Inherited a House and Want to Sell it? Follow These 10 Step
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The thought of inheriting a house always seemed like an exciting prospect — until this hypothetical became your reality. Maybe the house you inherited stirs unpleasant memories. Or perhaps you love the house, but you can’t afford to pay the outstanding mortgage. Whatever the reason, you want to sell that house you inherited ASAP.
The process of selling an inherited home is complex, including an array of financial, legal, and market ramifications. We spoke with probate attorneys and a top-performing real estate agent to bring you 10 essential steps for selling an inherited house.
Source: (Slidebean / Unsplash)1. Know where the mortgage stands
As the new owner of the house, you must fully understand the status of the mortgage. Run a title search to surface liens or judgments attached to the property, such as unpaid taxes, a home equity line of credit, or a reverse mortgage.
Lenders expect you to pay the monthly mortgage payments on time no matter what. “If the mortgage holder was behind on mortgage payments, it is imperative to make the account current as soon as possible,” explains Somita Basu, an estate planning and probate attorney based in the San Francisco Bay Area.
Reach out to the mortgage company and any owed creditors as soon as you have the appropriate documents that show you are in charge of the estate or trust. “Time is of the essence where mortgage issues are concerned,” Basu comments.
2. Anticipate your ownership timeline
Whether you’ve inherited the house via probate inheritance, transfer on death deed (also known as a beneficiary deed), or living trust impacts the ownership timeline.
You’ll take ownership the fastest if you’ve inherited the property through a living trust or life estate deed, according to Justin A. Meyer, an attorney whose decade-long practice includes probate, real estate, and title. “Because no court approval is required, you can sell the property immediately or at any time,” he comments.
Probate inheritance, on the other hand, is more complicated. “Probate inheritance will take as long as it takes,” Meyer says. “That’s an unsatisfying answer, but remember that it’s a judicial process in most states, and it can take anywhere from a week to six months.”
Basu agrees with this sentiment: “Beneficiary deeds pass title to the named beneficiary upon a filing of a preliminary change of ownership form within 150 days of the date of death of the original owner,” she explains. “Note that there are several limitations on these types of deeds, so it’s best to check with your attorney to make sure the beneficiary deed is valid and has been recorded.”
For a rough timeline, ask your probate attorney and estate administrator about when the probate process is likely to conclude.
3. Coordinate with all heirs to nominate a personal representative
Before you initiate selling the house you’ve inherited, you’ll need to identify all of the heirs and find out who is the named executor or personal representative. Only the executor or personal representative is legally authorized to make decisions about the home sale.
If the deceased’s will does not appoint an executor, then all heirs must agree to nominate someone as the personal representative. Typically this is the one person in the family most emotionally and practically prepared to handle the responsibility.
“A judge wants somebody who’s going to follow his or her role, then follow the letter of the law for the accounting and the paperwork and the rightful distribution of the funds from the estate,” explains Melissa Harmel, a top-selling agent and probate specialist based in Anchorage, AK.
In Harmel’s experience, the deceased homeowner only names a personal representative about 25% of the time; that means 75% of the time, her clients must nominate a personal representative before selling the inherited property.
4. Open an estate account to manage shared assets
The personal representative should open a bank account in the name of the deceased person’s estate to temporarily hold the person’s assets, including the proceeds from the home sale and any ongoing income. In agreement with the other heirs, the personal representative uses the estate account to cover the deceased’s financial obligations (e.g., mortgage payments, property taxes, car payments, etc.) and probate-related expenses.
Once you’ve paid all debt on the estate, the personal representative will distribute the remaining funds to heirs. You’ll need to file a final accounting of the estate that includes receipts or other documentation of all payments and disbursements with your probate court before closing the account.
Source: (Karolina Grabowska / Pexels)5. Consider selling the inherited house for cash
Selling an inherited home on the market requires significant time and labor (think staging, marketing, and negotiating). And until the property sells, heirs are on the hook for the monthly mortgage payments, property taxes, and utility bills until the property sells.
If your top priority is an ultra-fast sale, consider selling the inherited house immediately to a cash buyer instead. While you typically net less money selling for cash, the process is usually faster, easier, and less stressful than selling a house on the market — a big plus if you’re feeling overwhelmed by the home sale process.
