Boomers are expected to put millions of homes on the market in the coming decades
Handling the estate of a person who has died can be overwhelming and very often the sale of real estate is involved. Over the next 20 years, more than a quarter of the nation’s currently owner-occupied homes are likely to go on the market as their current owners pass away or vacate their homes. The overall boost to the housing supply may be “comparable in magnitude to the fluctuations that new home construction experienced in the 2000s boom-bust cycle.”
In addition to building new homes, the construction industry may need to place a greater focus on updating existing properties.
What is Probate?
Probate is a legal proceeding that is used to wind up a person’s legal and financial affairs after death. In California probate proceedings are conducted in the Superior Court for the county in which the decedent lived, and can take at least eight months and sometimes as long as several years. Probate litigation is a fact of life. It is sensitive, personal and emotionally charged. The increasing complexity of wealth preservation strategies and an aging baby-boomer generation have led to a corresponding increase in trusts and estates litigation.
Why is Probate Real Estate Important?
1. There are 76 million Baby Boomers (people born between 1946 and 1964). Baby boomers have driven the U.S. economy from the start of the baby boom. They are responsible for the huge infusion of money into the stock market in the 1990s (as they saved for retirement). Every day about 8,000 people turn 65. These folks will be downsizing their homes, purchasing second homes, and unfortunately as they age, they will be dying.
2. More than 1 in 4 Californians are Baby Boomers. A study from the California Department of Health Services indicated that 27% of Californians are baby boomers.
3. There is $6 trillion in property in the probate courts. This is such a huge number. Experts have indicated that this number is more property than all the MLS services in the whole nation. That is a lot of property.
Why You Should Look Into Probate Properties
If you were to ask a person paying rent/living in an apartment if they will ever be able to afford a house in California, usually they would say, “No! It’s way too expensive.”
Luckily, that’s not necessarily true. Whether you’re looking to buy your first home, a vacation home or a second home to avoid a long commute, you should take a look at probate properties – specifically the overbidding process. Even if you have little to no interest in living in the home or condo, wouldn’t you like to invest in an income property or two that you can rent out for some extra income? Probate sales are a great way to invest in real estate for the right kind of person. It’s not for everyone: You have to have some cash in the bank. You need a knowledgeable probate real estate agent/broker on your team. You should also have access to an experienced probate attorney. You may have to be able to handle a “fixer-upper” – using people who can repair plumbing, broken windows, etc. Decide how “handy” you really are. A probate house may have been in the family for years. Or rented out to a family that didn’t make keeping the home in good condition a priority. Unfortunately, that means that you cannot expect anything from the current owners—not a fresh coat of paint or a plumbing repair. Factor in all the sprucing up and repairs you may have to do/or have to hire someone to do before committing to anything. Consider this while you’re thinking about the highest bid you can make. Don’t make the mistake of getting caught up in “winning” at all costs. It’s very important to bring your probate real estate agent with you to the court hearing. You need to be patient. Don’t go over your budget! Keep in mind that it’s easy to get carried away in an auction setting. Before you arrive, make sure that you know what your “walk away” amount will be. Tell your probate real estate professional what the number is and they will make sure you keep to your budget. You might be outbid, and you need to show constraint, so you don’t blow your budget during what boils down to an auction with someone in the back of the room running the bid up just to make you mad.
How Are Probate Homes Sold?
Private sales are in legal newspapers and handled by attorneys. Sealed bids are opened by those attorney and the highest bidder wins.
Public auctions are listed in legal newspapers. Bids are oral rather than written and sealed. The highest bidder also wins during a public auction.
Private auctions are handled by auction companies. They get notified about upcoming properties for auction. Bids are also oral and the highest bigger wins.
The trust department can act as a personal representative and sell the probate real estate.
Real Estate Agents
The personal representative chooses the probate broker/real estate agent. A probate attorney can recommend a real estate agent to you, although you are not obligated to hire the agent they recommend.
By studying the probate process with an experienced probate real estate agent, and working with probate attorneys, you will become a homeowner! Looking for help? Contact us at Delphi Realty Group today! (925) 705-1300
Sources: starnewsonline.com, nolo.com, zillow.com
For comments or inquires contact:
Alex Khodadad, Broker, CPA
1930 Contra Costa Blvd.
Pleasant Hill, CA 94523
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