Selling inherited property can be a precarious mourning and money journey. The sudden loss of your beloved aunt may have brought on paralyzing grief first. Compound this with the dawning realization you now have to sell her home, and the pain multiplies. Every city or state has its own way of divvying up the dearly departed, so live in Washington long enough and you’ll need to learn to love the probate system.
The first step in selling an inherited house is to determine whether the property is subject to probate. Depending on the type of process, heirs may have different responsibilities such as filing the will with the court and notifying any heirs, beneficiaries, and debtors.
Do you have the choice to sell the house as-is, so let the next owners be damned? Or are you mandated to spend $15,000 upgrading the half-century-old kitchen or fixing the stubborn retaining wall so you net the highest profit when the house does sell?
Be careful if the rest of the family disagrees on the best way to sell your inherited property. Understand the steps to either take when selling an inherited house, below.
Selling to Cash Home Buyers
Cash home buyers are people or companies that purchase a property without needing to obtain financing to do so. They have the cash on hand to make the purchase, which makes the home-selling process much faster. After all, there’s no need to wait for mortgage approval. This way, they can purchase properties in a few days, sometimes weeks.
This solves a lot of problems for someone selling an inherited house! The longer the home-selling process is prolonged, the longer the search for a solution is. Plus, it doesn’t remove you from the situation or eliminate the house from your life.
Your life is also not being turned upside down because there are no contingencies. If you accept their offer to purchase your property, you’re all set!
So where can you find reputable cash home buyers in Washington? Likely, you will find them in your local area. Begin with an easy Google search and look at online reviews. They are probably working with local real estate agents as well, so you can call a few agents to see what they have to say about the company.
You really do need to do your homework. Make sure to ask for verification of funds. You want them to prove that they can purchase your house!
Legal Considerations and Estate Planning
There are several legal considerations you must know about before you even think about listing an inherited house for sale.
The first is that you will need necessary documentation in hand, including the death certificate of the deceased family member; the will or trust documents, if there are any; and documentation of ownership. If the property was held in a trust, you will need a letter, statement, or another document issued by the trust that proves you or someone else has the authority to sell the house. An appraisal may be necessary to establish the “fair market value” that will help you price the home and establish its tax basis.
One inevitable thing that everyone must do is plan their estates. As unpalatable as that idea sounds, we do it not just for ourselves but for our loved ones as well. If you’ve ever been party to a real estate sale, especially those where there are multiple siblings and other family members, you will know that estate planning plays a critical role in the disposition of the home.
It is, therefore, an appropriate venue to guide everyone about how the formal listing of beneficiaries on financial or insurance accounts should read. For instance, “…Ms. Brenda Ann Smith…” or just “…Brenda Smith…” on your insurance account means a whole lot of legal difference.
When and if the time comes, that “…legalese…” could mean that you are “…in…” or “…out…” of a mortgage or title transaction or just about be the one thing that could put a mortgage loan application or closing to a screeching halt. Be very careful how names are represented on legal documents. Consult a “…competent real estate attorney…” before you put your signature on documents. Doing so will simplify many of the issues we have on this page.
Then, there are the usual tax implications that we all must be mindful of. Just like any other property sale, only more onerous because estate properties are one of the few transactions where the IRS “…benefits…” the heirs, to begin with. But, of course, the IRS also built so many tax trap pitfalls that it’s just enough to make your head spin. Debates, arguments, families feuding, sibling rivalries…
Understanding the Probate Process
The legal process for administering a deceased person’s estate and distributing their assets as prescribed in the person’s will, or by state law if there is no will, is known as probate. If you’ve inherited property, this process is important because it provides an organized way of settling the deceased person’s debts, paying the required taxes, and putting the assets they owned, including real estate, in the rightful new owners’ hands. And, without probate, there’s an excellent chance of having an argument about the deceased’s wealth that could lead to legal action and delays.
The process [PDF] usually begins by filing a petition with the deceased’s local probate court. In Washington, the will also is filed at that time to have it accepted as authentic by the court. A personal representative is appointed at that time, and this person then begins to inventory the deceased’s assets. This inventory, which is also filed with the court, should be fairly complete because it may take creditors four months or more to respond to the personal representative’s call for any claims they may have against the estate (debts that are owed to them). These calls, which most often do not result in any filed claims, are mailed to all known creditors. They are also published in local newspapers (although it’s rare to see them) to alert any “unknown” creditors to file their claims or risk the possibility that the estate may be “insolvent” (that is, have nothing left for them to attach). The inventory should reflect the extent of the person’s assets and how complex the estate might be. As a general rule, a larger estate is going to take longer to probate.
