You
will find that many of the names you find this way later appear in the legal
probate notices.)
The “Notice of Death” "Notice To Creditors" or “Notice of Petition to
Administer Estate” will give you the name of the deceased.
Now you determine if the deceased owned any real estate. You find
that information at the County Assessor’s Office. The assessor will have a
file listing the names of everyone in the county that owns real estate. The
names are listed alphabetically. Most assessors now have this information
in computer data bases. You may be able to access this information from
your home computer. Ask.
Take the names you have gathered from the Notices Of Death and
see if they appear in the assessor’s files. If the name is not there it means
that person did not own property in your county. You may also find that
one person owned more than one piece of property. Make note of those
who owned property. Discard the other names.
You now have the names of the deceased property owners and know
the location of their property. Your next step will be to contact the
administrator and learn what the plans are for the real estate. The PR is
usually one of the heirs.
15.
The name of the PR usually appears in the Notice Of Death, but to
find an address for that person you will have to look in the probate file in
the office of the County Clerk or Court Clerk in the probate court.
In Arizona, for example, probates are administered in the County
Superior Courts. In most cases the probate file will be filed by case number
and will not be filed by the name of the deceased. You will find the case
number displayed prominently in the Notice Of Death, usually near the top
of the notice. You must have that number for each file you wish to
examine. Here again, many areas now have this information in a computer
database.
Next you must find the file section at the probate court (or elsewhere
in the court house) and ask to look at those files. These files are public
records and you need no authorization to inspect them. Most often the
people who work in these areas are accustomed to helping people find
what they need. Don’t be hesitant to ask for help.
In the file you will find many legal documents and a copy of the will.
You should also find the name and address of the administrator, as well as
the names and addresses of any heirs. The administrator is often one of
the heirs. If no one was named in the will you must find the name of the
person who has been appointed administrator.
Check the will to see if there is a provision leaving the property to one
or a combination of heirs. If more than one person was left ownership in
the property you may want to contact each as well as the executor. Usually
you will only deal with the executor/administrator.
Also, in the will you should find the phrase “with or without notice”, or
something similar. This can be an important phrase, which allows property
to be sold by the executor without court approval. There may be wording in
the notice indicating the executor has independent power. That would
indicate that the will contains the “with or without notice” power.
In many states the executor can petition the court for independent
power. Sometimes that will allow them to sell property directly or submit
the contract for the sale of property for the court’s approval, which is
normally given without question.
16.
If the executor does not have that independent power it is possible
that the property would be sold by bid. The court must approve the bid. It
can take months to get a court date. In court the judge announces the
amount of the high bid and asks if anyone else would like to submit a
higher bid. It can happen that others are present who will make an “over
bid”. That bid very likely will be more than you wish to pay. This means all
of your hard work and your time has been washed down the drain.
Wait a minute! Could you track estate property sales that must be
approved by the court and be an over bidder? Maybe. Once you learn
how the system works you will see if potential bidders are showing up in
court to make over-bids and if they are doing it regularly.
As we mentioned, in some areas there are investors (with cash) who
follow foreclosure sales, sheriff sales and probate sales of real property.
They are usually called “the forty thieves”. It has happened that they get to
know each other and often cooperate in the bidding. This is a game for
only the most seasoned and cash rich investor.
But what if you find that is not the case in your area? Then you may
become the over-bidder in these courtrooms. Keep this opportunity in
mind, but follow your main plan until you have a complete understanding of
the system.
CONTACT
Most of your research is now completed. You know the name and
address of the executor and any other heirs, and you know there is real
property in the estate. The Will may have called for all property to be
sold and the proceeds distributed among the heirs, or portions of the estate
may have been willed to particular heirs. Sometimes the contents of the
estate are to be equally divided among the heirs. This is called Distribution
in Kind.
The Will is a map that will lead you to the person or persons with
whom you must negotiate the purchase of the property. Remember that
the Will is now a matter of public record and you have the right to read it.
