Buying probate properties is a phone business, not a list business. The foreclosure and probate lists are sold by roughly a hundred companies, so the data is a commodity — the money is in calling two to four hours a day, five days a week, and being the one person who actually reaches an heir who has stopped answering. AJ Modig, a broker in California and Nevada since 1989, has paid $1,000 to $2,500 for dozens of houses this way.
The reason the discounts are real: heirs have no skin in the game. They usually already own a home, often live 400 to 2,000 miles away, and the inherited house arrives with property taxes and possibly code violations attached. Modig’s estimate is that only about 20% of them actually want to list for top dollar.
This guide covers where the lists come from, the calling cadence that produces appointments, what discount to expect against value, how to handle sellers who are upside down, and the one closing-table mistake that cost him nine months of rent.
Key takeaways
- The list is not the moat — around a hundred companies sell foreclosure and pre-foreclosure data. The advantage comes from calling it two to four hours a day, five days a week.
- Roughly 20% of heirs want to list the property retail and get top dollar. The other 80% want the headache gone, which is where discounted buys come from.
- Against the 70% rule, 30% and 40% off value is routinely achievable on this lead type, and 50% off is not unheard of.
- When an inherited house has no equity and won’t cash flow, run it as a short sale and take the commission instead of forcing a purchase.
- Never let a buyer occupy a property before closing. Modig did it once on a Sky Canyon flip and spent eight to nine months removing a non-paying occupant who had run the same play two or three times before.
From the Real Estate Pros Show
This article draws on an interview with AJ Modig of Bear State Realty on the Real Estate Pros Show, hosted by Issa Hanna.
Why Probate Is the Deepest Discount Left in Residential
Modig’s view after 35 years of brokerage is blunt: probate is the biggest ongoing opportunity in residential, and it always has been. Roughly 12,000 people a day turn 65 in this country. Some pass on, others reach the point where they move in with their kids, have their kids move in with them, or sell. The passing-on portion is where the acquisition volume lives.
The structural reason heirs sell cheap is that they have no skin in the game. They didn’t buy the house, they didn’t pay the mortgage, and in most cases they already own a home of their own. They frequently live 400 to 2,000 miles from the property. What they inherited isn’t an asset in their mind — it’s a monthly bill, a set of property taxes, and possibly open code violations they had no idea existed.
Modig’s read is that about 20% of heirs actually want to list the property and chase top dollar. Those are the exception, not the rule, and he works them too — as a broker, taking the listing. The other 80% want the problem solved.
The flip side is that heirs are also the hardest people in real estate to reach. Modig is currently chasing a doctor who is, as far as he can tell, the sole heir to a Southern California house with $600,000 of equity in it. The man will not return calls. The property is heading to foreclosure. That gap between indifference and value is exactly what the business runs on, and it’s why persistence beats data quality.
Where the Lists Come From and What They Cost You
The foreclosure and pre-foreclosure list is easy to get. Modig estimates roughly a hundred companies sell it. That is worth repeating because most people treat data acquisition as the hard part — it isn’t. Everyone working this niche is looking at substantially the same names.
His entry into it came sideways. He started with short sales in 2006 — his first one took two years to close — and built an REO career off BPO work, doing them for years before a single listing came through. What he noticed as the listing agent was how good the deals were that investor buyers were pulling off his own REO inventory, and how brutal the competition was to be one of those buyers.
So he moved upstream. Instead of competing with dozens of offers on a bank-owned listing, he started calling pre-foreclosures directly. The reasoning was simple: banks lose more on a foreclosure than on a short sale, so there’s room to solve the bank’s problem and get a good buy while cutting out the crowd entirely.
He also works a county-level source most investors overlook. Clark County maintains a list of properties where the county performs abatement work — going in, boarding houses up, cleaning up nuisance conditions. Those are distressed by definition and often have an absent or disengaged owner. Modig recently figured out where to get that list and how to request it, and he’s using it to source flips, with a target of two or three a month instead of one every second or third month.
