Myths run rampant in our society. People who don’t know what they are talking about spread misinformation. Worse yet, others have an ulterior motive spread disinformation. Sure enough it will be repeated and repeated often morphing into something more inaccurate. Next thing you know a myth has rooted itself in what is considered “common knowledge”. Some myths contain a kernel of truth but are a gross oversimplification of the more nuanced underlying reality.
Myths may not bother you. But myths can cost you money. Lots of money. If you are not taking advantage of an opportunity because of some myth that it is too hard, too tricky or too complicated, that will cost you. If you haven’t been investing in Probate Properties because of some misconception you have about them, it is costing you hundreds of thousands of dollars.
Let me walk you through the top probate investing myths in the marketplace.
Costly Myth #1: Probate is complex and hard to understand. Complexity depends on your vantage point. If you are working as the attorney for a wealthy person with assets all over the world, probating their estate will be complex. But that is the exception that proves the rule. Probate is actually pretty simple. And it is very simple if you are only buying from an estate. I meet the Personal Representative of the estate at the property and make my offer. The attorney for the estate handles the rest. I have never gone to court, talked to a judge or had to understand some obscure probate law. Meet the Personal Representative and make an offer. That is how simple it is.
Costly Myth #2: Heirs do not want to deal with potential buyers of estate property. This one might be the most illogical of all the myths. The main reason heirs open up a probate estate in the first place is so they can SELL the assets of the decedent. You see, if someone dies with property owned (titled) solely in their name, their heirs cannot sell it. How can you sell a car if you cannot sign and transfer the title? How can you sell a house if you cannot sign a deed to transfer ownership to the new buyer? You can’t. A probate court allows someone to be a Personal Representative for the decedent. This person has the power to sign for the decedent and sell what is in the estate. The best way you know the heirs are ready to sell is they initiate the probate process.
Costly Myth #3: Properties are ‘tied up’ in probate for a long time. Sure, they can be. It is possible. The people dealing with the real estate holdings of Anna Nicole Smith shouldn’t hold their breath. That could take 10 years to finalize. But this is another case of what might be possible vs. what is probable. There will always be cases when the heirs are fighting, contesting and arguing with each other. Most of the time it doesn’t happen that way. Once a probate estate is opened up and a Personal Representative is given the power to sign for the deceased, they are free to sell the property. This can happen in a period of a few short weeks.
Costly Myth #4: Probate files are private information, not public record. False. Absolutely false. Of the thousands of counties in the US I don’t know of a single one where probate files are private. People might think like probate cases would be private. Many people think bankruptcy filings and foreclosure notices are private. Wrong again. Probate files are of public record just like Bankruptcy and Foreclosure. You can walk into any county, ask where the probate files are kept and access them with ease. Or better yet access them online in the comfort of your own home with the simple click of a mouse.
Costly Myth #5: Probate court requires that probate property is sold for FMV (fair market value). I could tell you this is not true based on the deals I buy at big discounts. When a probate estate is opened a Personal Representative is put in place. The ‘who’ can sell probate property is the court’s main concern, but not the ‘what’ the property is sold for. Think about it, if the heirs are getting what is theirs, they can do whatever they want with it. The court wants to make sure the probate estate is settled properly but rarely micromanages the disposition of assets. In some cases property will be appraised, but this is the exception more than the rule. Here is what you need to know: the overwhelming majority of probate estates allow the heirs to sell the property at whatever price they desire. And when you have a probate property in disrepair, vacant and often being dealt with by out-of-town heirs you have the makings of a great deal.
By: Quinn Niego