TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

f you have been out investigating real estate leads anytime during the last twelve months, then you know

that we are experiencing an unprecedented time where nearly every area in the United States has a low

inventory. Real estate investors who have used the traditional market to access properties are seeing a

dramatic slowdown in their business as properties are being snatched up for prices that are well above the

listed asking price.

©mtldizon

Why a Tight Real Estate Market?

The reasons for the tightness in the real estate industry are varied and wide ranging. Said Diana Olick, “Sticker

shock was behind weak sales in 2014, but as price gains began to ease, buyers came back. Now prices are

heating up again due to severely weak supply.”1 This “sticker shock,” as Olick puts it, is part of the changes in

the market. Many geographical areas, especially large metropolitan areas such as Sacramento and Dallas, are

seeing increased prices due to low supply in the market.

These areas are having issues due to the fact that more and more homeowners are staying put. Olick said,

“’This is a notable speed bump,’ said NAR's chief economist, Lawrence Yun, who deemed the phenomenon,

‘puzzling,’ given a stronger economy and rising rents. Listings are down significantly in parts of California and in

formerly strong markets like Las Vegas and Denver, according to Realtor.com. Texas is also seeing a very tight

market as well as Chicago and Boston. According to running surveys by Realtor.com, potential buyers are

saying they can't find a home that meets their needs and/or budget. Usually inventory drags are more localized,

but today's market is behaving more nationally than in the past. ‘Typically for a home seller in the past, they live

in their home for seven years and then make a move,’ said Yun. ‘Now we're seeing home sellers are living in

their home for 10 years.’" 2

Clearly, it is not a smart

business practice to

purchase real estate at

the top of the market

with rising prices, but

many real estate

investors believe there

is no other option.

While the real estate

market is tight and there

are contributing factors,

there is a way – through

probate real estate

investing – that it is

possible to still get

discounted rates on real

estate and other

property.

TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

©Depositphotos.com/doomu

can't afford a move up, or because they still owe

more on their current mortgages than their homes

are worth. Somewhere between 7 million and 10

million borrowers are underwater, and millions

more don't have enough equity in their homes to

afford to sell and move up.” 4

Greenberg wonders if this is a change that will

continue over the long term. He said, “Perhaps

there has been a change in social behavior as we

move into more stable economic times - maybe

people just aren't up for moving as much. Or

maybe there is a hidden financial dynamic - one we

can sense but haven't yet put our finger on - that

argues against the old 'prosper and move up'

patterns of not so long ago.” 5 A cautious

undercurrent has been running in the real estate

industry for the last few years, since the recession

of 2008 and the implosion of the credit market,

which is contributing to homeowners concerns

about moving and investing in a new property.

Homeowners Choosing to Stay in their Homes

Why are homeowners staying in their homes,

causing a shortage of leads for both traditional

home buyers and real estate investors? There are

two main reasons. Dick Greenberg, a real estate

broker who tracks the economy said, “This has

been a big change for us - we're still flinching from

the market meltdown, the credit crisis, underwater

homeowners, short sales and foreclosures. Then,

we wake up one day to a sort of cosmic joke - the

buyers are storming the walls and there isn't

anything to sell them.”3 Homeowners are clearly

uncomfortable with the challenges of the current

market and have deemed that staying in their

current home is far superior to trying to make a

move at this point. Many of these homeowners

with mortgages have figured out that their homes

aren’t worth what they were worth ten years ago,

so they are holding onto the property hoping for a

value rebound.

TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

©Depositphotos.com/hanaschwarz

Homes that are mortgaged for

more than they are worth,

colloquially called “being

underwater,” can be troublesome

for buyers and sellers alike. Banks

want to loan money on the current

value of a home. When a home is

underwater, it is mortgaged for

more than it is worth. That means

it likely won’t sell with enough of a

cushion to cover the mortgage.

That is making sellers nervous, so

they are holding onto their

properties. Olick said, “More likely,

people aren't selling because they

Construction (Or Lack Thereof) is Also a Factor

When the credit crisis of 2008 was in full swing, it

not only effected lending for individual

homeowners, but for construction companies who

wanted to build as well. This is another

contributing factor to the decreased amount of real

estate inventory on the market. Alan Heavens

writes, “Predicting how much housing is needed

involves a complex calculus that weighs hard

statistics (new-home starts, sales of previously

owned homes) against a certain amount of

demographic tea-leaf reading (household-

formation forecasts). Thus, there isn't complete

consensus on what will be enough. ‘At current

levels of housing construction and demand, the

nation has just about two years' worth of excess

vacant homes for sale and rent,’ said Moody's

Economy.com chief economist Mark Zandi.

