Reasons to question “Probate lists”? See the statistics in 2021

Investors who choose to pursue the inherited property niche are already ahead of their competition, because there are fewer people pursuing it since it requires a bit more knowledge and effort to find deals, and most investors just aren’t looking to put in the extra effort.

But inside the inherited property niche – everybody is doing the exact same thing.  Everybody. 

Everybody is relying on Probate lists

Namely, in each county investors are all waiting for new Probate cases to be filed with their local Surrogate court, so they can obtain a list of those new Probate cases and start the process of reaching out to the people associated with them, to try to see if there’s any property to sell.  

Some companies even provide the service of selling a data dump of those probate leads to investors, to save the time of manually transcribing the info from the courthouse records.  But why is everyone chasing these same probate leads? Are these prospects from probate lists really the best way?

These Probate lists have become the bread and butter of property investors pursuing inherited properties, and become so popular that the word “probate” has become synonymous with an inherited property in general, when in fact it’s just a portion of it, and they have many shortcomings also.  

Are probate lists really the best way?

Property investors have pretty much developed a blind reliance on the much sought-after “Probate List”, just because everyone else is doing it, without ever really questioning what they’re doing.

We’re here to question those assumptions so that you can think differently as an investor and take advantage of superior data sources that will put you far ahead of the pack who are all doing the same thing and chasing the same probate leads as soon as they’re published in the courthouse.

Estate planning statistics explain why Probate leads are too slow to rely on as the core of your marketing strategy

Most investors just purchase a probate list and start blanketing it with letters and postcards, which eventually does yield results.  

However, investors that want to be efficient, and run their business with less waste and cash burn, need to look into the actual quality of the data in that probate list and understand what they’re actually buying, and be realistic about the shortcomings.

The first key things to realize are:

1. Probate lists cover only a fraction of all the inherited properties that are out there and can be acquired. 
2. Probate filings are really slow, and heirs often wait a long time to file in Probate. While investors are waiting for more Probate cases to be filed in court, you can actually find out about inherited property long before they’re ever filed in probate courts. 
3. With probate leads there’s lots of junk data… lots.

Let’s take a look at some estate planning statistics to illustrate some of the underlying drawbacks of relying solely on probate leads in the pursuit of inherited real estate:

A lot of inherited property doesn’t go through the Probate process and instead passes through Administration, Trust, or other legal procedures that are totally outside of probate and therefore would never show up as a probate lead.

• 55% of Americans die without a will. No Probate in 55% of deaths. People who die without wills leave their assets and any property they own to bypass Probate and go through other inheritance formalities instead.
• Only 45% of Americans have a will. So at most 45% of all deaths can be found through the Probate process, and eventually, appear on some sort of Probate court record that would eventually trickle down to some sort of “probate list” being sold by a provider. 
• Only 50% of Americans aged 65+ have up-to-date wills. So there’s a good chance that IF they own property, it may not be properly accounted for in their will.

If you think 45% of Americans having wills is a really low statistic and skewed downwards because a lot of younger people ages 18-35 don’t have wills, you’ll be surprised to find that even amongst 45-54-year-old Americans, 60% don’t have wills.

Furthermore, although a larger portion of senior citizens has some sort of will or trust in place, the statistics show that even amongst 65+ years old Americans, a large majority haven’t been maintaining and regularly updating their wills. This means that if they’ve acquired property even years ago, that Property may not be included in the Will. Yes, it has to be treated differently during the settlement of the estate, and yes, it could be excluded from Probate proceedings.

However, heirs often wait for 4-6 months to several years to actually file a Probate case in surrogate court, and many never file at all in cases of distressed property. That’s because they either don’t want to, or are afraid of potentially incurring liabilities by assuming a distressed property from the estate.

6 months to 2 years is the usual time span for starting and getting a typical estate through the Probate process. Meaning if you’re a property investor waiting on Probate records to be published in court in the hopes of finding hidden property assets, you might be waiting a very long time. Meanwhile, investors with better data and advance notice can get to the deal before you, through InherentValue.ai.

1. 3-8% of estate value – the average Percentage of assets the typical probate court process costs can drain from the value of an estate, ranging from legal fees, court costs, personal representative fees, bonds and insurance, and various other professional services. 
   
2. $3,000 – $5,000 – a typical retainer and court costs for an estate attorney to handle even a simple and uncontested inheritance.
   