See what a cash buyer would offer for your home with HomeLight’s Simple Sale. We’ll connect you with offers from our network of pre-approved cash buyers. To give you a clear view of your options, we’ll also show you a side-by-side comparison of an estimate of how much you could sell the home for on the market with a top agent.
6. Partner with an agent who does probate
If you prefer to sell the house for the highest price possible, hire a top real estate agent with probate home sale experience to list your home on the market.
“My goal as a probate specialist real estate agent is to net the family as much equity as possible,” Hamel says.
To find experienced agents near you, plug property details into HomeLight’s Agent Finder. We’ll match you with the three best agents for your home sale based on local transaction data and client reviews. Interview at least three agents over the phone to compare their probate experience, marketing strategies, and communication style.
You want an agent with an appropriate bedside manner at a time that can be quite emotional. “I want the family to feel like I have respectfully treated the property,” Hamel says.
“I actually love those properties — they’re my favorite. They have stories, and it’s all about presenting them to the world in the best light possible. I like doing that.”
7. Enlist the help of a mediator if needed
In a multiple heir situation, there’s plenty of opportunity for drama. If your family is struggling to reach an agreement over the home sale, hire a mediator to help you work through the obstacles together.
“If there are beneficiaries who do not agree on the sale of the house or other issues regarding the house — renovations, which Realtor, removing tenants — then a mediator can help resolve these issues outside of a formal court process,” Basu says. “This can decrease the time spent on resolution, as well as the cost.”
Meyer adds that most common for hiring a mediator is when one heir doesn’t want to sell — usually for sentimental reasons — or wants to hold out for more money. “A big issue is when one heir has unreasonable beliefs as to the value of the home,” he says. “Usually, you’ll need one if there is a dispute about what to do with the house. But luckily, I’ve never needed one yet.”
You can search online to find mediators in your area. Mediators may charge an hourly rate, a flat fee, or a percentage of the value of the estate assets.
Source: (Annie Spratt / Unsplash)8. Take an aggressive approach to decluttering before you sell
“Ninety percent of the time when I arrive at an inherited house, the family has already taken items that were personal to them, and now they don’t know what to do with the rest of it,” Hamel shares.
Create a decluttering plan with other heirs and family members to tackle the job over a couple of weekends. You can hire a professional estate sale company to manage and promote an estate sale or attempt to sell items individually with a garage sale and use of online platforms, such as Facebook Marketplace, Craigslist, and OfferUp.
Though decluttering a deceased loved one’s home is a difficult task, it’s essential for securing a swift and successful sale. Our research indicates that decluttering costs on average $486 yet adds $2,584 to the home’s value at resale — that’s 432% of costs recouped.
9. Spruce up the property, but don’t renovate
Let’s say you’ve inherited a home dressed in 1970s shag carpet and popcorn ceilings. You’ll want to focus on light, cosmetic upgrades rather than full-blown room renovations. Ask your real estate agent what upgrades they recommend to help increase the property’s value and marketability.
“When you walk into a house and nobody’s taken anything out of it, and it’s just full of stuff, people just walk out the door,” Hamel says. “With a mere $2,000, we can turn the property around, get it cleaned up, steam cleaning, painting, taking the time to appreciate the asset and making sure that the family benefits from the sale as much possible.”
Here are some examples of easy, high-impact projects that can help you sell your inherited house faster:
Boost curb appeal with a professionally groomed lawn, new mulch, and a fresh coat of paint on the front door.
Replace aged carpet and linoleum with vinyl wood flooring.
Remove window valances, faux plants, furniture covers, and other dated details.
Paint the walls in primary shared living areas a light, neutral color like Agreeable Gray or Accessible Beige by Sherwin-Williams.
Source: (Oleg Magni / Pexels)10. See if any home sale tax exclusions apply
Remember, you’ll need to report proceeds from the sale of your inherited home as taxable income. Since the tax implications of selling an inherited property vary from state to state, you likely want to enlist the help of an attorney. Report the sale on Schedule D (Form 1040 or 1040-SR) and Form 8949.
Typically, you will not qualify for the home sale tax exclusion if you plan a quick sale because you will need to have lived in it for at least two of the past five years to be eligible. However, you may be eligible to take advantage of the stepped-up tax basis. In short, this means you won’t be responsible for an enormous capital gains tax if the inherited home appreciated substantially over the course of the previous ownership.
