As the Baby Boomer population ages, properties in probate are increasing.
A common concern among residential real estate investors is that there are too many people working the same leads. We frequently hear investors say they are having a hard time finding properties that are good for investing.
The number of probate leads available each month, however, continues to grow with no end in sight. As the baby boomer population continues to age, the number of properties in probate will also increase.
But why should you be interested in probate leads? Because roughly 80 percent of heirs will sell or transfer the title of the property within 18 months. Moreover, a high percentage of deceased homeowners have either paid off their home or paid off most of their home. That means there is a lot of equity for the heirs, and since most heirs are already splitting the equity with other heirs, they are not as concerned about getting as much as they can for the home.
More often, heirs are in over their heads, especially the executor of the estate, with all the tasks necessary to settle the estate. Many welcome an investor offering to pay cash for their inherited home so they can sell it “as is” without spending time they do not have preparing the home for the market. This means probate properties are often available at below-market prices.
Growth in Probate Properties
There are currently about 76 million baby boomers in the United States. This generation is often described as the wealthiest generation in history, and they control at least 70 percent of all disposable income in the United States. Their assets have been predicted to peak at $54 trillion by 2030, when members of this generation will start to pass away in large numbers. It is expected that baby boomers will transfer over $30 trillion in assets over the next 30 – 40 years in the United States alone, according to Bank of America’s Sarbjit Nahal and Beijia Ma.
Between now and 2030, Generation X will experience the highest increase in the share of national wealth as they inherit their parents’ assets. Millennials will also inherit a great deal of wealth. This will be the largest generational transfer of wealth ever and is expected to peak in 2031, according to a study conducted by Accenture.
Since many baby boomers are property owners, and many baby boomers have a large portion of their wealth invested in their homes, probate properties are going to be available in increasing numbers. Based on what we know of Generation X and millennials, it is expected that most of the homes and other properties that are inherited during this time will be quickly resold.
Probates are a growing lead source of motivated sellers, and savvy real estate investors are already working this segment. But while the interest is growing, there are thousands of leads every month that are not being worked.