Inheriting a home can come with a mixed bag of emotions and responsibilities. In addition to processing the death of a loved one, acquiring a house can be daunting.
There are often several heirs involved in the process, as well as financial debt and legal issues to navigate. If you’re interested in selling a home you’ve recently inherited, here are some important things to consider as you begin the process.
The home’s worth
Getting a broker’s price opinion will be your first step.
Before you make any decisions, try to determine the value of the home. Many online estimators can assist you in this process but keep in mind that they’re not always completely accurate. In other words, you may not be able to sell for that exact price.
Comparable properties in the area (that are selling in the current housing market) may help you make the most accurate prediction. Also, note that the house may need repairs or minor updates if it hasn’t been cared for in a while.
Having a general idea of how much the home is worth will be important as you work towards finalizing your listing.
Next, it’s important to figure out how much is left on the mortgage. If the home is not paid off, you’ll be responsible for making payments every month. This is why it’s critical to find out where the mortgage stands as soon as possible.
In addition to monthly mortgage payments, check to ensure all property taxes are up to date and paid in full. You should also complete a title search to check for any liens on the property. These types of financial issues will need to be settled before you can begin the process of preparing for a sale.
How many heirs are inheriting the property?
There are often several heirs when it comes to an inherited home. For those who have siblings (or even cousins), this can be a lot to sort through.
Carefully examine the will to identify all heirs and notify them of the situation. You should also identify the executor who will have the ultimate say on any decisions. This individual will be in charge of caring for the home and ensuring the mortgage is paid every month until it comes time to sell.
If the will does not name an executor, the heirs need to work together to identify one. This should be someone ready and willing to step up and handle necessary responsibilities.
The probate processes
Probate is defined as “the formal legal process that gives recognition to a will and appoints the executor or representative who will administer the estate and distribute assets to the intended beneficiaries.”
In addition to every state having various inheritance laws, there are different ways the decedent can leave behind assets. For example, a trust is different from a will. Consulting with an attorney is the best way to determine whether a probate proceeding is necessary.
The good news is that many states have worked to simplify probate. While it was traditionally known as a lengthy process, many people report a more streamlined system today.
Selling an inherited house will likely lead to some level of tax implications. Please note that this is just an overview of what to expect. You should always consult with a tax professional to get a better idea of what to expect when you sell an inherited property.
If you’re wondering whether the sale of this property is taxable, you must first determine your basis.
According to the IRS, the basis of property inherited from a decedent is usually one of the following:
- The fair market value (FMV) of the property on the date of the decedent’s death
- The FMV of the property on the alternate valuation date if the executor of the estate files an estate tax return and elects to use the alternate valuation on that return
For more information on this, visit the IRS website.
In addition to issues of basis and capital gains, you’ll have to determine whether estate tax applies to your situation. This is a tax on someone’s right to transfer property after their death.
Finally, it’s important to remember that you are responsible for any unpaid and upcoming property taxes on the home when you inherit it.
Preparation before listing
If you’ve made it this far, it may feel like you’re close to the finish line, but preparing the house for a sale can take a lot of time and effort. This is especially true if the person lived there for many years.
Your real estate agent will guide how you should prepare the house before listing it. Whether they prefer it to be empty or staged with furniture, you should trust their advice.
Regardless of which route you go, it’s time for everyone to determine what they’d like to keep and pack up in a box to bring home. When it comes to old furniture items that have seen better days, consider hiring a company to haul them away. For items that may still hold some value, put one of the heirs in charge of selling items online.
Once this is accomplished, you can hire a company to do a deep cleaning of the house before a photographer takes photos for the listing.
Accepting the right offer
If you have time and patience, it pays to wait for the right offer. Your real estate agent will help you facilitate negotiations that lead to a fair price. This is the best way to ensure every heir gets a sum of money they’re satisfied with.
If you’re eager to sell quickly (and without making repairs or improvements), you may want to consider selling to a cash buyer. These are companies that are willing to buy houses for cash, usually as is. The downside is that you won’t get full price for the home.
Consider your options before making a careful decision.