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  • Deal Finding

    How to find probate deals

    what's the best way to source probate deals?

    Is there a public register where one can source property left in inheritance before they go to market?

    whereby one can make formal cash offer?

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    I had two tenants once who were in the funeral business.

    They had the heads up on what was potentially coming up.

    I didnt actively pursue it though as it didnt sit well with me and felt  a bit like  ambulance chasing.

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    Jonathan Clarke. http://www.buytoletmk.com

    Probates, love them :-)

    Contacting bereaved family member through the obituaries or similar is morally questionable and the vast majority of the time you will be given a hostile response.  If someone dies, very often a grant of probate is not applied for, for some time.  Which means the family / executor is not yet ready on any level to deal with the sale of property, as they have not yet applied to the Court for the right to deal with the estate.

    The other danger is that later in the process, when they are able to sell, these vendors will come into contact with agents and solicitors who you may later want to have as contacts for probates or other properties.  If you have damaged your credibility / reputation by contacting the bereaved, it could ruin future business with them.  It could also ruin any future possibilities with that property.

    I have found by far and away the best source of probates is Rightmove.  Sounds simple but there you go.  If you know what to look for you can spot them a mile off.  If they have been on for a long time, then they may be open for offers, so don't be shy about making an 'insulting' offer.  They are often guided by the most desperate beneficiary.  Ie if 5 siblings all expecting a share, then a low offer 25k under asking price may only mean 5k each drop, psychologically easier to swallow.  And if one of those beneficiaries has a pressing debt... they'll put pressure on siblings to accept.  I find that the probate situation is often so fraught and awkward, family members go with the path of least resistance... :-)

    In your area you'll find a secret world where probate solicitors and estate agents refer to each other.  Its hard to break into that cosy equation.  But what i have done successfully is be involved with many probate sales either to investors or assisted sales, and make a note of finding out who is dealing with the probate.  Then if i come across another probate they are involved in, i can mention i was responsible for the x and y properties selling.  They don't get paid until the estate is settled, which can take MANY years, so i am a boon to them.  As a sweetener i can offer them the conveyancing, promise them conveyancing on a resale, etc etc... I've pursuaded several solicitors to refer me to their clients.  I then have the benefit of having a warm prospect and having been given legitimacy by a profession they trust (unwittingly or not).

    A great way to take advantage is by assisted sales.  Most of these properties are solid and well cared for but very tired and in need of modernisation.  The familty often live away, are busy with their own lives, and nobody has the money or inclination to modernise the property to make it more selleable.  This is where an assisted sale comes in.  I offer to refurb the property and sell on the open market.  You can agree a profit split above x price achieved, or simply pin them down to a figure, and you get everything above.  This is then covered by an option agreement and a key undertaking to allow you to go in and do the works.  There are various way to sell but typically in my case i'd get an investor to buy, or in the right area use one of my friendly agents to list it at a bargain price and get interest that way.  Sometime the latter, with the former as a backup if it takes too long / gets no interest.  You can add value by offering to look after the property (checking weekly, putting out bins, sorting mail etc).

    The great thing about probates is you can usually create a big uplift in value, above cost of works, from the refurb.  At the same time a mint house is much more sellable.  So in other words, you don't need to get a massive discount to current value if you do you sums right.  You can create a comfortable profit margin below (negotiating a good price) and above (adding value above cost of works).  As 'consideration' for the option agreement, i have often paid £1000+, which i spin as helping towards utilities and council tax (most probates will have exceeded the void rate timeframe).  I offer to cover legal fees, agency fees, whatever works.

    Being an executor for mosty people is very awkward and traumatic.  Probate situations brings out the worst in peoples nature and some of the greed etc can create family feuds.  I am involved in one at the moment where to elderly beneficiaries were selling to me, then at the last minute an American cousin who nobody hear of, came out of the woodwork and blocked the sale with the help of a solicitor.  The cousin never knew the deceased (or the other beneficiaries), and the two old dears i am dealing with are desperate for the money, but this cousin is adamant it will stay on the market until she is happy, even if that takes years. She's threatened the executor with legal action if her share is 'prejudiced', so he's to scared to carry on with the sale.