Assessing the Inherited Property
When evaluating the condition and value of an inherited house, start with a professional appraisal. An appraiser will give you an unbiased opinion of the property’s market value, based on factors such as location, size, and market. This step is critical not just for financial implications of the inheritance, but also for decisions regarding potential repairs or renovations.
Following the appraisal, thoroughly inspect the property. This will help you learn what repairs you may need to make before putting the house on the market to ensure you receive the most out of the property. There may be outdated plumbing or electrical systems that require attention, or structural issues that can also reduce overall value. By fixing these potential issues, you make the house much more attractive to potential buyers and increase its overall value on the market.
Also, consider any aesthetic changes the home may need. A fresh coat of paint, updated landscaping, or minor kitchen and bathroom renovations (especially those that haven’t been updated in a while) can completely transform the house and attract new buyers. You will likely get a good return on investment with these repairs, and this could make the difference in a competitive market.
The ability to examine the property and evaluate these conditions could mean the difference between selling an inherited house in multiple months versus one.
Options for Selling an Inherited House
Selling Privately.
Being one of the main ways to sell an inherited house, when selling privately, you can avoid the commission realtors take by selling directly to a buyer. This can either take the controversial classified-ad/post-on-Zillow-and-see-what-happens route or the technique of selling directly to someone you know. With this method, you’ll be in charge of everything, such as pricing the home, negotiating, marketing, and scheduling showings. Not an ideal solution for people who are busy or do not have any knowledge of the real estate sales process.
Using a Realtor.
The old-fashioned way of selling a house with a good ol’ fashioned realtor is still alive and well. Even after the realtor cut, as long as you are selling a house that isn’t in a terrible condition, you’ll more than likely profit from the exchange. The key is that realtors will use their resources to help you. Anything from taking good pictures of your house; setting the price point with their fancy algorithms, databases, and home value prediction tools; and marketing your property listing can all be done by a good realtor.
Selling For Cash.
The route of selling to a cash home buyer is becoming a more and more favored method of being taken. You guessed it, because it’s quick-easy cash. With the cash buyer route, they will assume similar programs that buy houses, in their as-is condition. That being said, no showings of the house will be needed, so no need to put any more dollars into the house you were given, nor will you need to spend extra time getting the house ready for visitors.
Selling Privately
Putting an inherited house on the market without using a realtor is a less complicated process than you might think.
- Get a clean title on the house. You may have to settle up for any liens, back taxes, or other fees that the property might have.
- Fix it up. There may be several things wrong with the home that we’ll need to take care of. By getting the house into better condition, we can sell it for more money.
- Price it right. We’ll look at similar properties in the area to your house that have sold on the open market and see what price they’ve been able to sell for.
- Market the property. Now it’s time to get this house out on the market! We can do this by putting your house online for other people to see. We’re lucky enough to live in a day and age when we can reach more people online than in the physical space. And the best part is that online real estate marketplaces are more populated than most storefronts along main street. You can utilize the power of the internet by putting your house up on social media and websites like Zillow.com to get much-needed eyeballs on your property.
Selling Through a Realtor
When it comes to sell inherited property, a realtor can really earn their commission. They know the local market and can help you determine the best price for your property. They can also give you an idea of any repairs or upgrades you should make before trying to sell that will increase the price or decrease the sell time.
The right realtor will have experience in selling houses people are looking to get rid of. That means they’re familiar with the challenges and have likely worked with multiple heirs. Word-of-mouth and online reviews will tell you what you need to know.
They will conduct marketing, including open houses and showings, and they’ll draft a purchase agreement when you have reached a verbal agreement with a buyer.
Meanwhile, you can split your time between talking to other potential buyers and, as this probably isn’t the only property you are selling (see the next section), pursuing other leads.
Selling an inherited house has several key steps:
Understanding the probate process: When someone passes away, their estate goes through a probate process. This is a legal proceeding used to settle a deceased person’s estate. The probate process could be simple or complex, depending on whether the decease left a written will. In cases where there are written wills, the designated executor in the will is responsible for managing the estate. In cases where there is no written will, the court will appoint an administrator to handle the estate. This is one of the first steps because it determines who is able to portray the house of the deceased. This affects the legal logistics of selling the house.
Identifying all the options available: You can sell the house as-is without having to do any repairs to it. Another option you have is to make repairs to the house to help raise the value of the house. Some people also choose to sell their house to an investor. This is because it’s common for investors to make all-cash offers, which means that an investor can close on a house almost immediately. There’s no right or wrong answer to which option you should choose. It ultimately boils down to what you think will give you the highest return, should you decide to sell.
Real estate professional or an attorney: Yes, it may be a good idea to definitely consult with an attorney, who could potentially advise you on everything written in this article. It’s also a good idea to speak with a licensed real estate professional to understand the ins and outs of selling your house.