The Probate Hookup

"So, are you guys like Pedro's cousins with all the sweet hookups?"

"Simon."
-Napoleon Dynamite

I have had a few people ask about my probate process. And in the spirit of the sweet hookup I'm going to go into detail...
If you make a ton of cash, you can send my referral fee to my paypal account -heytaylor30@hotmail.com-. Now go make some money!

First off, big thanks to Preston Ely for his probate course. He gave it out as a bonus along with a teleconference put on by flippinghomes.com and it was exactly what I needed at the time. I understand that he is developing a probate specific course & I will link that when it comes out...

Intro:
My first foray into real estate was by knocking doors of people in foreclosure. Foreclosures (FC) are tough. There is a ton of competition, even thousands of other investors trying to get a hold of people in pre-foreclosure(PFC).

People in foreclosure get:

• mail(letters/postcards/post-it notes/fake "while you were out" phone message slips/pens...),
  
• phone calls,
  
• investors calling their neighbors & relatives,
• investors knocking on their doors
  
• investors door-knocking their neighbors (& possibly relatives,)
  
• fake UPS deliveries, (this is a good one - Brilliant!)
  
• business cards jammed into the door & stuffed in the mailbox,
  
• annoying I buy houses signs posted around the corner,
• etc...
  

People in PFC are good at throwing away mail (ergo the pending FC?) and avoiding/denying, so you end up being:

• one of the many investors, that are
  
• trying to contact someone that doesn't want to be contacted and
  
• who is good at avoiding you.
  

An uphill battle for sure... (That doesn't mean that I don't pursue FC's, I just think that it is a tough market to start your RE experience with.)

On the other hand...
Probate heirs are regular people.

• They open their mail.
  
• They will call if they need your service.
  
• They will answer the phone if you call.
  
• They will return phone messages.
  
• They don't get letters from many investors and
  
• They tend to be very, very nice, (even grateful for the contact.)

You don't need to knock on their door, call their neighbors or bombard them with repeat mailings. A one-time mailing is all I send. (I am planning a 6-month follow up letter, but that is still in the works & will be a future topic...) In short, probates are an easy way to get your feet wet in real estate & get comfortable talking to sellers. And a great way to get/keep the phone ringing as you expand into other marketing/seller avenues.

Probate: A Primer
Probate is the process of settling financial affairs when someone passes away. It is a judicial process handled by the courts and the files are public information. People can use living trusts to avoid probate and keep their financial information private, but most don't and the estate ends up going through the probate office. Many people actually die intestate and the courts have to decide who gets what... messy stuff. (Come to think of it, I need to get a will going... So do you, right?)

The Courthouse: It All Starts Here
My most recent job was pretty flexible and it allowed me to go to the courthouse and collect my probate info each week on my own. The Monday after my flippinghomes.com probate teleconference I beat a path to the courthouse to try out my new skills. Being the MBA-spreadsheet building knucklehead that I am, I tried out a ton of different ways of collecting and processing the info (designing different info collection sheets, tracking the files by hand and then via excel spreadsheet, mail-merge tweaking, etc...) until I had it down to a pretty efficient system.

One of the barriers to entry in probates is the fact that the info you need is only in the file.

• Obituaries are published in the paper,
• some counties have basic info online,
  
• but the list of heirs and whether or not the estate has property is only in the file. Someone has to open it and get the info.
• This actually keeps competition low.
  

Many (dare I say most?) RE investors are lazy, buying into the 'work from home in your underwear' mantra. (by the way, what is so great about working from home in your underwear? PUT ON SOME PANTS!! Again, I digress..)

My first trip to the courthouse I was a little unsure of what to expect. There is no reason to worry. As it turned out, I had no competition in my county! None! The ladies in the probate office were very nice and said that there used to be a couple of people that would come into the office to pull files, but they didn't come around anymore. In the 3 months that I collected my own probates I only ran into another person collecting info; one time, one person. It turned out that she was forwarding the info to a guy that runs estate auctions out of Florida. No competition for the real estate.

Since my aim (and yours too) should be to get 3 counties going at a time, once you get the procedure for your own county, it is likely that you'll find similar in adjacent counties as well. Do your best to systemize the process so you can get others gathering the info for you. Make it easy for them and they'll keep working for you for a long time. (Who doesn't love an easy job?)

The Probate office in my county is at the courthouse and is staffed with 2 very nice ladies. The files are numbered (2007-xxx) and start at 1 at the beginning of each year.
I was only looking for files that have property in the estate, so I asked one of the girls if there were any easy ways to do a quick check for real property in the file.

It turns out that there is a $1 transfer tax charged if there is real estate transferring in the estate. No tax, no real estate. They also note the amount of the property in the column next to the fee on the opening page. So all I need to do is flip open the file, scan the first page for the transfer tax, check the amount of property and then start filling out one of my info sheets. Easy, peesy, Japanesey...

**Look/ask for shortcuts like this. A couple of Starbucks gift-cards go a long way.

The File:
The file contains the decedent's will and any addendums. Initially I would read through the wills to see if the property was listed specifically and see who the heirs for the property were.

• A note about reading the will: I thought it would be a little creepy to read someone else's will, but most times it was quite touching to read the comments in the will. You can tell how much people care about leaving a legacy and helping out the heirs. It is a surprisingly emotional thing and not impersonal as you might think.
  

It didn't take me long to realize that I didn't need to read the will. All I needed was the info of:

• Whether or not there was RE in the estate
• The names/addresses of heirs
• Name/address of the attorney (if there was one.)
  
• The date of death (so as to not send my letter too soon.)
  