(At least that is how the law stands as these words are written.)
If the contents of the estate are to be sold you will want to contact the
executor and make an offer on the real estate.
17.
You must use good negotiating techniques to make the best deal
possible. Often the heirs are scattered around the country and are anxious
to receive their share of the pie. They may be putting a good deal of
pressure on the executor to get the property sold.
Heirs may not have a good idea of the value of the property. Even if
they do you may find they want to sell as quickly as possible. Some have
been (mentally) spending the money since the moment they heard of the
death.
If an heir is directly receiving property as their portion of the estate
you will want to contact him or her and make your deal. If more than one
heir is involved you will have to satisfy them all.
In any case your aim should be to buy the property for 50% to 30%
below market value. At times you can ask the estate to carry back the
financing on favorable terms. Older heirs may want the steady income
from a mortgage rather than a lump sum of cash.
Remember that you are there when the heirs need you and you are
ready to make a deal on the spot. Your service has value.
Keep in mind that if your first contacts with the estate show promise
you should at least drive by the property and get an idea of its value. Many
times you will find the property had not been well maintained for the last
few years of the deceased's life. They were old and infirm and just did not
have the energy for maintenance. This should be brought to the attention
of the heirs as you make your offer.
It goes without saying that during your contact with the heirs and
executor you must tread carefully and consider the stress they may be
under. Good manners and understanding are a must. Get your deal, but
get it in a civilized manner.
There will be an attorney involved in a probate. He may or may not
be well versed in probate law. Attorneys don’t know everything! There are
some that may not be aware an executor can sell property on his own
authority. Or they may not want to remove themselves from the process
and lose some billable hours. You may have to educate the executor and
the attorney.
18.
Make a copy of the section of the probate law that gives independent
authority to the executor. With this copy you can convince everyone that
what you are asking is possible and legal!
HOW TO
Most investors are not aware of the opportunity in probate real estate.
This means you have far less competition in your search for bargains. The
information in these pages will guide you toward the profits. If you truly
understand the potential of this idea you will be very motivated to do the
research necessary to reap some amazing rewards.
Don’t take shortcuts. If you have not been exposed to the
fundamentals of investing in real estate you may make some serious
mistakes in evaluating the property you have the chance to buy.
MAKE CONTACT
Direct mail is the best way to make contact with the Personal
Representive. Earlier we have suggested that you first learn if the
deceased owned property and then visit the probate court file office and
find the PR’s address
You should plan on sending about four letters to each estate. One as
soon as the notice is published and then at intervals over the next three or
four months…. depending upon the timeline of probate in your state.
You find an example of the type of letter you might send to the
administrator.
19.
Example letter:
Mountain Valley Financial LLC
123456 West South Drive Ave.
High Taxes, MA 09876
Peggy Moran
Personal Representive
John Wills Fremont Estate
324354 Bumpy Rd
Mud Hole, TX 7693020
Dear Ms. Moran,
Please excuse me for intruding upon the difficult situation
you are now facing, but perhaps I can help.
Often estates need ready cash to pay taxes and to
distribute to heirs. As the person in charge this burden falls
on your shoulders.
I buy real estate and other personal property often found
in estates. I understand your responsibilities under our
state’s probate laws and I can assure you that I am sensitive to
your situation and the needs of any heirs.
At some point you may find that it is in the best interest
of all involved to sell a property. You may find that you need
a buyer who can act quickly, so that you can settle the affairs
of probate to the benefit of all.
I am prepared to do what is best for you and the estate.
For example: I can offer to buy a home and it’s contents.
I
can buy just the home or just the contents. I can buy cars,
boats, promissory notes and other items of personal property.
You can simplify your responsibilities by dealing with just
one person who has the ability to solve many of your problems.
If you don’t need me now, you may later. Please keep my name
and number in a safe place, so you can find it when needed.
Sincerely,
Barbara Buyer
788 123-0000
P.S. I enclosing references from estates I have helped in the
past. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
