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$750 EMD? say what?
July 14, 2010 by Esi · 19 Comments
Tuesday was a long day in court. I didn’t have to go but I went anyway and I learned so much about the probate process in the county where I invest. Two main reasons I went was one, I decided to lend the home owner some money because she are going through a tragic period in her life including losing a sister this past week, the city is threatening to foreclose on their home if they don’t pay their back taxes and even though they were ready to let go of a lot of equity on the home to the city because they couldn’t afford to pay $750 in probate fees, I felt bad for her and took the risk. (I guess you could consider that an EMD (Earnest Money Deposit). I have never handed my sellers an EMD before, so this is a first). Also, I already had a big time buyer who wants to close ASAP that I’m still trying to build a relationship with and create a first impression so the smoother the transaction the better and ofcourse, it will be nice to get a nice little check at the end, ya know.
A while back I got a lead on a probate property and from my understanding it was out of probate and the personal rep was ready to sell. After finding a buyer, I asked the title company to pull title and we found that there were 3 siblings on title. One is deceased (A), One is disabled (B), one was the seller I’ve been communicating with about the house (C). The title company requested probate papers for A and a conservator for B. This meant several long days in court and several bucks in fees. My seller C went to the county court to try to resolve the issues and was given the run around. Almost everyone she spoke to gave her different answers and this was after waiting for hours, missing classes at school, paying $17 for parking everyday for 5 days in a row. She were eventually asked to pay a fee of about $150 to open the case, then they needed $600 to settle A’s estate, then they needed $150 to see an analyst, then $150 for a conservator and other little fees. If I was not there on Monday to witness for myself, it would have been hard to believe what personal representatives go through before the sale of the estate and I only witnessed a small part of the process.
We planned to meet at the city building downtown which was a 45 minutes drive. The purpose was to get a letter of approval to close A’s estate and get her name out of the title, which took over 2 hours by the way and guess what? We were the only ones there. We were told to go downtown to meet with an analyst, so we drove another 15 minutes to the county court. On arrival, we had to go through a metal detector, and I don’t know what I was thinking putting on all the jewelry in my jewelry box, but I had to take them all off in order to stop the beeping after 5 times. Then we were lead to an elevator that took us to the 11th floor. On getting there, the room was half full of about 10 people, so after being in line for about 5 minutes, we got to talk to a lady who asked us to take a seat. Here we were sitting and waiting for about an hour before my seller’s name was finally called. Unfortunately, there was no record of her last 5 visits the previous week and since it was her first time dealing with this lady she had to start all over again with the process. After being called forward 3 more times to ask more questions, fill out forms etc, She were now qualified to talk to an analyst who was supposed to tell her if the paperwork was complete or not and also if she was eligible to see a judge or not. Despite all the wait time and delays, my seller was happy she even made it that far in the process. On getting to the analyst office, she went through the paper work, called the funeral home to make sure the amount they claimed they spent on the funeral was accurate, she then told us “well it’s quarter to 1 right now, why don’t you go grab some lunch and come back at 2, so we can continue the process” I can’t even begin to tell you how much I was ready to explode, but ofcourse I had to keep my cool, I don’t even think I know how to explode. Anyway, we later found out all she needed to do was sign in place of the judge and send us to the county clerk to file the record. The best part was she didn’t even show up till 2:30pm.
At 3pm we thought the process was over after spending close to $1000 only to be told wait a minute you still need a conservator. So now before she can get a hearing, she needs signatures from all other family members to waive off their rights including one of them in prison. Since the judge only sees people on Wednesdays, the earliest time to see him will be next week Wednesday, but wait there is more, she has to pay another $150 upfront. Oh and she has to go somewhere else in the city to register the deed with the updated information for a fee she is yet to find out about.
I had to wake up at 7am which is early for me and didn’t get done till 4pm ish, but despite the rant it was definitely a learning process I would cherish forever. I learned a lot of terminology that I’ve glossed over in the past and now know what is required to get through the probate process and sell an estate in my county. It has given me a better appreciation for those going through probate, it’s definitely a stressful and hard process to go through. This is one of those experiences you don’t learn in books or courses. It’s amazing how every single step of the process the county treats people like ATMs, it just sucks and the attendants at the counters in the court house take their sweet little time to get things done. Maybe it’s just my county, afterall the city is broke, yours could go a lot more faster for less money.
