One of the most important aspects of real estate investing is being able to buy properties at discounted prices. And that’s what made short sales and foreclosures so demanding in the real estate industry. But did you know that there is yet another way for investors to earn enticing profits through property investment? It is switch sales!
Probate sales are not so similar to normal real estate transactions. Although it allows investors to make significant profits, it is a complex process. So, if you are new to real estate investing and want to learn more about probate, this blog will be of great help to you. Here we will cover an overview of probate, how exactly the process works, and most importantly, what are the benefits of investing in probate or distressed sales.
When a homeowner dies without leaving a will or debt settlement, the descendant’s property passes to probate. The court then appoints an estate agent to liquidate the property with the aim of selling it for the best possible price.
The probate process works almost like the foreclosure or estate planning process. It is important to note that probate laws can vary from state to state. While the key aspect of a switch or emergency property selling is getting properties at discounted prices, understanding the overall selling procedure in detail can help you understand the ins and outs of the probate process. To move forward, here are the steps to a flipping estate sale:
- Election of representative: as already mentioned, when a homeowner dies without inheritance, it is assigned to the High Court. The court then appoints an executor to carry out the property sale.
- Hiring a probate broker: The estate agent, be it an executor or executor, must hire a real estate agent or real estate agency to seek assistance throughout the probate sale process. A Certified Probate Real Estate Specialist (CPRES) is the right person to turn to while dealing with probate real estate.
- Property assessment: Determining the value of the property is a crucial step in any property sale process. Therefore, whether it is a traditional sale or transfer, a property appraisal is a must!
- Property listing: Once the property is appraised, the next step involves listing the property on property marketing sites. Generally, it is done by real estate agents or rental agencies, as they are more knowledgeable and experienced in MLS listings. The only thing to keep in mind is that the exchange status on the listing should be updated from time to time.
- Offers from interested buyers: Potential buyers start making offers on the property once it is on the market. While multiple buyers can bid on the property with their lucrative offers, only the highest bidder wins. The offer is then passed on to the beneficiaries and legal heirs attached to the property. If no one objects, the proposal is sent to the probate judge for sale approval.
- Signing of contract: If the probate judge approves the sale, the buyer is expected to hand over a cashier’s check with at least 10% of the asking price. Once the cashier’s check is validated, the buyer and executor or executor are supposed to sign a contract.
- Home visit: At this point, the buyer can request a property inspection, but cannot cancel the transaction. If the buyer wants to withdraw from the purchase after finding problems in the property, he or she can do so by forfeiting the deposit amount.
- Final ending: The buyer can settle the property at closing after receiving a positive property inspection report in hand. The property is officially sold exactly 15 days after signing the purchase contract.
Now that you have a brief description of what probate is and how it works, here are the benefits of a probate sale.
Advantages of investing in Probate properties
- Reduced property prices: The biggest advantage of buying a second home is that the sale price is often lower than the market price. This allows the investor to resell the property at a significant profit. Other than that, executors are looking for ways to get the property off their hands as quickly as possible. This is also an important reason for listing probate properties at reduced prices.
- Less competition in the market: While short sales and foreclosures usually tend to have stiff competition, a large number of people are unaware of the existence of flipping sales or where to find them. Even if investors come to learn about probate real estate, most of them prefer not to be bothered by the complicated process of a probate sale.
Now that you have read the entire blog, you have learned important aspects of a probate sale. However, as you go through the actual switching process, be sure to monitor the associated risks before making a final purchase. It’s also important to be aware of state probate laws, so keep that in mind!