What’s Wrong With Probate Data for Finding Inherited Property? A Lot, Actually. Here are 9 Things You Didn’t Know

Yes, that’s 9 issues with Probate Data. That’s a lot. We know this post may be a bit controversial, but that’s just because it’s going to question many incorrect assumptions that investors have developed about the best ways to find much sought-after inherited real estate, which is traditionally much more profitable.

If you can see the shortcomings of Probate Data for what they are, you can get a huge competitive advantage over other real estate investors in your market, and get to deals first long before they do.

This might also be a bit controversial because we recognize that a sizable marketing industry has already developed around gathering and selling Probate data to real estate investors.

It’s grown to the point that many experienced investors have already come to associate “probate” as synonymous with inherited property, and assume that probate data are the best (or only) way to find inherited real estate, when in fact they are not.

In this article, we’ll examine some of the issues, concerns, and inefficiencies around using probate lists as the key part of your acquisitions strategy for inherited houses.
But first let’s recap a quick primer on inherited real estate and probate, for those who aren’t too familiar.

(If you’re an estate attorney or super experienced real estate investor who is a master of the niche, feel free to skip this brief summary and skip ahead directly to our list of top 9 issues with relying on probate lists.)

Quick recap: What is inherited property?

Just as a recap to those who are newer – “inherited property” simply means any real estate that belonged to a person who died. And now the ownership to that property is in limbo in the “estate” of the deceased person, until the inheritance process to heirs is completed, it’s sold off, or in some distressing situations, it’s repossessed or auctioned. You can check out a more detailed primer on inherited real estate on our blog.

What is Probate? Are all inherited properties in Probate?

No. Not all inherited houses are in Probate. In fact, in some markets, a large majority are not! Probate properties represent just a fraction of the pool of inherited property that’s out there for investors to pursue.

What happens to somebody’s property when they die?

What happens to the property depends on whether or not the deceased left a will or other estate planning measures. A will is simply a written instrument giving orders as to how to divide a person’s property after death, including real estate if they happened to own any.

When somebody dies, there are different legal methods to dispose of the asset so their estates, such as Administration, Trust, or Probate. Probate is a legal method to authenticate a deceased person’s will and methodically dispose of the assets of the estate (which could include some real property), according to provisions in the deceased person’s will. In other situations, there could be no real estate at all, just a few personal belongings.

How does the Probate process start?

It varies slightly by state but, in general, the Probate process has to be started in Court by the heirs or representative of the deceased person. If the deceased didn’t leave behind a Will, they’re not eligible for the Probate process. And statistically less than HALF — only around 45% of Americans even have wills. So you can see where the issues begin for investors that want to rely on probate lists to prospect for properties.

Then what exactly is a Probate List, where does it come from?

When heirs finally decide to file a Probate case in their local court, to dispose of the assets of their deceased relative, a court case actually gets opened. This case gets assigned a docket number (a special tracking number), along with the information of who filed it, etc. The list of these court cases is a matter of public record, available freely to anyone with the patience to gather them. So a probate list is literally just a list of all the probate court cases that have been filed in the past month.

That’s where the problems start… and keep going

Remember how we mentioned that when a person dies, they might not have actually owned any real estate, and maybe just had some cash or personal belongings which are now the subject of the Probate proceeding. This is important to remember because the first thing real estate investors need to realize is that a probate list is not a list of properties that they can buy.

It’s just a list of court cases, and depending on where you are many of them might not even own property. Finding out if there’s a property in that estate is a whole separate ordeal and often a costly one for investors in terms of time or money. Given that the average USA homeownership rate hovers between 70-80% at the highest in rural areas, and as low as 30% in urban areas like New York… that means anywhere from 20% to as high as 70% of a Probate List could be total junk for a property buyer, if there’s no property in there in the first place.

With that background already covered, now let’s look at the major issues for real estate investors who are chasing inherited property using Probate Lists.

The Main 9 Concerns With Using Probate Lists for Finding Inherited Properties

Experienced real estate investors and developers know that all other things being equal, getting to the deal first, and locking it up before other investors in your market is the single most important factor that makes the difference between having a great year or having to fight for increasingly crappy deals in a crowded market. Even being #2 to the deal is usually not often anymore.