    Hope this helps.

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    What an excellent post Arlo, excellent. What those clues you look for on right move? johnathans idea of funeral directors is a thought provoking one!
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    Susanne

    Thanks for the contribution to the OPs question.  Very enlightening.  I am glad that 'some of my advice' is 'sound' - good to know it meet with your approval, i am honoured :-)

    But I think you are being deliberately pedantic here, or have completely misinterpreted (nearly everything) in my post.  I don't know why you feel the need to publically label me a hypocrit, i think its unneccesary and adds nothing to the conversation.  But since you are trying to show me up (for whatever reason) i now feel obliged to defend my post (thanks for that).  Maybe it might have been better to enrich the thread with your own knowledge and experience?

    Its spelling out the obvious for many, but here goes:

  • Its very clear that my post is all about timing.  Is that not obvious?  Contacting a dead person's family is morally dubious as they have not indicated TO THE GENERAL PUBLIC that they have a house to sell, or indeed that they want to sell! 
  • If a property is marketted, then they have demonstrated that desire, and by default you are invited to make an offer.  The two situations are completely different.  Hence the discussion about morality is completely different. 
  • The whole concept of BMV is to get a discount because you are taking advantage of some sort of situiation - be that laziness, lack of knowledge, financial difficulties, divorce or indeed death.  Every property investor i know of takes advantage of someone elses situation - unless you suggest the only morally correct thing to do is offer market value?  Anyone whose ever made money in property is 'taking advantage' of something, are they not? and if they take advantage in a way the original owner didn't spot / couldn't manage - is that morally dubious???
  • Taking advantage of a willing and able seller by putting in a low offer is a two way street. They are more than able to decline.  If they accept, they may well view the offer as a godsend.  They may well be taking advantage of your desire and ability to purchase their property.  'Taking advantage' is a two way street
  • My point about an insulting offer is about the buyers perception of the offer.  Some people don't offer low because they feel 'guilty' or feel it will be perceived as 'insulting'.  The point of my statement (which i thought was clear but oh well) - is that it is a business and you should not be afraid to go in low.
  • I would love to know who on here as an investor, thinks it morally questionable, to get bargain properties from estate agents, by putting in low offers.  Rather than say 'some people', why not say what you think?
  • Finally, if nothing else, i am glad my post made you laugh and brightened up your morning.  Not sure it is Comedy Store material but whatever floats your boat.  I am to please :-)

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    It sounds like more hassle than just buying repossessions from an auction?

     

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    Susanne, i will assume you did not intend to label me a hypocrit, so that being the case, i would just add that your post was a bit casual and by default talking about 'glasses houses and stones' means people will interpret you post as saying i am being hypocritical. 

    As i have a reputation i care about, and do not wish the casual reader to have that impression of me, i am of course obligated to put that right.  Naturally its annoying to be obligated to defend your comments, when you post and my enforced response, diverts the course of the thread from the question asked by Andy.

    My reply is to explain that there is no hypocrisy - because contacting dead peoples relatives, and making open market offers - are completely different.

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    Andy

    Back to you, its your thread, sorry for the diversion.

    What those clues you look for on right move? johnathans idea of funeral directors is a thought provoking one!

    Nothing mystical really :-)  clues include NO CHAIN in the wording, 'in need of modernisation' or something similar, aloing with photos of dowdy curtains and 70s patterned carpets, the types of ornaments, photos, etc indicating an elderly person.

    In the pics you can often see some furniture but there can be clues that it looks unlived in - like very spartan but all heavy furniture remaining, etc.  Common sense stuff combined with a bit of experience helps.  I guess if you know what agents get probates referred to them, that helps :-)

    Asking the agent on the phone is easy enough, once you spot a 'possible'.  You might assume its a probate but on investigation maybe its a care home move.  These are equally good because in many cases, the level of money taken to fund the care means no-one will get anything from the sale anyway - so a low offer makes no odds.