P.S: I am not advocating that you pay your seller’s probate fees. I did it after having hours of conversation with my seller and making sure the money was the only thing keeping her from selling the house. I secured the loan against the sale of the house, so i will be getting my money back at closing and I included a clause in my contract to protect my company that states ” if the house does not sell for whatever reason, I will still get my money back in 30 days”. I’ve also secured a guaranteed buyer who has given me $2000 EMD. There is no black and white in real estate, I make decisions on a case by case scenario and try to make it a win win win for everyone. It might not be a smart thing to do by some people’s standard, but we’ll find out next week Friday at closing.
P.S.S: It’s 1:08am right now and I just checked my google voice and noticed a call 5 minutes ago, while reading the transcript all I needed to see was “I’m sick and tired of the house and I want to get rid of it” and i almost tripped while reaching for my phone, It turned out to be a great deal. Woo Hoo! Great ending to a great day. Good night y’all.
Great post!
You are one tough lady. I don’t know if I would of gone through all that.
It was a great story of perseverance and you’re willingness to get the deal closed.
In New York subways, there are these posters that say how government jobs are getting farmed out to corporations and how the poor government worker is screwed over by the less efficient, lazy, unmotivated, soulless, greedy, irresponsible, poorly trained, more expensive corporate worker. I’m not trying to say anything bad about government workers directly. However, I have to laugh when I look at those posters. Because anyone who ever stepped foot in a government office(DMV, Probate office, etc) knows that the person you meet the desk/window/office is not going to be a very efficient, active, motivated, knowledgeable, responsible, cheerful, friendly person. And no matter what process you will have to go through, it is going be expensive.
You earned your money. Now go and spent it.
David
Thanks David. It was long, dreadful and stressful process especially for my seller, but I’m glad i went through it. I’m sure there are great hardworking government workers doing their best to get work done, but that was not my experience. You would think someone threw sh*t on their face before we got there. No smiles, hardly any hellos, tension, just lots of bad negative energy. What I found interesting and I’m sure frustrating to my seller was that they don’t tell you all the fees you need to pay upfront. They make it seem like all you have to do is pay one fee and once that is done it’s another, then another and after being sunk in long into the process, it’s hard to back out and you have no choice but to continue paying all the fees required to get through the process.
Esi, the probate process sounds like one of my worst nightmares….being stuck in line after line, talking to countless people who have no clue and/or don’t care, and all during one of the most challenging times in life dealing with a loved one’s death….and being nickeled and dimed for it every step of the way.
I give you props for seeing this through. Your willingness to deal with these types of matters, take calculated risks, and do things a bit more creatively will place you head and shoulders above most of the investors in your area. Way to go!
P.S. In my months of doing direct mail to absentee owners and now also inherited property owners, I’m still yet to get someone who is utterly disgusted with a property and begging someone to take it off of their hands. That’s gold!
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I agree Shae, that’s why having a will is very important, because the process definitely sucks and that’s why there is very little competition with probate investing.
You know what Shae, I was wondering if the inherited property sellers you deal with will eventually have to go through the probate process to get a clear title before selling the house. In my case the deceased did not have a will, so the court has to decide who gets what, which of course complicates the process.
I’ve been lucky to have had a few ” I’m sick and tired of this house, please get this off my hands” calls including my seller in my post. It’s not as common as the gurus will make you believe, but they are out there and if you can help them in their time of need, they will cherish you forever. The call I got at 1am was after talking to over 50 people in the last 2 days and getting a few borderline deals and many “no deals”. The house is going to need a little more work than most houses I get under contract, so we settled at $4,000.
That was an outstanding post and about a topic I’m very interested in as you know. Do you mind if I post part of it over at my blog with a lead back to here to finish it up? I think your experience could help others learn some good stuff.
You are a patient woman Esi and I’m glad to hear you covered yourself well with the loan. I’m looking forward to the post about how you closed this one.
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Thanks Scott, I mentioned you in my previous post and I will be more than happy to be mentioned on your blog. Thanks for the compliment, wholesaling definitely requires lots of patience and perseverance.
