If you've inherited a property, you're likely facing a tough decision: keep or sell it. Managing an inherited property can be daunting for many beneficiaries. Most beneficiaries prefer to liquidate it instead. A probate sale is if you decide to sell the property during the probate process. To help you navigate this complex process and maximize your returns, here are three tips for developing a winning probate investing strategy in Texas.
Market to Out-of-State Beneficiaries
If you obtain a roster of homes in probate within an area, you will see a list of properties accompanied by the trustee's, executor's, or beneficiary's address. You can purchase a list of homes in probate, and you can also reach out to local wholesalers as well and ask them to send you any homes in probate. This presents a significant opportunity to provide assistance by offering to purchase the probate property for out-of-state beneficiaries and easing their burden.
Beneficiaries and executors face numerous responsibilities, especially when the deceased is a close family member. They must address a plethora of tasks, such as managing bills, bank accounts, and funeral preparations. Among the most challenging tasks is managing the deceased's home, particularly when it contains years of personal and family belongings as well as needing repairs.
Not only is managing the deceased's home an arduous task, but it can also be an emotional experience to sort through a lifetime of memories while coping with the loss. This task becomes even more challenging when the executor or beneficiary lives far from the property, making logistics more complicated and time-consuming.
As an investor, it's sensible to reach out to these individuals. For those contemplating selling, the process becomes more straightforward. While beneficiaries must still sort through personal items, having a ready buyer can provide much-needed closure once that aspect is complete.
Offer the Right Price
Executors and trustees are legally obligated to obtain the highest possible value for the property. Thus, don't expect to acquire the property at a low cost simply because someone is eager to close an estate. The probate process takes time, and an executor or trustee can be held accountable by both the beneficiaries and the courts for selling the property for an insufficient amount.
Offering a market price or slightly above may be worthwhile if you believe there is an opportunity to renovate and resell for a greater profit. Presenting a genuine offer upfront will likely be taken more seriously than proposing a lowball offer. If the executor or trustee perceives that a better price can be obtained, they will likely reject the offer and list the property. Offering cash for houses and zero closing costs or commissions may get you the house.
However, if you can investigate and discover other issues with the estate, such as a significant tax obligation due shortly for the entire estate, the executor may need to liquidate quickly to meet financial needs. In such instances, you may be able to purchase the property at a discounted price to ensure the beneficiaries do not default on estate taxes.
Purchase “As Is”
Executors and trustees likely already have a lot on their plate and usually do not have the time or desire to repair a home in preparation for selling. It takes time to locate contractors you can trust, and this adds additional costs and time, which is generally not feasible.
To make their life easier, ensure that you make an "as is" offer. This means you understand the property has issues and requires substantial repairs based on your initial inspections. You will not seek repairs or credits during the escrow process.
This approach is standard practice for many investors who plan to fix and flip properties. They conduct a thorough inspection before making an offer, knowing from experience the approximate amount of work required.
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