    Not so sure about the funeral home idea as its a bit well, mmm.  But i guess if you could get a card, leaflet and pursuade some funeral director to put it in their 'pack' of info to bereaved families - its no harm.  Its an inoffensive ad then, and in due course when they are ready they may dig it out and give you a call.  But the active contacting bit is what i refer to when i say its morally dubious - its basically ambulance chasing, but just as much as that - i think its very ineffective because you'll get peoples backs up straight away!  i've not tried this idea - but my understanding of funeral homes is they are mainly part of large co-ops or groups and are very strict about marketing and will probably not want to get involved.

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    Bill

    It sounds like more hassle than just buying repossessions from an auction?

    You might be right, for you, but everyone has their own strategies which work for them. 

    For me, i middle a lot of property so auctions aren't the route to get them.  Lots of research then always the chance of being outbid.  Lots of competition.  I just don't have the time and its admittedly a new set of skills and learning curve.  If i want to develop and flip, i've got the 6 month rule to contend with, ties up funds too long (deposit AND refurb), the buying in costs and holding costs erode the profit too much. 

    Buying in at a bargain price sets a low price on land registry and it can often be held against you when you go for a remortgage. Eg, house end value 100k, current value 80-85k, refurb 10k, agreed 58k.  What to do if you are your own worst comparable when it comes to remortgage - most surveyors will feel squeamish about signing their name to a paper uplift of 42k.  If the buyer gets repo'd in 2 years, the first thing the bank will say is "did you not see it was only bought for 58k?" - not saying this is fair but i've seen a lot of low remortgage valuations after being bought in at a bargain price.  Such a climate of fear and surveyors always take the easy route.  A weird thing to say but if there is no activity in a street, and you buy cheap, you are in effect downvaluing the street - at least making it hard for surveyors to justify higher prices.  I know some people will disagree here but just saying what i've experienced.

    However i have found plenty of probates i couldn't be arsed refurbing, and so bridged them in and put them in an auction - and made a profit that way :-)  i have done rthis with properties i knew local builders would be keen on, who could do major refurbs much cheaper than i could - so it works for them, even if i make a profit.

    With the assisted sales, i could never agree that with repossessions on with agents (receivers will never consider it)  - but on assisted sale probates i could have only my refurb budget tied in the house without buying and holding costs, or deposit, or the six month rule.  So i could potentially turn my money much faster without the fear of being eaten alive by finance costs.

    Of course if Andy or others are looking to buy and hold a few properties a year, developing and refinancing out his capital input, auctions / repos can be great of course.  Just doesn't suit my personal strategy or skill set.

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    Arlo i think your 6 points were excellently articulated and although i don know you, it reads that you are clearly a very experienced investor and a man of good nature, so don't worry.  You raise some excellent thought provoking points about investing and morality. Its a case of is the glass half full or empty? Its a simple case of free markets and supply and demand. People buy what they need for a variety of reasons. If people did not need the services of quick cash buyers and investors then the industry of property investing would not exist! They way i see it is that investors are 'risk takers' 'doers' people and provide a vital service to the community providing rental property and investing their own cash and time in fixing broken properties back on the market renovated. If its so easy, then anyone can do it right? The reason most don't is that its too much like hard work and hassle!!

    We should not entertain the hateful spiteful socialist political brigade, that believe all landlords and investors are heartless greedy bastards living off the poor downtrodden. That's utter crap! This industry is what makes the UK one of the richest and most modern economies in the world. Its investors that are keeping the UK property market afloat right now. If you don't believe me try and be a landlord in somewhere like Spain! There stupid negative laws against landlords just simply hurts and deprives the very people they are supposed to protect and ultimately stifling the massive economic benefits the industry provides to lenders, solicitors, surveyors, architects, builders, developers etc....

     

    Let us never question our morality talking about probate and other ways of making a living in our profession!

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