3. 40% of Americans would have trouble being able to pay a $400 emergency expense with cash, according to a 2018 Federal Reserve study. A far cry from the $3,000 – $5,000 that needs to be paid out of pocket to get things moving with a lawyer in Probate court.
   
4. Any sensitive person can understand that the Probate process is a financial hardship for many Americans, who have already incurred considerable expenses surrounding funerals and perhaps medical bills they had assisted the deceased with.  All in all, it’s not difficult to see how this financial consideration often pushes the Probate formalities back months or years for a family, while the property and estate remain in limbo.
   
5. 35% of Americans have personally experienced or know someone who’s had a family conflict connected with an inheritance – with family drama being another important reason that contributes to heirs delaying probate or other court filings while things get worked out.

How much of that probate list contains cases where there’s not even any real estate? The answer depends on whether you’re in an urban area, or rural… but how’s 20-30% to start? That ratio of junk data can get as high as 70-80% in inner cities or more urban areas.

According to the US Census, home ownership rates can be approximated as follows:

65% is the overall USA national homeownership rate. That average varies by area and region but can be applied for an overall quick understanding of how much junk data can be found packaged into probate lists.

For a very basic analysis, you can infer that from a probate list of 100 people, if you apply the national average homeownership rate you can expect 35 people to NOT have any property. That’s a 35% junk data rate because we consider that for property investors who are seeking to acquire properties, spending time and money marketing to people who don’t own property is a waste of time.

This calculation is a bit of an oversimplification, but it helps illustrate at a high level that the proportion of junk data we’re talking about with probate leads is not small and insignificant, like single-digit percentages.  

It’s in the low to mid-double-digit percentages at the very least, and that strongly increases your marketing cash burn and time wasted prospecting to junk leads.

73% is the average homeownership rate in rural areas. So the junk data rate in those areas is lower, although still high at almost at 22% which is more than 1 in 5.  However, keep in mind that only about 23% of the American population is considered in Rural areas according to the Census.

58% is the average Urban homeownership rate. So that implies that probate lists gathered in Urban areas can be expected to have a higher junk rate of data, with almost half or 1 in 2 records being somebody who doesn’t actually own any property. 

20-35% is the Average range in the largest cities, such as New York and San Francisco where only about 35% of people actually own properties, and the rest are owned by commercial landlords, equity funds, and REITs.  Newark, NJ for example has a homeownership rate of just 22%. In areas like this when you buy 100 probate leads that came from the courthouse, you might have just 20-30 cases where there’s some property connected, whereas 70-80% of that probate list might be junk data.

The above is a bit of an oversimplification for calculating junk data rates, but they’re still effective at conveying the large volume of junk data you’ll be facing with Probate lists.

Especially for investors in more populated or urban areas, you could literally be wasting half your money with Probate lists chasing people who don’t own any property. Or paying huge costs associated with trying to filter out situations without property. That inefficiency and cash burn is multiplied many times over when you consider that you might want to direct mail letters or postcards to those probate leads at least 5 times to get an adequate follow-up.

Probate list providers will attempt to downplay this unsavory fact by highlighting the profit to be gained when one deal gets done, or selling expensive list filtering add-on services, however, that doesn’t change the underlying issue of junk data that’s inevitably buried inside those probate cases.

No matter how good that Probate List is… it’s still months or years behind Pre-Probates generated by InherentValue.ai

Getting to the deal first is the single most important thing.  No matter how fresh and how clean that probate list is, it’s still coming from the courthouse list of filed probate cases. And those probate cases are getting filed by heirs typically months or years down the line.  

So getting advance notice of properties being inherited before the heir’s file in Probate is the single most important thing you can do as an investor to beat the competition.

InherentValue.ai uses artificial intelligence to identify and track inherited properties months or years before they’re filed in court or become a matter of public record, and definitely before they appear on any probate lists. By the time a probate case is filed, you could already have been in touch with the heirs to arrange a transaction.

Second, Probate lists only cover properties that are in probate, for the reasons mentioned above. So inherited properties that are tied up in Administration, or Trusts, are left out and totally off the radar for investors who are thinking probate leads are the entire universe of inherited properties (which they aren’t). InherentValue.ai tracks inherited property regardless of whether it’s in Probate, Administration, or other legal proceedings.

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Powerful features and accurate data that help you efficiently pursue inherited real estate… months or years before they’re visible to others via any Probate or Public records.  Click below to check out the features and request a spot on the waiting list for the launch of our Beta data subscription.

Learn more about InherentValue.ai pre-probate data here.