‘However. . . the market could very well begin to

become undersupplied. Construction will likely not

have fully caught up to improved demand, and the

market will tighten.’“6

We are now seeing exactly that tightness in the

market. While there are areas where new

construction has become evident, it is clear that in

traditional markets, there are simply not enough

homes for people to purchase. Greenberg said,

“Low inventory is endemic. It has become a

common phenomenon in many markets across the

country, and we have had to learn how to deal with

it as it has created opportunities for our sellers and

challenges for our buyers. It would probably be fair

to say that for many of us, over the last couple of

years, it has been the single largest factor

characterizing our markets.” 7

Higher Prices a Result of Fewer Leads

The overall result of having fewer homes on the

market nationwide is a spike in prices. While a

traditional homeowner, who has the goal of

purchasing their “dream home” may be willing to

add several thousands of dollars to their bid price

to get the home that they really want, this is not a

sustainable activity for investors. The net effect of

having much higher prices in the market

means that many real estate investors

have moved away from purchasing

homes, simply staying with their current

portfolio until there are better economic

conditions for investing.

That begs the question. . . Is there

another option? Is there a way to

continue to find leads and purchase

homes and other types of real estate no

matter the overall conditions of the

market? The answer is yes.

TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

Probate Provides the Solution for Real Estate Investors

If you do want to take advantage of the market, there is an easy way to do so, but it involves circumventing the

traditional real estate markets. By looking in the probate arena, you will have access to a new form of

investing that will provide distinct benefits.

What is probate? Probate properties are put on the market after the passing of their owner. Managed by a

court appointed individual, called an Executor, these homes can be generally purchased for thirty to fifty

percent below the market value. Executors have a legal responsibility to sell off the property of someone who

has passed away. The funds from these sales are used to pay funeral expenses, past credit card debt,

medical bills as well as taxes and legal fees. Any remaining property and funds are distributed to the

individual’s heirs. Since this entire process is overseen by the local court jurisdiction, Executors are motivated

to sell these properties quickly at lower prices.

As you can imagine, this scenario sets up

the ideal situation for real estate investors

who want to avoid the traditional markets

and who want to take advantage of homes

that are being sold at a discount. Executors

know that they need to sell homes quickly

and they also are generally aware that the

property they are selling may not be up to

date. This is another factor that accounts

for the discounted prices.

Probate Offers More than Just Homes

For savvy real estate investors, working in the probate real estate industry can lead to many more

opportunities than simply residential real estate. In fact, what many probate real estate investors have

discovered is that there are not only many different options for real estate, but other streams of income as

well.

In addition to residential real estate, research may reveal that a probate will have commercial real estate,

apartments, vacation homes or even businesses attached. This provides a wealth of opportunities in addition

to residential real estate that can help to diversify a portfolio. In fact, many investors who have often dreamed

of owning their own home are now experiencing that through a probate purchase of an operating business.

TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

©mtldizon

Personal property is also another area for investment. From cars to boats, RVs, planes, antiques and art,

there are more types of personal property for sale in probate than can be imagined. Investors with experience

in these areas can purchase these assets for a discount and can then sell them at a profit.

How to Find Probate Leads

With all of the amazing opportunities in probate the next step is to gain access to probate leads. While it is

possible to simply visit the courthouse in your area and take a look at the cases that have been filed recently,

there is a better way. Using a professional leads service can save you time and money. Professional lead

services send trained personnel to every county in the United States and have them collect the information.

These leads are collated and prepared, at which time they are simply emailed to the investor.

The industry leader in lead generation for the probate industry is US Probate Leads. Our team offers the

highest quality leads available and has current information for literally every county within the United States.

In addition to offering customized lead packages, we also offer supportive services that help our investors to

grow their businesses and meet their investing goals. From online webinars to in-person seminars, software,

eBooks and individualized mentoring, we are committed to ensuring that your business thrives no matter the

market conditions. Call us today for more information on our services or visit our website at

www.usprobateleads.com .

Sources:

1 http://www.cnbc.com/2015/02/24/low-inventory-may-take-bloom-off-spring-home-sales.html

2 http://www.cnbc.com/2015/02/24/low-inventory-may-take-bloom-off-spring-home-sales.html

3 http://activerain.com/blogsview/4392530/my-inner-economist-is-uncomfortable

4 http://www.cnbc.com/2015/02/24/low-inventory-may-take-bloom-off-spring-home-sales.html

5 http://activerain.com/blogsview/4392530/my-inner-economist-is-uncomfortable

6 http://www.matrixrealestate.com/about-matrix/market-news/slowing-construction-could-lead-housing-shortage-experts-say

7 http://activerain.com/blogsview/4392530/my-inner-economist-is-uncomfortable

TIGHT REAL ESTATE MARKETS SHOW BENEFITS OF PROBATE INVESTING LEON MCKENZIE

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