Esi´s last blog ..750 EMD say what
WOW!!!!! That was a very educational story. I remember you telling me about this deal and trying to figure out should you pay the probate fees. I’m glad you decided to help her. Even though the decision was part emotional, you still took care of business in protecting yourself in the contract. I believe more than just your assignment fee, the knowledge you are getting from this deal is something you cant put a price on. To top it off you get a hot lead. You do good and good things happen. Keep doing your thing Esi
Hey Erby, I’m glad you liked it. Yeah, it’s the same deal I talked to you about and to be honest that conversation helped me make my decision, so thanks for that. It’s definitely a learning experience that will help me in future probate deals. Before going to court, I was ready to pass on deals that have similar issues in the future, but just go to the next.
Wow Esi…that was racking my brain just reading it. That was definitely a learning process. Great Posting! Kat.
Lol Ka, yes indeed. Thanks
Wow, what a pain in the neck, but it sounds like you are getting a great education about probate deals in the process! Like you said- this is the kind of stuff you don’t really find out about in books and courses- you find out by getting out there and DOING it!
Congrats on the deal, and good luck on the latest one!
Steph
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Thanks Steph. Most of what I’ve learned so far is definitely by doing. I learn new things everyday and I really do enjoy the process; the good, the bad and ugly. Though, some more than others.
Hi Esi,
Great post…what a story. If this works out well for both you and the seller, I bet you’ll get other leads based on the way you helped out this family…they’ll tell everyone they know that you did what you said you’d do. A lot of investors don’t follow-up or follow through. Most people would have blown off this lead and not done all this work…but you are seeing it though. I am sure it’ll all be worth it in the end.
Keep us posted!
Steph
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Thanks Steph, the seller actually sent me a very touching email thanking me for everything and she has mentioned a few times that she wants to sell her current house and it will be nice if she sold it to me. She keeps telling me that her sister told her that she is lucky because no other investor will help her like I did especially in this market where there are sooo many deals. The experience and knowledge i gained is definitely worth it and ofcourse the money does not hurt..
Wow, what an amazing story Esi! It definitely sounds like you’ve learned a lot so far – it’s so true in this business that we learn the most by doing. And, you’re right – a lot of this stuff cannot be found in books, everyone has different experiences.
I have to admit, probates (as well as divorce situations) are tough especially when there are siblings and/or others involved. If you can get everyone on the same page and to agree on things, it works great. If not, it’s such a push and pull. But, definitely a learning experience.
I worked a probate situation last year with a mobile home. There were 3 sisters involved, they were all over the U.S. One near me, one in Colorado and another one in New Mexico. The case went to court and the judge gave the sisters the right to sell the home. Well, the two in Colorado and New Mexico were in agreement on selling the home to me. After much deliberation, they convinced the one near me to sell to me – they just wanted to get rid of it. So, they gave power of attorney and made the sister (who was the executor) in my area in charge of handling the sale – we were about to sign the contract. And, guess what?
The sister near me ended up moving into the mobile home and living there. Her two sisters were extremely upset! Turns out the sister near me had her lease up and needed another place to live, the owner of the building she was living in decided to sell. So, it didn’t work out. And, the two sisters in the other states apologized to me and said they were really upset – told me that now the sister near me had moved into the mobile home and that they would probably keep it until she moved out down the road. And, they would call me when that happened and would be ready to sell then. (Hmmm, I wonder if and when that will be?)
To make a long story short, it’s always a bit more difficult when there are more people involved. The fastest and smoothest transactions I’ve done are when I’ve dealt directly with the seller(s) – usually one person or a couple (if husband and wife and not a divorce situation). But, there is something to be learned with more complicated transactions such as these. I applaud your persistence and willingness to make this happen.
Looking forward to reading more of your stories, great job!
Racheal, this could very well be a blog post on it’s own, lol. Very similar experience happened to me. One brothers wanted to sell, but the other didn’t because he was staying in the house rent free with his wife and 2 kids, neither of them was working and it would have been nice if he at least paid the taxes and he didn’t in the last 2 year and kept lying to his brother about it. The brother that wanted to sell was pissed because he was hoping to use the check at closing to move out of state. Few days before closing, we had to call it off because the freeloading brother called begging the other not to sell and that he was going to get a job and move out. Well, 3 months later, he is still at the house. It’s definitely more complicated when they is more than one person involved in the decision making. Thanks for stopping by.