With that in mind, almost all investors who are pursuing inherited real estate, probate houses, etc systematically are all relying on just one thing to find and source deals: the probate list from their local courthouse.

And there’s a lot of issues with that probate list, from the perspective of speed and prospecting efficiency in a real estate business. Here they are:

1. Probate lists are slow. It can take months or years for a Probate case to be filed, and you need to wait for that to happen first.

Buying a list of Probate court cases won’t get you anywhere if the heirs haven’t filed a Probate case yet. And that usually takes many months to a few years to happen, for a number of reasons. One of which is that the Probate process is expensive, time-consuming, and intimidating for most people and it’s not something they’re exactly rushing to do right away.

Many times there’s also conflict or disagreement amongst heirs or family members regarding the assets of an estate, which further delays administrative matters such as Probate.

Once they’ve actually decided to file (whether through an attorney or independently) the process itself could take months to properly initiate the formalities before a Probate docket number (a case number) is finally created and assigned. Only after all this happens does a Probate case finally make it onto some “Probate List” to be sold to an investor.

2. Probate lists are months or years behind “Pre-Probate” data that can identify inherited property long before any Probate case is filed in court.

Why wait for a Probate case to be filed, when you can find out about any inherited properties long before then, and reach out early?

Until now, it wasn’t possible to know about a court case before a court case is filed, but thanks to Artificial Intelligence “Pre-Probate” data, you can now actually identify inherited real estate months or years before heirs start the legal process of Probating a will.

If you’re a property investor relying on Probate Lists to get to inherited properties, imagine your disappointment when you slowly start to realize that for some reason each time you finally contact an heir after spending so much time and money on marketing to them… you keep hearing “sorry we’ve already sold it.” That’s basically what starts happening when you’re marketing to probate leads, but some other investors who have “Pre-Probate” data got there first before you.

Heirs can typically wait 6 months to 2 years to get started filing probate cases, and there’s a number of reasons for that, ranging from emotional difficulties, family drama, and most often simply the financial burden associated with the costs of Probate. There’s another post covering that here in more detail.

But for investors that spells a valuable window of opportunity that can stretch months or years, where you can have advanced knowledge prior to the Probate case getting filed and becoming a matter of public record for everyone else to pursue.

3. With a “Probate List” you’re not actually getting a list of Probate real estate. You’re just getting a list of court cases. Figuring out if there’s any real estate associated with those cases is extra work… and lots of extra cost.

Investors often assume the wrong thing about what’s in that Probate list
The biggest misconception about “Probate Marketing Data” is that you’re obtaining a list of properties that are being inherited, so you can market to them.

In reality, what you’re really buying from the Probate marketing company is just a list of court cases (not properties) and the names of the people who are now associated with the court cases, most likely the heirs. However, figuring out if there’s even one real estate associated with the Probate court proceedings is a lot of extra work. And if you want to automate that work, it’s very expensive.

The truth is, the probate marketing company that sold you the data actually has absolutely no idea whether the estate mentioned in the Probate court record even owns any property at all. Otherwise, they’d be selling you data on properties, not giving you a list of court cases to then go figure it out on your own.

Oh, you wanted it without junk data? That’s gonna cost you double.

It’s not uncommon now for a Probate marketing company to sell you a list of Probate Data, and then turn around and charge you almost double if you want them to “clean” and scrub the list to take out the junk data and tell you which ones actually have property.

Probate marketing companies try to minimize and gloss over this by encouraging you to just blanket everybody on the list with marketing such as direct mail, but fail to mention the huge costs associated with pursuing bad data when at least 1 in 3 prospects are actually dead ends.

How costly is that junk data?

There are even Probate data providers in the market that are happy to sell customers a list of Probate cases (often at a few dollars per record), and then make them pay extra… as much as $2-3 for each and every lead to actually do a separate lookup and see if there are any properties associated.

Imagine paying for data, and then having to pay extra for that data to clean out the junk. Ouch. But up until now the market for Probate data has been so tight and limited to a small monopoly of companies that investors pretty much had to agree to anything because the information contained in those Probate lists was valuable and there were no other choices to get the information otherwise (until now).

4. How much junk data? Anywhere from 30-70% of all Probate List records are trash – meaning there’s no inherited real estate in the Probate case.