Check your own county. The naming varies, but most large counties keep a public record of nuisance abatement and board-up actions.
People who are inheriting properties have no skin in the game. A lot of times they own their own home already and they live 400 to 2,000 miles away. They just don’t care. It’s a headache for them, and I’m happy to solve their problem.
— AJ Modig, broker, California and Nevada
The Actual Work: 2-4 Hours of Calls, Five Days a Week
The cadence is two to four hours of cold calling a day, minimum, five days a week. That is what Modig runs, what he tells new agents to run, and what he still does himself — he’ll finish a call block and set one or two appointments for that same day and the next.
Consistency is the whole variable. He has a partner who was the number one caller on the top team in Las Vegas, doing two to three times the daily volume of everyone else on that team and setting three to nine appointments in a single day. Nothing about that is a technique secret. It’s dial count.
Two habits separate the callers who compound from the ones who churn:
- Ask every non-deal for a referral. If the person can’t be helped or isn’t ready, that conversation still has value. Ask who else they know.
- Keep in touch with the not-yets. Heirs and pre-foreclosure owners rarely transact on the first contact. The estate isn’t open yet, the siblings haven’t agreed, the notice of default is fresh. Stay in the file.
One thing Modig does that runs against the stereotype of the probate caller: he tells sellers what the property is actually worth and what they’d need to do to get top dollar for it. Many of them thank him and ask him to show them the money anyway. Everything he does goes in writing. That posture costs him some spread on individual deals, and it’s why he can also take the listing when the heir turns out to be one of the 20% who wants retail.
What the Numbers Look Like: $1,000 Buys and 30-50% Off
Modig has paid between $1,000 and $2,500 for dozens of homes over the years. Some had equity, some didn’t. He describes it as being given more houses than most people buy in a lifetime — which is a fair way to describe what happens when an heir 1,500 miles away just wants the deed off their name and a little cash for the trouble.
Measured against the 70% rule that most flippers underwrite to, his read on achievable discounts is this: 30% off value is easy, 40% off is easy, and 50% off is not unheard of. Those are broker-level numbers from someone who has closed over 200 properties in 20-plus years and knows what the comps actually say.
The important discipline is the exit fork on the houses that don’t pencil. When an inherited property has no equity and won’t cash flow as a rental, Modig doesn’t force the buy. He runs it as a short sale and takes the commission instead. That single decision rule is what lets him call a wide list without accumulating dead inventory — every conversation has a paying outcome, whether it’s an acquisition or a listing.
The keepers went into short-term rental use. During the strong years for the Las Vegas B&B market, those units produced $8,000 to $10,000 a month for years. That market has since deteriorated, and Modig has been selling or peeling off short-term rentals rather than defending the model. Worth noting: the exit strategy that carried the portfolio for a decade is not the one he’d underwrite to today.
Distressed-Equity Plays: Subject-To and Pad Split Conversions
Not every distressed seller has equity to sell you. Modig’s approach with owners who are upside down and about to walk away is to hand them a small amount of money to sign the property over and take title subject to the existing mortgage. The prize is the loan itself — a 2.5% or 3% note that cannot be replicated at current rates.
He’s working two of these now. One is a house with roughly $850,000 owed against a $650,000 to $700,000 value. Underwater by any conventional measure, and unsellable at retail without a short sale. But it’s a large house, which opens a different exit: repurpose the square footage into a pad split so the rent roll services a debt the property’s market value can’t justify.
The second conversion is further along. It’s a three-bedroom, two-bath near Palace Station in Las Vegas, going to a six-bed, six-bath pad split. Budget is about $180,000 of remodel, targeted at seven months of construction and 94% occupancy by month eight. He has the acquisition capital and the repair money lined up before starting.
Two cautions on this play. Subject-to purchases carry due-on-sale exposure and the loan stays in the seller’s name — get it papered by a real estate attorney in your state before you sign anything. And the pad split math only works where zoning, occupancy limits, and parking rules allow it, which varies by jurisdiction and sometimes by parcel. Modig’s expectation is that this becomes a much larger opportunity over the next five years as post-2021 buyers who overpaid at low rates run into affordability problems.
