I have been doing probate real estate investments (flipping, listing, and buying) for the last 22 yrs and it's been a goldmine. What I found out over this period of time is attorney's do not study probate law by itself but one of the courses that they take in law school. I have heard this comment over and over. Estate Attorneys do Family Law which includes Probates and most attorneys I have spoken with consider wills their retirement funds.
What has amazed me about Probate Law is the fee an attorney receives is based on the gross assets of the estate. So for an example, let's say the decease had $ 150K life insurance policies, $ 50K in the bank, stocks worth another $ 100K and a home worth $ 500K, the attorneys fee is based on a percentage of the total gross dollars in assets. In this case $ 800K. The attorney would receive a fee based on a percentage (sliding amount) which can be thousands. The funny thing about this is that they do not take into consideration any of the debt associated with these assets. If there is a mortgage of $ 300K on the house it does not lower the house asset to $ 200K in this example. I found this very hard to understand.
Another Probate Law issue I have is there is really no system in place from what I have experienced over the last 20 years doing Probate Real Estate, to assist the petitioner who is going to be the executor. These people for the most part have never undertaken anything like they experience in being an executor in probate. They are usually kept in the dark on the process and when they do speak to someone at the estate attorney's office, it's usually the Para-legal. I can not tell you how many times I have sat face to face with a petitioner who was so confused and unsure of what they were doing. Something needs to be done to help this situation out.
To make matters more complicated, in California there are two ways to probate an estate. One way is through the Court Confirmation process and the other through the IAEA I buy probates through the IAEA process so I can pull the estate home out of the process, avoid the 10% deposit, the 90% of appraisal rule and the “As Is “situation. The enables me to purchase homes (for clients also) at enough discount to make a profit when we resell. The petitioners love me because I remove a big burden off their shoulders by buying the house. Also, I give them an option to place the house on the MLS since I'm an Probate Agent where I will use my probate expertise and show them how to net more sale proceeds. For the most part, the probates I have purchased (as principle and agent for investors) over the last 22 years, the petitioner did not care about the discount as it was more important to get rid of the vacant house.
Our Probate law needs to be revised to treat the sale just like a regular real estate transaction. Under the IAA in California there are checks and balances to make sure everything is right and the heirs agree, we have no need for the old probate law which involves too much red tape but most importantly hand cuffs the estate from entertaining offers to purchase from retail Buyers looking for a home to move into and willing to pay retail. The old Probate Law (Calif) usually attracts only the investor looking for a wholesale purchase. I will say I have profited over the years from the probate laws but I still feel we should only use the IAEA probate procedure and better yet, everyone with assets over $ 250K should be required to have a Living Trust.
Probate law is necessary to protect the estates but it needs to be revised to have a uniform easy to follow procedure for the executor with the estate attorney who is making these large fee's required to assist in all the tasks of the executor (with para-legal help).
From having probate investing students (Agents and Investors) all over the Country, I have found many of the States are different in some way with their Probate law procedure and California is one of the strictest and most confusing States to probate an estate under. Time for someone to step up and change the system.
If you are in real estate as either an agent or investor or even both, you really need to look out the opportunity in probate real estate.
And stay away from these internet “Guru's” selling every system under the sun but probably never had really flipped themselves. If John Reed can not say anything good about the so called “Guru” or does not know them Be Careful!