Marketing to Probates

Transcription

1 Marketing to Probates It s a fact of life that in the coming years, trillions of dollars will be passed from one generation to the next. This ebook explains the probate process and how real estate professionals can capture their share of this niche market. By: Jim Rutkowski Senior Consultant Conexus Data jim@probateleads.net jim@probateleads.net

2 The Probate Process Probate is the process supervised by a surrogate court of competent jurisdiction that determines the validity of a will, itemizes assets including real property, paying taxes and debts to creditors as well as expenses associated with will administration, then finally distributing the assets left over to the heirs that are entitled to them. Depending on the complexity of the estate and the intent of the parties, this process can be short or lengthy, typically ranging from three to seven months and rarely, upwards to a year or more. The estate is distributed in accordance with: 1) The will of the deceased 2) When a will is not present, the laws of intestate succession are applied. These laws parcel out property to the deceased person s closest relatives. There are reams of books on how to profit from real estate investing, but the common denominator is buying low and selling high. That s how you make money finding a bargain and reselling it at market value or higher. One of the biggest advantages to probates is the ability to find deeply discounted deals because of the family s motivation to liquidate the estate. Let s face it, bargains are harder to in this competitive market. If you have worked with distressed properties, you have probably seen inventory shrinking and banks holding onto REO s longer. Enter an aging baby By the Numbers Vast Inventory 6 million unsettled probates at any given time with an estimated value of $600 Billion. Constant Supply Over 2 million new probate cases open each year. Real Property in Most 70-75% of probate cases have some type of real estate attached to the estate. Motivated Sellers If the executor is going to sell residential property in the estate, ~65% cases will sell within 4-8 months. Most Executors Out of County ~85% of the Executors do not live in the county where the probated property is situated boomer population, and you owe it to yourself to seriously consider the niche or probate properties. 2

3 Who s The Decision Maker? The descendent usually spells out who they wish be in charge of their estate. Yet absent a will, the court will assign a Personal Representative (PR), more commonly known as the executor, who is tasked with the fiduciary duty of divvying up the estate to pay NEARLY ALWAYS, THE HEIRS DON T WANT THE HOUSE. THEY WANT THE CASH IN THE HOUSE. creditors and distribute the remaining proceeds to the heirs. While anyone can petition the court to fill the shoes of the Personal Representative, most states prefer the surviving spouse or registered domestic partner as the Probates are the low-hanging fruit because the PR often has a heightened sense of urgency to sell the real property in the estate, for a host of reasons: first choice, followed by adult children or other blood relatives. As a real estate professional, the quintessential point to grasp from 40,000 feet is that the PR has been awarded the authority to sell the house. This is the person that has the greatest influence into how the estate is divvied up. A couple of important documents you should be aware of are The Petition of Probate and The Letter Testamentary. The Letter or Testamentary gives the PR the authority, and the Petition for Probate gives the exact name and address of the Personal Representative. It s important to note that these 2 documents will both be found in the Probate case files. There are taxes and other estate-related expenses that need to be paid. More often than not, the heirs do not want the house. They want the cash in the house. Heirs may live too far away from the property to play landlord or travel on a regular basis to maintain the property. The PR may get in the middle of unfortunate heir in-fighting where heirs have disagreements as to their equitable share. This normally brings out the worst of people, and the PR has an increased need to liquidate the estate to end the fighting. 3

4 Time Frame To Sell Will all of these properties sell? Of course not. For those that will sell, when will they sell? We don t have a crystal ball every case is different. But here are some scenarios that span every time frame. «Low hanging fruit of families that want to cash out NOW. Some deals may fall into your lap, as if the executor is waiting for your call. Yet we all know that in most cases, it s not that easy. «Living spouse decides to sell after some period of time. Not uncommonly, a spouse is not immediately ready to sell the house right now. Contact the same person 2, 3, 4+ months from now, they are feeling the crunch of bills, maybe they want to get closer to the kids, or otherwise want to make a clean break from the property and move onto another chapter in their lives. «The court process plays out and the property reverts to the heirs. The #1 Barrier to Selling When someone passes, the relatives are left behind a treasure chest of memories, and it is a gutwrenching process to dispose of these personal belongings. According to renowned probate investor Sharon Vornholt and thought leader in the sphere of probate marketing, In most of the probate deals I have done, the number one reason they haven t sold the property is the final bit of personal belongings that are still left in the house. They just can t finish the job. If you can take over the task for them, you just may have sealed the deal. We know of some agents and investors that offer to rescue classic cars, jewelry, antiques and other prized items as a key component of their communications with the executor. This may be a touchy subject that goes beyond the scope of this publication, but suffice it to say that house cleaning may be of value to the families torn on what to do with the gems left behind.. At the completion of the probate process, the heirs have an itch to sell and cash out. With the newfound ability to sell the property, they are eager to liquidate the estate.. 4

