During my 25 years of working Probate Real Estate as both an Investor (Flipping) and Probate Agent (representing buyers and sellers) most of the estate homes had been paid off (without mortgage). All through the 90's when I dealt with heirs there was usually a good chunk of equity sitting in the home so if I was trying to purchase this Probate as an investor (wholesale) or for a landlord (low retail) or a end user buyer (retail) it wasn't to hard to have the estate accept a little less since there was so much FREE money on the table.
Today, well about the the last 3-4 years I have seen more and more estate homes underwater then ever before. I'm not sure the reason but the point is they are coming. Think about this, you are the executor of an estate, you have all this responsibility to do many task to complete the probate process and the biggest asset (the home) has no equity in it but you still must do the tasks. Why would you even want to deal with any of this. For what every reason I have dealt with many petitioners and executors who are going through the process just to place closure on their loved ones dealings. No loose ends, everything proper. This spells opportunity.
I dived into a probate which was underwater because it was in a prime area and the estate had contacted me off my marketing piece that they wanted to sell. The house was worth between $400K to $450k, needed work but was in a great area. Soon I realized this would have to be a retail sale as there wasn't any room equity wise for a wholesale deal. What I soon found out was the house was in foreclosure as well so I had a time issue as well. As a Probate Agent hired by the estate it was my job to help the estate out from under this burden to help the executor move on. Here was the final outcome and what I learned about probate homes underwater and how a Probate Agent could earn from these situations as well and do some good for the executor.
The price of the home based on condition was not going to bring enough money not to be a short sale. There was no money that was going to go to the heirs but there was the executor fee which in this case would be a little over $10K that we wanted to try and salvage. I had my attorney involved and between us we started the process with the bank. Unlike a regular short sale there where no financial's the seller had to provide because there was no seller (deceased). So this took much of the paperwork off the table. The bank still asked but I kept telling them the seller has passed and there are no financial's. My attorney checked out a few other things and we decided just to move forward. We had a good offer on the table at $425K "As Is" (low retail) as the buyer was a move in buyer and they knew after fixing the property it would be close to a $500K value. The executor signed the paperwork allowing the bank to deal with me as usual in a short sale and we started moving forward. The Hud1 was prepared but what we did on this HUD1 different from other short sales was add the executors fee and the attorney's fee which is customary in probate sales. THIS IS KEY!
The bank came back and said they would not pay these fee's to the executor and estate attorney. My attorney did a little more research and we put a plan together. We told the bank we where going to take this sale to court for court confirmation if they didn't ok the sale and we would let the court decide. The buyer was going to now have to place a 10% deposit down but they where ok with it as they where placing a 25% down payment anyway. So we started to move forward and petition the court for the court confirmation sale. This also meant an appraisal and a few other hoops but before we had to spend any extra time or spend any money on the process the bank came back and agreed to the original sale terms and HUD1 with the executor and attorney fee's included. WOW what happened.
My attorney felt the bank did not want to spend the time or money to go to court to fight this sale plus have a precedent confirmed. Per my attorney if we had gone to court and the court ruled in favor of the sale then the bank would have spent more time, attorney fee's and they just don't want to do this so they just agreed to the original sale terms. Now maybe there where other reasons but the point is we received our short sale approval after the bank saying "NO" and we closed without having to go to court. We where pumped and wanted to try this again on another probate as well. Keep in mind this first one was not to big of a discount for the bank as we where close to what was owed even after all the sale costs including executor and attorney fee's. Maybe it was better for the bank then to foreclose (cost wise) and or fight the sale in court. The point is we closed.
Now I needed to test this again and within a few months I had another probate short sale to test. This time it was a huge short sale. The decease seller owed almost $500K and we had a sale price of $350K. We went through the same process. No financials when the bank asked as the seller was deceased and a NO when the HUD1 showed Executor and Attorney Fee's included. This one took longer (several months) but after several NO's the bank gave in after we told them we would take the sale to court for confirmation. A pattern was now showing with these probate shorts sales. I love Probate Real Estate!
I now welcome probate short sales and as a Probate Agent I market for them when I see one come across my desk. We haven't lost one yet but you never know. I have a complete webinar cd on this subject for anyone who would like a copy. Just contact me and I will show you how to receive a copy. I even have a program where you can receive a complimentary copy of this process....THINK OUTSIDE THE BOX
Comments(0)