The short answer to using transactional funding to buy probates is “if you work it correctly.”
The best prospects for probate wholesale deals are the ones where there is not yet a probate attorney working on the probate filing with the probate court.
When the case is filed the probate attorney takes control of who will do the closing when the property is sold, and usually, it is the same probate attorney wearing another hat (closing agent).
In some cases, the probate attorney is also a listing agent, so he can receive a commission on the sale of the property.
In these cases, the probate attorney doesn’t want to see the property wholesaled unless it is in deplorable condition.
The most profitable probates are “pre-probates”, this is where the beneficiaries of the deceased have not yet filed to have the probate adjudicated by the probate court.
With these individuals, you can offer to pay for the probate as part of your purchase of the property.
One of two situations can happen:
1. The proceeds of the sale of the property will go into the Court Registry and be disbursed to the beneficiaries when the probate is finished, or
2. The proceeds of the sale will be disbursed directly to the beneficiaries, and you can close on your purchase and then on the resale of the property on the same day.
In case #1 above, the probate judge will usually have to authorize the sale and approve the sale price.
Approving the sale price (your purchase price) can be problematic if the judge thinks the price is too low, and he can order the property to be listed on the MLS®.
The other option is to have the property transferred into the beneficiaries’ names and purchase the property directly from them at your agreed-upon price.
As an investor, you should have a “go-to” probate attorney who you can rely on to get paid for the probate cases at the closing of your purchase of the property.
I suggest you pay for his initial hard costs of the filing fees, so he only has his time into the case.
What happens if the seller(s)/beneficiaries don’t close with you – they “breach your contract”?
This can happen, and you need to be prepared with your attorney to take immediate action to stop the sale of the property to another party!
The seller(s) can be sued for specific performance which takes time and money and with no guarantee of recovery of the property or your expenses.
You should file a Notice of Interest in the public record and be able to file a lis pendens quickly to stop their selling to another investor.
If you have any additional questions, contact me directly at [email protected].
If you need hard money instead of transactional funding, contact me for referrals to private hard money lenders.
Be sure to check out BestTransactionalFunding.com for all your same-day double closing needs, including a list of Investor-Friendly Closing Agents in various states.
We have more five-star Google ratings than all the other transactional funders combined.
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