Baby Boomers. About 79 million people were born between 1941 and 1960. As a generation, they control the largest amount of real estate in America. Analysts predict boomers will pass along $27 trillion in the coming decades.
Real estate will be a large portion of the wealth transferred. Last year alone, over 1,130,755 homes were sold in this niche!
Better yet, a number of factors all combine to make selling the best choice in most cases:
Quite often, inherited homes are in another part of the country.
The new owners will not be familiar with the area and market. They have no pre-existing relationship with a local agent. The opportunity is there for anyone to step in and win the listing.
Renting or leasing brings a lot of hassle.
This is especially true when none of the beneficiaries live nearby. Being a landlord is tough. Being a long-distance landlord is a commitment few people wish to make.
Families upgrading into a parent’s home will have their own house to sell.
Either way, you still have a good listing waiting to happen. If they are moving long-distance, help them on your end, and connect them with a referral on the other.
Ownership is frequently shared among siblings.
Even if owners are not “looking to cash out” simply for monetary gain, most inherited properties will be sold. Taxes and other fees from the estate will need to be paid. Selling the home outright is the most straightforward way to split the dividends.
67% of inherited houses already have the mortgage paid off.
Most people are inheriting a home because a family member just passed away. That being said, here’s the cold, hard truth: many already knew it was coming.
You’ll often find at least one heir has already “spent” their portion of the inheritance at the wishing well! They just need that home to sell in a hurry, so the “mental shopping trip” they went on can become reality. Let’s face it, people are people, and that’s just human nature.
Now, I do want to be very clear on this. I mean NO disrespect to the heirs, family, or their loved ones. Matter of fact, I suggest that you do NOT contact spouses and parents (more on that a bit later). Be professional, and above all, be respectful!
So what CAN you do, and how SHOULD you approach an Inherited Home prospect?
A good niche in any market
The first step is the same for any unique niche: take time up front to determine the extent of opportunity in your own market.
Check for potential leads before you get started. For instance, the previous year saw 3,640 new inheritance court cases filed in Jacksonville, Florida.
The majority of filings involve a house as part of the inheritance transaction. In most cases, the heirs choose to sell.
No guesswork here, it’s obvious there’s a big opportunity in our market! Even the smallest of towns have a handful of inheritance filings. It’s just an inescapable fact of life.
If there is money, investors will come!
Because of the “windfall” nature of inheritances, investors heavily target this niche. They prey on owners unwilling to wait for the sale process. Unfortunately, their impatience causes them to make under-informed decisions.
Heirs who rush to sell usually close well below market values. Investors who help them “cash in” turn an easy dollar by flipping their house.
I have no bones to pick with any professional making money! However, I do take issue to slick talking, greedy investors preying on good folks.
These homes represent years of work and sweat by their parents. Like circling vultures, investors swoop in, ready to feast on opportunity caused by death. People fall to the promise of quick money, and all their equity is lost in a rushed decision and a quick sale. The investor reaps all the profit.
Smart agents care about their clients.
As real estate agents, it’s our chance to help these folks. Help them through a tough time in life. Help them get a fair price for their home. In turn, you’ll have good, solid A+ listings. Listings priced to move. Now THAT is a win for both sides.
It’s really your call on how fast you choose to move on the property.
In cases where an estate goes into full probate court proceedings, it could take 6 months to a year before everything is resolved.
On the other hand, many aggressive investors will scope out obituaries, and reach out immediately. While this approach is likely to ruffle a few feathers, they ARE able to snatch up easy sales from open and shut cases with no processing needed.
You can also work to build a relationship with probate attorneys. Ideally, you could become a preferred agent for them, and possibly even work out a co-marketing deal together!
I once even saw a case where a Real Estate broker was also a practicing probate attorney. Now THAT is a guy who has an “in” on inherited property leads!
Another tack you can take is reaching out directly to estate sales. Chances are high if they’re selling everything OUT of the house, the house itself will be next to go!
The hidden benefits of helping.
If you’re looking for an edge, target the out of state Executors. They’re not likely to be familiar with the local market. They are also more likely to turn into motivated sellers, simply looking to complete the sale process and move on.
There’s one more hidden benefit to working with inherited property owners: collateral listings.
Remember talking about people who’ve already “spent” their inheritance? Quite often the beneficiaries turn their new found wealth into a living upgrade!
Yep, that’s right. After all, what better way to spend a big chunk of cash than buying a bigger house! Or vacation home, dream place, and hey, some even have a sudden urge to turn real estate investor.
Bottom line? Money burns a hole in people’s pockets, and there’s no better time to be the friendly agent standing by to help!
Inherited vs Probate
Requirements vary from state to state, but every state has a process for transferring ownership of property.
Probate is the legal process for settling an estate and handling the transfer of real estate ownership. Probate property is still working through the court process, and there are usually several parties involved at this point. The go-to person is usually the executor, personal representative, or administrator. This person has authority to handle decisions regarding the estate and property.
