In the final quarter of 2018, the average home in the US was selling for almost $400,000.
If you’ve inherited a house from a loved one, figures like that might influence you to consider selling it. But selling your family home and selling an inherited house are two very different real estate transactions.
If you are thinking about selling an inherited property, you’ll need to know everything from who can sell it to when you can sell it. Also, be prepared to tackle some of the most common issues involved with selling an inheritance property.
Keep reading for all of that and more.
If you inherit a property, you have three options. Your option includes moving into the home, renting it out, or selling the property.
Some people will choose to sell their family home and move into the property they’ve inherited. Others may choose to keep the property and rent it out for additional income. But most people decide to sell off the items of the estate and then sell the property.
There is one additional option, but it’s not available in all cases. You may be able to decline inheriting the property if the property has environmental concerns or if the money owed on the property is more than its value. Check with the laws in your state to see if the option to not accept an inherited home is available to you.
Not just anybody can sell an inherited home. Before selling an inherited house, you must determine who has the authority to sell the home and distribute the assets.
An executor is responsible for carrying out all aspects of a person’s will. The executor is the only person who is legally authorized to sell an inheritance property.
If the inherited property is in a trust, then a trustee will handle the sale of the home and the distribution of assets. A deceased person may appoint an aide or even a trusted real estate firm in this arrangement.
If the deceased didn’t have an estate plan that included a will, then they’ve died intestate. The intestate laws of your state will determine who is responsible for their assets and property.
There’s a process that needs to be finished before you can sell an inherited property. In the majority of cases, all assets of the deceased including their home must go through probate. After probate, the executor can distribute the proceeds of the home sale to the beneficiaries.
You must wait until the title is transferred to you before selling if you’re receiving the home through a title transfer. Once you are the legal owner you can sell the property.
If the property was a property held in a trust, the trustee will manage the sale the estate. The trustee can sell the home without going through probate. They will then transfer the proceeds to the beneficiaries
Perhaps part of your decision for selling inheritance property is based on the money you’ll receive from the sale. In that light, you might head online and check what you can expect to receive.
Looking at comparable properties in your geographic location might be a good place to start. However, you need to consider the condition of the house as well as the current housing market before making any estimates.
Often times inherited properties are in need of repairs and updates if they have been vacant for a while. Many times inherited properties are located in different states than the heirs. It’s often easier to consider selling the property As-Is rather than racking up costly expenses and time fixing up a property that could be hundreds of miles away.
Many times heirs have visions of grandeur when they inherit a property, only to find that the situation is not nearly as lucrative as they initially believed.
In addition, there may be other costs that lower the value you’ll receive in the end. For example, you should think about how much is left on the mortgage. The heirs must pay the mortgage balance off before they receive the proceeds.
There may also be other debts to consider. If the deceased owed any other debts, you may have to use the proceeds of the sale to pay those off as well. If there are real estate or tax liens on the property, it can get even more complicated and can further reduce proceeds.
When calculating how much you’ll receive by selling an inherited property, you should also think about how many beneficiaries there are. Each person’s share is quite a bit less If the proceeds have to be split among several rather than a few individuals.
There are some common issues that arise when selling an inherited home. Being prepared for these in advance can make your experience that much smoother.
One of the first big issues people face when selling an inheritance property is disagreements among the family. What happens if one sibling wants to sell the property and the other wants to rent it out? Or what if one sibling thinks that repairs should be handled by a professional while the other prefers to do the work themselves?
Disagreements between siblings can happen even between siblings who get along, especially when it comes to money and sentimental value. This not only causes delays, but it can lead to resentment and fights that go on for years.
Similarly, trying to equally distribute assets can also can problems between beneficiaries. While splitting everything equally sounds easy in practice, it becomes challenging when it comes to determining the value of sentimental belongings. It can also be complicated by some siblings feeling like they’ve done more to help and are therefore entitled to compensation for their work.
Even though we never think it will happen in our own family, money does funky things to people. Be aware of some common pitfalls, such as hurtful disagreements between siblings. Think about discussing these types of issues with your loved ones ahead of time in order to try to clarify as much as possible.
But if your biggest concern is selling inheritance property fast, then we can help. Find out how it works and contact us to get started.
Lisa is a local real estate investor in Austin Texas.