Header Image Source: (rSnapshotPhotos / Shutterstock)
#QuickTips&Tricks #SellingAdvice
The thought of inheriting a house always seemed like an exciting prospect — until this hypothetical became your reality. Maybe the house you inherited stirs unpleasant memories. Or perhaps you love the house, but you can’t afford to pay the outstanding mortgage. Whatever the reason, you want to sell that house you inherited ASAP.
The process of selling an inherited home is complex, including an array of financial, legal, and market ramifications. We spoke with probate attorneys and a top-performing real estate agent to bring you 10 essential steps for selling an inherited house.
Source: (Slidebean / Unsplash)1. Know where the mortgage stands
As the new owner of the house, you must fully understand the status of the mortgage. Run a title search to surface liens or judgments attached to the property, such as unpaid taxes, a home equity line of credit, or a reverse mortgage.
Lenders expect you to pay the monthly mortgage payments on time no matter what. “If the mortgage holder was behind on mortgage payments, it is imperative to make the account current as soon as possible,” explains Somita Basu, an estate planning and probate attorney based in the San Francisco Bay Area.
Reach out to the mortgage company and any owed creditors as soon as you have the appropriate documents that show you are in charge of the estate or trust. “Time is of the essence where mortgage issues are concerned,” Basu comments.
2. Anticipate your ownership timeline
Whether you’ve inherited the house via probate inheritance, transfer on death deed (also known as a beneficiary deed), or living trust impacts the ownership timeline.
You’ll take ownership the fastest if you’ve inherited the property through a living trust or life estate deed, according to Justin A. Meyer, an attorney whose decade-long practice includes probate, real estate, and title. “Because no court approval is required, you can sell the property immediately or at any time,” he comments.
Probate inheritance, on the other hand, is more complicated. “Probate inheritance will take as long as it takes,” Meyer says. “That’s an unsatisfying answer, but remember that it’s a judicial process in most states, and it can take anywhere from a week to six months.”
Basu agrees with this sentiment: “Beneficiary deeds pass title to the named beneficiary upon a filing of a preliminary change of ownership form within 150 days of the date of death of the original owner,” she explains. “Note that there are several limitations on these types of deeds, so it’s best to check with your attorney to make sure the beneficiary deed is valid and has been recorded.”
For a rough timeline, ask your probate attorney and estate administrator about when the probate process is likely to conclude.
3. Coordinate with all heirs to nominate a personal representative
Before you initiate selling the house you’ve inherited, you’ll need to identify all of the heirs and find out who is the named executor or personal representative. Only the executor or personal representative is legally authorized to make decisions about the home sale.
If the deceased’s will does not appoint an executor, then all heirs must agree to nominate someone as the personal representative. Typically this is the one person in the family most emotionally and practically prepared to handle the responsibility.
“A judge wants somebody who’s going to follow his or her role, then follow the letter of the law for the accounting and the paperwork and the rightful distribution of the funds from the estate,” explains Melissa Harmel, a top-selling agent and probate specialist based in Anchorage, AK.
In Harmel’s experience, the deceased homeowner only names a personal representative about 25% of the time; that means 75% of the time, her clients must nominate a personal representative before selling the inherited property.
4. Open an estate account to manage shared assets
The personal representative should open a bank account in the name of the deceased person’s estate to temporarily hold the person’s assets, including the proceeds from the home sale and any ongoing income. In agreement with the other heirs, the personal representative uses the estate account to cover the deceased’s financial obligations (e.g., mortgage payments, property taxes, car payments, etc.) and probate-related expenses.
Once you’ve paid all debt on the estate, the personal representative will distribute the remaining funds to heirs. You’ll need to file a final accounting of the estate that includes receipts or other documentation of all payments and disbursements with your probate court before closing the account.
Source: (Karolina Grabowska / Pexels)5. Consider selling the inherited house for cash
Selling an inherited home on the market requires significant time and labor (think staging, marketing, and negotiating). And until the property sells, heirs are on the hook for the monthly mortgage payments, property taxes, and utility bills until the property sells.
If your top priority is an ultra-fast sale, consider selling the inherited house immediately to a cash buyer instead. While you typically net less money selling for cash, the process is usually faster, easier, and less stressful than selling a house on the market — a big plus if you’re feeling overwhelmed by the home sale process.
See what a cash buyer would offer for your home with HomeLight’s Simple Sale. We’ll connect you with offers from our network of pre-approved cash buyers. To give you a clear view of your options, we’ll also show you a side-by-side comparison of an estimate of how much you could sell the home for on the market with a top agent.