Inherited property has already passed through the probate process. Someone has now taken ownership, and the transfer is complete. If the property passed directly to an heir, they hold the deed. This person is now like any other regular seller.
There are two schools of thought on probate versus inherited leads.
On one hand, reaching out during the probate process allows you to contact the heirs before they make a final decision. You’re also in place to build a relationship as they move through the process.
Investors who argue against probate leads will point out all the parties involved, and the variables still in play. There can be problems in the court. Attorneys and heirs may interfere. Some cases may require a judge’s approval.
People in this camp say wait it out until court proceedings are closed. They prefer to contact the final owner of the inherited property. Advocates of inherited leads will tell you they avoided all the hassle. After the dust settles, these investors reach out to an owner who is likely ready to sell the home they’ve just inherited.
However, the big decisions regarding real estate ownership are made in probate court. A competitor may have already forged a relationship during the process. And if the property had to be liquidated, it may be too late to win a listing.
Steps to finding good leads
There are several ways to dig up leads from this niche.
Obviously, you can turn to the Internet and buy them outright. A quick Google search pulls up quite a few different sources selling probate and inherited leads.
Before you take that route, a word of caution: Not all “leads” are created equal! Be sure you know exactly what you’re getting before buying anything.
It will take more work on your part, but pulling leads at the local level yields better data. Every county is different, but in most cases, you can pull the records at the courthouse. Some counties have an online site; others will require you to visit in person.
If you choose to start contact during the probate process, the person you will need to find is the Personal Representative. Depending on where you live, they may be called Executor or Administrator.
NOTE: some estates are small, and don’t require a handler. You may only find a Petitioner on these.
- The first part of the process is to look up names of deceased people and the personal representative or petitioners on their case.
As you pull the records, keep an eye out for spouses and parents on the contact list. Remove them whenever you can. Their relationship is closer to the deceased, and out of respect, you should leave them in peace.
Also, note the date of death. Because you are dealing with an emotional process, you may want to wait at least 90 days before contacting anyone in the family. The probate process is generally slow moving, and this allows time for emotions to settle.
- Once you have the name of the deceased and the personal representative, search your county’s property records to see if the deceased person owned a house.
If they do own property, make a note of the address. This is the “inherited” property.
- Now, look up the address and contact info for the personal representative or petitioners.
This is your main contact while the property is in probate. Again, laws and record keeping vary among states and counties. You can usually contact the clerks at a local courthouse for direction.
The courthouse isn’t the only place to find good leads. Here are a few other good local sources:
- Obituary notices
- Probate attorneys
- Estate Sale listings
Obituary notices in the newspaper provide a very fresh source of leads. Probate attorneys are another good source to cultivate. Finally, search Craigslist and other sources for postings of estate sales.
Congratulations, you’ve just built a list of inherited leads!
It does take a lot of work, but the reward will be good, solid leads. You’ll also find little to no competition because many agents won’t put in the effort. Investors do, because they know there’s a lot of money to be had in this niche. And if they can, you can too!
Solve problems and help to win listings
Ok, you’ve built a list of leads. Now what?
Contact the personal representative. It’s their job to handle the estate.
Estates often hold a lot of items and belongings, but little cash money. If the estate is cash poor, they may need to liquidate assets. That means a quick sale of the house, and an excellent listing opportunity for you!
If not, it’s time to start building a relationship. Talk to them about the property. What do the heirs plan to do with the home? If they haven’t had an appraisal, this is a good point to get them a full home valuation. This can be especially valuable to out of town heirs, who wouldn’t be familiar with the market in your area.
You may want to build an “inherited owner” care package. Share contacts of moving companies, storage options, estate auction houses, etc. This is helpful information, and you have a chance to build rapport within your network as well!
Good problem-solving skills also come in handy.
Seemingly simple things like cleaning out a home after a loved one passed away can be a big deal. Look for ways you can help lighten the load.
Remember the “junk” in this old house likely holds a lot of personal and sentimental value. Offer them options to handle or dispose of these items in a compassionate manner.
I read of an agent who won a high end inherited listing after coming up with an awesome “outside the box” idea for the sellers.
While previewing a home in probate, she noticed many personal belongings hadn’t been cleared out. She asked about their plans for moving. It turned out family members had already taken everything they wanted. Nobody wanted the remaining items, but everything was sentimental. The children all felt bad about throwing away things that had belonged to their mother.
She suggested donating the items to charity; the family loved her idea. She arranged everything for them, and the charity handled the pick up. Her quick thinking turned a bunch of unwanted items into a charitable contribution by the estate, worth over $12,000!
More importantly, it sealed the deal on her listing.
Chances like that don’t come every day.
But if you come prepared, and look for ways to help, you will find them. Handling a loved one’s death can be a very emotional time. Even small things make a big impact.
One last tip on working with inherited leads: When multiple heirs are involved, try to find out who is most interested in selling. Focus on talking to them, and win them over on listing the home. In turn, THEY will sell you to their siblings!
Until next time, be smart, and work smarter!