How to Buy Probate Properties
Probate is the process by which the probate court distributes the assets of an individual in accordance with his or her will. In the event that a person dies intestate (without a will), the probate court distributes the assets in accordance with the law and with the intent of following the deceased's presumed wishes. The first step in probate is the settling of debts. This means assets will be sold to pay creditors before being dispersed.
Settling with creditors often requires the quick sale of properties. Probate properties represent some of the best buys in real estate because they cannot sit around for years waiting to get the best price. There is often a high demand for probate properties, however, because people observe such properties closely waiting for the property to become available in the probate process.
To be successful at purchasing probate properties, you must be able to move quickly. This means you may lose out on a hot property if you have to get your IRA custodian to sign off on the deal before you can close it. With checkbook control of a self-directed IRA, however, you can make an offer and close the deal in an accelerated fashion giving you a much greater chance of success. With probate properties, timing is everything.
Buying in and after Probate
Probate properties can yield extraordinary returns if you are fortuitous enough to get the good ones. You can also sometimes find great deals after the probate process. Inheritors often can make more use of the money from the sale of an inherited property than of the property itself. This means you may be able to get a great property below market value if you are able to seal the deal quickly.
Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)
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