The reason you don't need to read the will is that the county requires that all heirs be contacted/notified so that they have a chance to make any claims against the estate. The list of heirs includes the assigned executor (with phone #) as well as the mailing addresses for all heirs concerned. Occasionally the estate will use an attorney & my form includes a spot to collect that info as well. I also have a letter that I send to attorneys. No responses yet... but I still send the letter.

The File Part II: Schedule of Assets:
One thing I learned is that within 4 months after the decedent passes away, the estate executor is required to file a schedule of assets with the court. They have to list the bank account and retirement account balances, cars, other items of value including real estate. So in the beginning I started going through files that were at least 4 months old so I would have the specific address of any real estate and the amount that the executor assigned to the property.

It turned out that this was just extra information and by waiting to contact the heirs after 4 months I missed out on a number of chances to buy property. Good info if you happen to get it, but not vital.

I got a call from one of the executors thanking me for mailing my letter, but he had just signed the documents with another investor & sold the house. He actually said "too bad I didn't get your letter sooner, he got a really good deal on the house..." I hung up the phone and thought, "CRAP!!! What an idiot I am!"

• The only thing that matters is that the letter gets in the hands of the decision maker when they have decided to sell. Sooner is better. Don't wait for info about the address or value of the property. If they want to sell, they'll call & tell you about it.
  

Lesson learned. I changed my approach. Instead of collecting the info months after the fact, I started collecting info from the prior 4 weeks. The file notes the date of death, and I didn't want to mail too soon after the passing, so I decided on 4weeks. Figure out what you're comfortable with and mail as soon as you like.

The Letter:
I encourage you to write your own letter. I think that one of the keys to working with probates is your philosophy of helpfulness and being genuine.

You will want to have some key components in your letter:

• Address the heir,
  
• express condolences on the loss of their loved one (I insert the name of the decedent - totally your choice)
  
• Then you will need to address the fact that you understand that there was property in the estate and you're interested in buying it if they want to sell.
  
• Note some of the challenges of trying to sell real estate (cleaning up the property, expenses of taxes & upkeep, expenses of real estate commissions etc).
  
• Don't forget to encourage them to hold onto your letter in case they decide to sell in the future and
  
• wrap it all up with a nice, heart-felt best wishes of sign-off.
• Sign the letter in colored ink to make it stand out from the black printed letter.
  

My initial letter included the address of the property listed in the probate file. I thought it might be better received if I showed the executor that I had done my homework. I learned through a few conversations with heirs that when someone owns property in an estate, they often own multiple properties and likely in different city/counties... **So my idea of having a specific address in the letter actually limited my potential responses from heirs.** Whoops.

I got a couple of calls that went like this... "I have your letter here and 123 Elm St. wasn't my mom's house, but we do have her house in "random city" that we are thinking about selling. Would you be interested in that?" Holdonaminuteletmethinkaboutit, YES!

Lesson learned. I have modified my letter and have removed any specifics about location of any property. It mainly says, "I understand that there was property in the estate and if you are interested in selling I would be interested in discussing it with you..."

The number of response calls has gone up and as an example, I even had a guy with a property in FL ask me if I was interested in it. (I referred it to an online associate of mine "Tampa Steph"whom I also met online at flippinghomes.com.) And if it goes anywhere I'm getting a referral $$. Nice.

Be Flexible & Look to Remove Bottlenecks (Including Yourself)
At this point, things were going along fine. I was going to the probate office twice a week to gather the probates on my lunch-hour and then entering the info into my spreadsheet in the evening. Once a week I would mail-merge the list and sign/fold/stuff/stamp/mail the letters.

Like clockwork, the phone would start ringing a few days later and I would talk to the heirs. Cool. Met some nice people and looked at a bunch of houses. So far so good.

Then came the layoff. And the new job. 8:30-5, M-F. At the office. Probate office hours... 8:30-4:30 M-F. The courthouse was across town, 20 min drive...

I couldn't collect my own info anymore. I contemplated placing an ad on craigslist for a real-estate researcher, but I didn't have the $ to pay anyone. Quandary... It turned out that I was the bottleneck. I am the limiting factor and when I couldn't get the info, my little venture came to a screeching halt.

The Solution: Coop-a-tition:
I was discussing this situation with a fellow member of TRIG who is also a Realtor. She was interested in getting the list of probates to mail for possible listings. Since I only mail once and then basically never use the list again I suggested that we split the cost of a researcher and share the info.

She did one better and offered to gather the info for me if I would train her on the process and share the names with her.
We worked out a deal where she goes to the probate office once a week and collects the recent probates and then leaves the info sheets for me at the front desk at her real estate office.
I grab the envelope on my way home from work and enter the info in excel.
I print my letters and my lovely bride stuffs the envelopes.
The letters do their thing for a month and then I email the spreadsheet to my Realtor connection for her to do her mailing.
She is competition, but I like to think of it as coop-a-tition. (phrase from JP Moses, flippinghomes.com) which is a mash-up of cooperation and competition. We compete and yet we work together. Can't we all get along? As it turns out, Yes...

Now Go Do It
The point is, you can get this thing going for free (other than some sweat equity on your part if you insist on pulling the files yourself or entering the info & stuffing envelopes.) If you feel like you have to do it yourself first (you don't,) take a few hours on an afternoon and go by the probate office in your county.
Get the low-down on the process, look at some files, get some info sheets filled out and get your brain around the process. Find someone to do the work and get it going man! You can do this!

I'd love to hear what you think & if you have any suggestions. Leave a comment.

Much love.
-Taylor