Do you or would you cover the expense of a mini-probate in order to move an acquisition forward? I have a widow that did not realize she could claim the property. My offer is quite low so I am worried that the probate cost would cause her to not want to do the deal.
I’m considering covering this cost, but there’s always the chance that she might not complete the sale once the property is in her name and I could lose that money. However, I think the odds of that happening are quite low since there are liens on the parcel which would then become a problem for her.
@suitedconnector it would depend how much meat there is on the bone for you if the deal comes full circle. This is what some house investors specialize in, so I’m sure there is a time and place where it’s warranted, but it would have much to do with the amount of money you stand to make and the likelihood that all the other pieces fall into place.
@charlotteirwin Yes, I agree, there’s several sandwiches (in regards to the amount of meat). Just wondering if anyone else has done this and what their experience was.
@suitedconnector if by “mini-probate” you mean an “ancillary probate” (that’s the Florida term anyway), then yes, it’s worth considering. Think of it like paying back taxes—if you are buying cheap enough, you can afford some expenses to acquire the property. I’ve paid for several probates for owners. I’ve made it work by increasing my purchase offer to cover some or all of the probate cost. My first offer is usually to cover 50% of the probate cost. I would avoid paying any expense up front before closing, since the owner can always back out of the deal after you’ve paid for probate, contract or not.
Contact a few probate attorney offices to see what the rate is in your state for ancillary probate, then base you negotiations on that amount. Establish a relationship with one trustworthy attorney and let them know you’ll send business their way if they work with you—could lead to a discount, but just as valuable is the ability to give them a call for some free advice when facing probate issues.
@sean-callahan Did you actually pay the probate fee, or did you add it to your offer amount to the owner and had the owner pay for the probate directly?
@suitedconnector I got the property under contract contingent on clearing probate. If the owner would only agree if my offer compensated them for some or all of the probate cost, then i included that negotiated uplift in the contract. How much i have been willing to increase my offer would of course depend on what ROI I wanted on the eventual sale. I’ve covered any where from none to all of probate costs and everything in between in the probate cases i’ve closed on.
@suitedconnector my experience has been the owner wants some or partial recompense for probate. my experience has been that most are satisfied with a 50-50 split.