6. Partner with an agent who does probate
If you prefer to sell the house for the highest price possible, hire a top real estate agent with probate home sale experience to list your home on the market.
“My goal as a probate specialist real estate agent is to net the family as much equity as possible,” Hamel says.
To find experienced agents near you, plug property details into HomeLight’s Agent Finder. We’ll match you with the three best agents for your home sale based on local transaction data and client reviews. Interview at least three agents over the phone to compare their probate experience, marketing strategies, and communication style.
You want an agent with an appropriate bedside manner at a time that can be quite emotional. “I want the family to feel like I have respectfully treated the property,” Hamel says.
“I actually love those properties — they’re my favorite. They have stories, and it’s all about presenting them to the world in the best light possible. I like doing that.”
7. Enlist the help of a mediator if needed
In a multiple heir situation, there’s plenty of opportunity for drama. If your family is struggling to reach an agreement over the home sale, hire a mediator to help you work through the obstacles together.
“If there are beneficiaries who do not agree on the sale of the house or other issues regarding the house — renovations, which Realtor, removing tenants — then a mediator can help resolve these issues outside of a formal court process,” Basu says. “This can decrease the time spent on resolution, as well as the cost.”
Meyer adds that most common for hiring a mediator is when one heir doesn’t want to sell — usually for sentimental reasons — or wants to hold out for more money. “A big issue is when one heir has unreasonable beliefs as to the value of the home,” he says. “Usually, you’ll need one if there is a dispute about what to do with the house. But luckily, I’ve never needed one yet.”
You can search online to find mediators in your area. Mediators may charge an hourly rate, a flat fee, or a percentage of the value of the estate assets.
Source: (Annie Spratt / Unsplash)8. Take an aggressive approach to decluttering before you sell
“Ninety percent of the time when I arrive at an inherited house, the family has already taken items that were personal to them, and now they don’t know what to do with the rest of it,” Hamel shares.
Create a decluttering plan with other heirs and family members to tackle the job over a couple of weekends. You can hire a professional estate sale company to manage and promote an estate sale or attempt to sell items individually with a garage sale and use of online platforms, such as Facebook Marketplace, Craigslist, and OfferUp.
Though decluttering a deceased loved one’s home is a difficult task, it’s essential for securing a swift and successful sale. Our research indicates that decluttering costs on average $486 yet adds $2,584 to the home’s value at resale — that’s 432% of costs recouped.
9. Spruce up the property, but don’t renovate
Let’s say you’ve inherited a home dressed in 1970s shag carpet and popcorn ceilings. You’ll want to focus on light, cosmetic upgrades rather than full-blown room renovations. Ask your real estate agent what upgrades they recommend to help increase the property’s value and marketability.
“When you walk into a house and nobody’s taken anything out of it, and it’s just full of stuff, people just walk out the door,” Hamel says. “With a mere $2,000, we can turn the property around, get it cleaned up, steam cleaning, painting, taking the time to appreciate the asset and making sure that the family benefits from the sale as much possible.”
Here are some examples of easy, high-impact projects that can help you sell your inherited house faster:
Boost curb appeal with a professionally groomed lawn, new mulch, and a fresh coat of paint on the front door.
Replace aged carpet and linoleum with vinyl wood flooring.
Remove window valances, faux plants, furniture covers, and other dated details.
Paint the walls in primary shared living areas a light, neutral color like Agreeable Gray or Accessible Beige by Sherwin-Williams.
Source: (Oleg Magni / Pexels)10. See if any home sale tax exclusions apply
Remember, you’ll need to report proceeds from the sale of your inherited home as taxable income. Since the tax implications of selling an inherited property vary from state to state, you likely want to enlist the help of an attorney. Report the sale on Schedule D (Form 1040 or 1040-SR) and Form 8949.
Typically, you will not qualify for the home sale tax exclusion if you plan a quick sale because you will need to have lived in it for at least two of the past five years to be eligible. However, you may be eligible to take advantage of the stepped-up tax basis. In short, this means you won’t be responsible for an enormous capital gains tax if the inherited home appreciated substantially over the course of the previous ownership.
Header Image Source: (rSnapshotPhotos / Shutterstock)
#QuickTips&Tricks #SellingAdvice
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