The Mistake That Cost Nine Months: Letting a Buyer Move In Pre-Closing
Modig’s worst deal was not a bad buy. It was a good buy ruined at the closing table.
He acquired a house in Sky Canyon out of probate and took over the existing mortgage at 3.5%. The plan was a straightforward flip. A buyer’s agent came in with what he described as a golden client, they went into contract, and then came the ask: the buyer needs about a month, can he rent the house from you before closing?
Modig said yes. He’d never had a problem with it before, and cash flow while waiting on escrow sounded like free money.
What followed was one loan issue after another. The buyer would clear one condition and a new one would surface. When Modig finally decided he was done and moved to exit escrow, the occupant simply stopped paying — and COVID had already started. It took eight to nine months to get him out, with zero rent coming in the entire time. When Modig looked the man up afterward, he’d run the same play two or three times before.
The rule that comes out of this is absolute: do not let a buyer take possession before you have funded and recorded. The moment they have keys, your leverage inverts. You are no longer a seller who can cancel — you are a landlord facing an eviction, in whatever court and on whatever timeline your county allows.
The mirror-image lesson is for buyer’s agents. Verify your client’s documentation before you write the offer. Push a fabricated file onto an experienced buyer in your own market and your name gets a permanent asterisk on every offer you submit afterward.
Frequently asked questions
Where do probate and pre-foreclosure lists actually come from?
Commercial data vendors — Modig estimates roughly a hundred companies sell foreclosure and pre-foreclosure data, which is why the list itself provides no competitive advantage. Everyone in the niche is dialing similar names.
The less-worked sources are at the county level. Clark County, for example, maintains a record of properties where the county performs abatement work and boards houses up. Modig uses that list to source flips. Most large counties keep something equivalent under nuisance abatement or code enforcement records.
What discount to value is realistic on a probate house?
Modig’s numbers, measured against the 70% rule investors typically underwrite to: 30% off is easy, 40% off is easy, and 50% off is not unheard of. On the extreme end he has paid $1,000 to $2,500 for dozens of houses over the years, though not all of those had equity.
The discount is not a negotiating trick. It comes from the heir having no financial or emotional stake in the property and wanting the carrying costs to stop.
Why would an heir sell at a discount instead of listing the house retail?
Because for most heirs the house is a liability, not an asset. They already own a home, they often live 400 to 2,000 miles away, and the inherited property comes with property taxes, maintenance, and sometimes open code violations attached.
Modig puts the share of heirs who genuinely want to list and chase top dollar at around 20%. He tells sellers what the property is worth and what it would take to maximize it, in writing, and most of them still ask him to show them the money.
Should you ever let a buyer occupy a property before closing?
No. Modig agreed to it once on a Sky Canyon flip, on a buyer’s agent’s assurances, and it cost him eight to nine months of a non-paying occupant during COVID with no way to force an exit from escrow.
Once someone has possession, you lose the ability to simply cancel the contract. You become a landlord in an eviction proceeding, on your county’s timeline, not yours. The occupant in that case had run the same pattern two or three times previously.
How do you buy a house that is worth less than the mortgage balance?
One approach Modig uses is to pay the owner a small amount to sign the property over and then take title subject to the existing mortgage — particularly attractive when that loan is at 2.5% or 3%. He’s working a deal now with roughly $850,000 owed against a $650,000 to $700,000 value.
The property has to produce enough income to service a debt its market value doesn’t support, which usually means a repurpose such as a pad split conversion. Subject-to carries due-on-sale risk and leaves the loan in the seller’s name, so have a real estate attorney in your state structure it before you sign.
The bottom line
Block two to four hours on your calendar tomorrow, five days next week, and call the list you already have. The data is a commodity and the discounts are real, but neither matters until someone is on the phone long enough to reach the heir who has been ignoring everyone else.