Yes, you read it right. Up to 70% of that fresh new probate list could be completely useless to you.

When you buy probate lists, you’re just getting a list of Court cases filed, regardless of whether the deceased owned any real estate or not. You’re not actually getting a list of properties.

Statistically, the average homeownership rate across the USA is around 60-70%, which means around 1 in 3 entries on the Probate list don’t have any real estate.

But in urban centers and cities such as New York, San Francisco, etc. most properties are owned by REITs and institutional investors, and the majority of the population are renters. So the average homeownership rate is as low as 30% which means statistically as high as 7 out of 10 probate case records you buy in those markets could belong to renters as opposed to property owners, and are pure “junk data” for an investor who is trying to buy real property.

In any data business it’s inevitable that some percentage of data may be inaccurate or “bad” however when the numbers approach 30, 50, or 70% it becomes untenable and a huge waste of cash.

The wasted costs of this are staggering if you calculate the cost of marketing such as sending direct mail to somebody who doesn’t own property, each month over the course of a year.

5. If nobody files a Probate case… they’ll never appear on a Probate List… which is more than half the time since less than 45% of Americans have wills.

Most eager investors incorrectly assume that Probate data providers will supply you with a list of all the properties that are being inherited in your area. Wrong!

If they don’t file, you’ll never know…

Statistically more than half the time when somebody dies, their estate does NOT go through probate and is instead handled via Administration, Trust, or another legal process. And more often than we’d expect, the heirs actually do not initiate any proceedings at all, for various reasons. In all these situations, you will never know anything about the estates or associated properties because there will never be a Probate case, and they’ll never appear on a “Probate List”.

For some examples, see the case studies in this Whitepaper which show successful “Pre-Probate” inherited property acquisitions that never appeared on Probate lists.

6. A probate list will never tell you about all the inherited properties that are available outside of probate, be it in Administrations, Trusts, or other legal proceedings.

Probate marketing data only captures cases filed in Probate court. They leave out all the rest, which can often be double the size of the market for potential transactions given that less than half of all people even have a will, or are eligible for probate.

In some markets, the number of properties in the probate process is less than HALF of the total inherited properties out there.

7. You’re competing with everyone else using the exact same Probate list from the courthouse

Knowledge is power, and investors are always searching for an edge over the competition. Probate court data is a matter of public record, and investors pursuing the niche will all have access to the same information since they’re buying it at the same time from the same vendors.

The probate marketing companies are happy to sell their data to everyone – very few of them will limit the number of customers in a geography. Even if they do, other Probate list providers will sell to the other customers, leading to a saturation and a large number of investors chasing the same Probate prospects.

How would you feel as an investor, when you’ve spent time and money to get in touch with an heir going through Probate, only to find out that they’re also looking at listing their property on the market with an agent, who is buying the same Probate leads you’re paying for?

8. You’ll often be too late to the party, because by the time heirs finally file probate, they’ve often already made a plan for the property, got appraisals, interviewed realtors, etc.

The best time to get in touch and negotiate an acquisition of inherited property is usually very early on in the process. Once many months or years go by, it’s typical for heirs to already have a game plan for the property, so by the time they finally DO file a case in Probate court, there’s a much-reduced chance of acquisition. Of course, plenty of deals still do happen, but you always want to stack the odds to be more favorable to you.

9. Probate list gathering can slow down or stop during a COVID-19 lockdown or other courthouses shut down.

If you’re an investor getting a consistent flow of data so you can keep pursuing deals is a top priority. Unfortunately, if your fate is tied to the courthouse doors being open, your plans could get interrupted. We’ve already seen in the initial COVID-19 lockdown many courthouses were simply closed for outside access.

In most states and counties there is zero digital access to court records outside the physical courthouse location, and during the shutdowns, many Probate and Surrogate courts simply shut their doors to visitors or anyone trying to look up and copy case information.

That obviously slows down and stops the lead flow in the event of future lockdowns, or restrictions on the number of people who can enter a court. However, with InherentValue pre-probate data that are created via Artificial Intelligence, information on inherited properties flows regardless of whether the courts are closed or not.

Get Access to InherentValue.ai

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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:

https://inherentvalue.ai/features/