I’ve been on the subject of probate recently. I contacted Ron Mead in the course of doing research on buying businesses out of probate. He was very knowledgeable and helpful, so I thought that I’d interview him to try to resolve some of my nagging questions about probate real estate investing. For those interested in real estate investing, I don’t think there’s a better strategy than probate investing.
When you mail probates, do you mail all heirs of the estate, or do you check the will and only mail those heirs who have inherited the property?
This is the kind of house you want to buy.
A. Sometimes not all the heirs are listed but it helps if you can mail them all. Here’s my reasoning; generally the Personal Representative is the most responsible of the heirs. However, the financial situation of each of the heirs is different. Consequently if one of the heirs knows of your interest in purchasing the property, they may become your ally with the PR. So that’s why I always send as copy of my letter to all the heirs as well as the PR if I can get their names and addresses.
As an investor, I have bought a lot of probates, so I know that probate leads are very valuable to investors. In your experience, are they as valuable to Realtors? Do most Realtors just list probates or do they have a hybrid strategy where they list some and buy some?
A. I personally know of Realtors who successfully use my strategy as a prospecting tool. It’s a gold mine. My suggestion is that RE agents make up a second set of business cards with the title “Probate Specialist” on them. If after viewing a property as a potential buyer, the PR rejects their offer, a question like “Do you plan on using a RE agent to sell this property?” leads right into you giving them the Probate Specialist card.
Does your marketing strategy consist of a single mailing or a mailing funnel? Do you market to the executor differently than the other heirs? Do you ever call or door knock?
A. I use the strategy of one letter AND a follow up call. I fully understand the sales tenant that it takes 7 contacts to make a sale but I don’t regard myself as selling anything but rather offering a service. I mail my letter and about 2 weeks later follow up with a call asking the PR if they received my letter. “Hi Mr. Simpson, Ron Mead here and I just wanted to make sure you received my letter?” Invariably the answer is “What was the letter about?” Oh it’s about he house over on 1234 Main St.” and off the conversation goes. I always mail to the PR (Executor) directly and cc the heirs. I never have knocked on one door in 16 years of working Probate.
We all know that probates are more likely to come with title issues. How much do you usually pay for an action to quiet title? (or your state’s equivalent)
A. My experience does not parallel your statement that probates come with title issues. I have never had one instance of paying for action to quiet title. Most titles are clears with no liens. I have encountered some with mortgages but rarely much else. By the way, as I am sure you know, liens do not pass with title so for potential buyers they need not worry about assuming any liens on the property.
Thinking back on this question, I realized that often my problems weren’t title-related per se, they had more to do with trying to get 14 different heirs to all sign off on the sale of the property. I did have one house that had an official title problem. It was a crazy situation where the owner of record was elderly, incompetent, and in a home. One of her grandsons was trying to sell me the house. Another of the grandsons lived in the house without electricity or water. I think he was a hoarder. I know that he was a crack addict. Anyways, I digress…
If you had to give one piece of advice to a probate investor who wanted to run their business to the highest ethical standards, what would that advice be?
A. Interesting question that I had never considered. I have had 4 instances of loss of parents with my wife and myself so I am very empathetic to the PR’s situation. As trite as this must sound, we are honest folks and operate our business appropriately. We never take advantage of people who are not familiar with property values but we are a business and as such we need to make a reasonable profit. I once heard a “Probate Guru” brag about making $146,000 on a $275,000 deal with a single Mom who had no clue about real estate so he just offered her a small amount of cash on the spot…take it or leave it. She was totally broke so the idea of getting $120,000 immediately seemed OK to her. She had no idea of property values in Scottsdale since she was from the backwoods of Arkansas. The person telling the story found it laughable that he was able to take advantage of her naïveté….he’s was very proud of his “great deal”. That is not the way I do business and I would hope others when faced with this situation would not either. I believe each of us has a “moral compass” within us and we can always do what is right. I’ve made a very, very good living by using my moral compass.
What is your opinion of national probate lead services?
A. Over the last 5 years, I have had several guys contact me who said they could provide Probate info for all counties in the US. Naturally they want me to endorse their service. Each time I have given them a couple of obscure counties to test them, they have failed. Last year I had a guy in Texas pester me until I finally tested him and he passed. So I had a teleseminar for all my subscribers and told everyone about his service….big mistake. Turned out he couldn’t deliver as he said he could and even worse, he kept the money for some who paid but never got any leads. So I kept getting the “you said this guy could….” emails and I ended up looking bad. Luckily it turns out this guy had not wanted to pay me anything for my promoting him but I decided to do it anyway as a service for my customers so I had no financial connection.
I also wanted to thank Ron for being so helpful by giving him some exposure for his probate investing course. The link is an affiliate link, since Ron insisted. I have not seen the course, so I can’t comment on it. In our discussions, though, Ron has been spot on in all things probate so I wouldn’t expect anything less from the course.
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