Successful real estate investors have a mindset that gives them the ability to negotiate a deal that makes business sense. Most real estate transactions between consumers are a very emotional deal. However, the probate process is very different, mixing a very emotional time in a family’s life with a very business-like probate court system. Here are three keys to a successful probate investing mindset in Illinois.
Set Realistic Expectations
One of the key mindsets for probate investing is setting realistic expectations. In fact, realistic expectations are true for any type of successful real estate venture. There are so many moving parts in the probate process and people involved that if you don’t understand what to expect, you will become frustrated.
The process, though simple, requires approvals along the way. In probate, an executor oversees all aspects of liquidating and distributing the estate. This includes gathering assets, selling real property and determining all outstanding debts to be paid by the proceeds before money is distributed to beneficiaries.
The executor is not just answering to beneficiaries who can hold the executor liable for not properly liquidating real property for the best price. They are also subject to the approvals of the probate court judge whose job is to make sure the proceeds cover liabilities adequately. Understanding this process means you can adjust your expectation of a quick transaction.
Don’t Be In a Rush
With all of the parties involved in the probate process, you need to understand this isn’t an overnight, fast deal. Even coming in with cash will not always expedite the process. Understand this.
Since the process can take more than a year in some cases, work in expiration dates that give you an out if the market conditions become unfavorable over the course of the purchase. The market might be ripe for a fix and flip right now but can be entirely different in 12 months. Be patient but also plan accordingly so you aren’t stuck with a property because the market turned on you in the waiting process.
Not being in a rush is also a power play as a business investor. If you come across as indifferent about the entire deal, the selling party has no idea if and when you are ready to walk away. Remember that the probate system needs to liquidate the assets in most cases. If there isn’t a lot of market activity, sellers will want to keep you engaged.
Be prepared to walk away to keep them engaged with you. You’ll have the upper hand.
This is one of the most important keys to a successful probate investing mindset in Illinois.
You may need to field a lot of objections in the probate sale process. Beneficiaries might have a skewed view of the fair market value of the home. They may not understand that the property is distressed compared to other properties in the area and object to your seemingly low offer.
Executors and probate attorneys might also object to the terms of the offer contract. While it is always best to make the offer in cash and without repairs, you may try to negotiate this in the first offer. Remember that you are the real estate expert; they are the probate expert.
Do your homework and be prepared to explain why your offer is backed by market conditions. Going back to being patient, smart probate investors find that executors often come back as time marches on wanting to reconsider your original offer or something close to it.
When sellers have objections, they haven’t rejected you yet. They are trying to open a negotiation. This works in your favor. Welcome the objections and start the conversation. One thing to always remember is to be empathetic and always remember the family is likely going through a very emotionally hard time.