What to do with an inherited home can be a difficult topic to broach. Many times, an inherited property holds sentimental value, and stirs a host of cherished moments. Nevertheless, inheriting a house means taking on any outstanding debts, repairs or other headaches property ownership can present. It happens, therefore, that selling inherited property’s usually the best route for property recipients.
‘Sounds good, but how do I sell an inherited home?’ you ask.
In this article, we’ve put together a comprehensive step-by-step guide walking you through the ins and outs of selling an inherited property. From presale processes to the different methods of selling your bequeathed house, we give you all the tools to make sure your property sale’s as smooth a transition as possible.
Let’s get into it.
The processes for an inherited property
Before selling an inherited home, there are a few legal issues that you must address.
First things first, establish who the legal executor is. A legal executor of estate is the named person in the will responsible for overseeing the conclusion of all financial affairs of the deceased. This matters when selling a real estate inheritance, as having the power of legal executor will give you the authority to sell the property.
After determining the inherited property’s recipient, now comes the point of officiating this legally in court. The probate process establishes who holds the power of estate. This happens by ruling of a judge in the state where the deceased lived. If you’re asking, ‘can a house be put up for sale before probate is granted?’ – the answer is yes. However, it should be noted that the property can’t be sold until probate has been permitted.
Once probate has been granted, the final task is to determine taxes owed on inherited property. This can be especially complicated if the deceased owned multiple mortgages on one or several properties, and has outstanding real estate tax unpaid. This can make keeping an inherited property increasingly problematic.
Implications of renting an inherited home
Legally validating an inherited property is yours can be a moment of relief. Now you fully have the power to decide how you want to use this new piece of real estate. Some people flirt with the idea of keeping an inherited home and renting it out to tenants, citing emotional attachment or the possibility of bequeathing it to their own next of kin.
While this seems like a reasonable option, let us highlight some potentially hazardous consequences of renting out an inherited home:
- Property refinancing – Although refinancing a mortgage means a lower interest rate, you’ll essentially be paying more money for the same property. Considering the application fees and appraisal fees from refinancing, it is likely you will end up paying out more than the value of the estate.
- Repairs costs – We will discuss this in more depth later on, but constantly maintaining a property, particularly if it’s old, can cause massive financial strain.
- Rising property taxes – With proposed propositional reforms looking to further augment property taxes being voted on in November this year, the cost for inherited home ownership could become unbearable by 2021.
-
- Tiresome eviction process – If you’ve ever had to evict tenants before, you’ll know how unpleasant an experience it can be. When the time comes to move tenants on from your property, oversights like not serving notices to vacate, or a signed lease contract can result in lengthy legal battles.
Selling your inherited home
Selling a house you inherited can be an extremely profitable venture. At the same time, the way in which you go about selling inherited real estate dictates the width of your profit margins, and the time it takes before you see any financial reward.
Be smart in your moves to sell an inherited home, and make sure you address the following:
What state should I sell my home in?
There are two options when choosing the state that you sell a house in – as is, or with renovations. While doing the latter can seem like an intelligent way to boost the value of a property, there are some potholes to be aware of.
For one, fixing up an inherited home before selling has the obvious disadvantage of repair costs. In the case of property inheritance, it is likely that the deceased was old when they left the property to you.
This means two things: One, the property itself could be old. Two the deceased was not in a fit state to do necessary repairs to the property his or herself. Structural issues to the property can cost tens if not hundreds of thousands of dollars to a homeowner. Furthermore, the sales process is elongated by the need to make alterations to the house.
Meanwhile, selling inherited real estate as is, is quicker, simpler and more cost effective.
Who should I use to sell my inherited home?
Generally speaking, there are three options for selling an inherited home:- Realtor – Selling an inherited property through a realtor makes sense to many people, as they can relinquish the responsibility of selling to a supposed expert. Having said this, it takes realtors between 8 – 12 weeks to sell on average to sell a home. Before even taking into consideration realtor fees or realtor experience, there’s a need inherited by property owners to take out home insurance on a property after a certain period of time. Most insurance policies elapse after 30 days on inherited and unoccupied properties, adding more costs to your bottom line.
- Auction – Auctions are another avenue for selling your inherited house. With an auction, there are naturally auction fees that occur, but there’s no guarantee your piece of real estate sells. Moreover, should you change your mind on the reserve price during or post-auction, you can’t back out of the sale.
- Fast-sell – As the name suggests, fast-selling your inherited home is a quick and smooth transaction. A quality fast-sell company will offer you a reasonable price for your inherited home in its current state – an offer which you can accept or reject. The real benefits of fast-selling your inherited real estate come from all of the inevitable fees you avoid from the first two options. With a fast-sale, you won’t need to worry about taking out extra insurance on the property, nor maintenance costs. As an added bonus, credible buyers won’t add on unexpected fees and honor the purchase when you’re ready to sell.
Final Thoughts
Property inheritance should be considered as a blessing rather than a curse.
Although the loss of a relative is difficult for everyone, an endowment such as a home can help build the future for the next generation of your family. There are some clear traps when selling your inherited home, which you must be aware of.
To avoid a long-drawn affair with a realtor, or spending more money than you’re due to gain on your home, take the sting out of a potentially cumbersome ordeal and fast-sell your inherited home for an assured windfall.