5 Repetition is the key to success. Every case is different, and there are unique circumstances surrounding every probated property. While we do not have a crystal ball, we can say that: THE MARKETING SECRET EVERY CHILD KNOWS People respond to repetition. If you are a parent, you know how hard it is to not give in to Some probates will be sold immediately. Sometimes, the estate will hold onto the property and sell it after some period of time. Sometimes, the property will be left to the surviving spouse or other family member Sometimes, the spouse or family member will want to sell the house after living in it for a short period of time Sometimes, the family member will be motivated to sell only when the personal belongings of the deceased is disposed of in a satisfactory fashion. Whatever the time frame, once the executor does in fact make an affirmative decision to sell the property, they will want to sell it as soon as possible. repeated requests for an ice cream or new toy. If you are not a parent, you likely remember asking or even begging for a toy, treat, or staying up past your bedtime, until your parents finally gave in. The executor of probated properties are similar. They need to be asked repeatedly. Whether your probate leads are generated through agent or attorney referrals, by compiling this data yourself at the local courthouse, or outsourcing this tedious task to a data compiler such as probteleads.net, multiple touch points with the executor will yield the best results. Since the executor has varying time frames to sell, repeated communications will ensure that you reach the decision makers at the time when they are in selling mode, or nearing the decision to liquidate the real property in the estate. 5

6 Getting the conversation started. Sending a letter to the family is a tried and true vehicle to initiate a conversation on settling the estate. Although postcards are cheap to print and cheap to mail and have no barriers to entry, in our view it lacks the personal touch, look and feel of a letter. Sending a commercial-looking mail piece with the banner of WE BUY HOUSES CASH AND CLOSE IN 30 DAYS seems strikes as insensitive to grieving families. For the best results, we recommend handwriting the envelope to get the mail piece opened. When the executor s information is readily available, you should Are you reluctant to engage in a difficult conversation with grieving families? Inevitably, some people consider probate marketing as ambulance chasing, but this is a myopic view. While this is a sad time for folks, it is also a time when those left behind have to take care of business. They have the business of settling the estate to attend to. That may include selling the property, and it almost always involves disposing of the deceased s personal belongings. The reality is, you as a real estate professional can add genuine value to these families by helping them settle the estate and move on to build another chapter in their lives. address your correspondence to the executor at their address, as they have the most influence into how the estate will be divvied up. Some clients will also send a letter to the property address of the deceased, addressed to the family, with the expectation that a local family member is checking the mail for estate-related bills and other important correspondence. Should you make contact with the attorney? There are several schools of thought, both for and against this. In our opinion, if your marketing budget permits, it is best to contact all of the parties that have a footprint in the probate process, including the heirs and the attorney, to get everyone on the same page and facilitate communication between these parties during this difficult period. 6

7 Sample Letter To Personal Representative RE: Estate of John Smith 1315 South 36th Street Dear Sharon: I want to offer my condolences. I know firsthand that it is never easy losing someone we hold dear. I want to let you know that I may be able to help you with settling this estate more quickly. I buy real estate in this area, and I m currently looking for single family homes and other investment property. If you or your heirs are interested in selling this property, please give me a call. I will be happy to speak to you anytime. I can pay all cash and close quickly to help you reduce your attorney s fees, utilities, taxes, and mortgage payments on the property. If I purchase your property, you will also be able to avoid repairs and fix-up to the property and the time and expense of a real estate agent. Please call me at your earliest convenience. I think we can have a great opportunity to work together which will be beneficial to all of us. You can reach me by at yourname@gmail.com or by phone anytime at (502) You can also visit my website at yourdomain.com. Sincerely, Your Name 7

8 Sample Letter To Attorney Attorney Firm Name Attn: Attorney Name Attorney Address RE: [Case Number] Dear <Attorney First Name>, I understand that you are representing <Personal Representative> in regards to his role as Personal Representative for the estate of <Decedent Name>. I would like to introduce myself. I am <Investor Name> and I specialize in buying estate properties. I am in a position to make an offer on any properties in the estate and would appreciate an opportunity to be of service. I understand that many Personal Representatives can find themselves in need of ready cash to pay estate-related bills and expenses and I can assist in getting that cash. I can close quickly and I do buy properties AS-IS. There is no need for the Personal Representative to have to worry about cleaning up the property and selling any estate-related items where there is neither the time nor interest in doing so. Should the estate be at the point where the only remaining task is to sell the real estate associated with the estate, I can be of immediate assistance. If there is no longer a need for these services for this estate, I would like to offer my services on any other comparable estate-related cases that you many have in house. You will find that I am a conscientious investor and that I strongly believe that the only deal worth pursuing is the deal where everyone wins. I am willing to entertain any potential opportunities and you will find that I am very creative in my deal structuring. I would appreciate your support in this matter and I would be happy to meet with youand/or the Personal Representative to see how I can be of help. I look forward to hearing from you and I trust that we will be able to do some work together in the near future. Sincerely, 8

9 About At probateleads.net, our goal is to help REALTORS and investors capture their share of the probate niche by pairing them with motivated executors that are motivated to liquidate the estate. Our accurate and responsive list of recent probate filings are compiled in 3,000+ Counties, saving real estate professionals an enormous amount of time and money by outsourcing this tedious and laborious task, empowering them to focus on their core business of closing real estate deals. Contact Information Conexus Data, LLC 181 State St. Suite 202 Binghamton, NY