Inheriting a home comes with both some perks and some downsides. Based on the location of the home and your individual situation, you likely have three options for what you can do with that home: move into it, rent it out, or sell it. Selling an inherited home can be a very profitable choice, provided you know how to navigate the selling process. Here’s what you need to know to avoid the pitfalls often associated with selling inherited property.
Variables of Property Interitance
Selling an inherited property is a little different from selling your primary residence or even a secondary home. First things first, take some time to learn a little more about the property you’ll be working with. Here are some things you might want to find out.
How much is the home worth?
Online evaluators might be able to give you a ballpark idea, but the best way to know for sure is to ask an agent.
How much is left on the mortgage?
If the mortgage isn’t completely paid off, you’ll want to find out how much is still owed on the property, as well as whether there are any other debts, like property taxes or other bills.
Is anyone else inheriting the property?
Often, property is inherited by multiple people, which might be the case if you have siblings or cousins. In this case, you’ll need to discuss and agree on many different aspects of the sale.
Possible Tax Implications
When selling property that’s been inherited, you might be subject to some taxes or tax breaks. Here’s what you need to know.
There’s no tax exclusion
On the sale of a primary residence, you can exclude up to $250,000, or $500,000 for a married couple, on the proceeds of your sale. This doesn’t apply when selling an inherited property.
You might be able to use a stepped-up basis
Many worry about owing capital gains tax on a property that’s been in the hands of the previous owner for a long time—and has increased a lot in value. However, you’ll actually only pay for any gains in value starting from the date of death of the previous owner—in other words, from the start of your ownership.
Before You Sell
There are a few more steps to take before you can sell the home. You’ll need to make sure everything looks good from a legal perspective, decide who will be in charge of the transaction, if there are multiple inheritors, and find a real estate agent well-versed in selling estates.
Wait for probate
Before you can sell a home, it must go through probate (the official proving of the will) before you’re legally allowed to sell it.
Determine who will be responsible
In the case of a shared inheritance, you should reach an agreement on who will be the main point of contact, and ultimate decision-maker, for some of the more detailed aspects of the transaction.
Find an experienced agent
One of the most important things you can do is to find an agent experienced in working with estate sales. Because this type of sale is different, you need something different from your average agent.
Preparation for the Sale
Any time you sell a home, inherited or otherwise, it’s crucial to get it looking as good as possible. This might take a little extra work in the case of an estate sale. Here’s what you might need to do.
Clear out personal belongings
This can be an especially emotionally challenging aspect of selling inherited property, but it’s definitely necessary to find a place for all the furniture and personal items within the home, as the new buyer probably won’t want them.
Hire an inspector
Inherited homes, particularly those held by elderly owners, may be in need of extensive repairs and/or modern updates. Don’t wait for the buyer to find out about hidden problems in their inspection; get ahead of potentially sale-breaking issues by rooting them out with a pre-listing inspection.
Stage the home
Once the home is completely empty, work with your Realtor or a professional staging company to transform the property into a model home. This may require you to invest in some cheap furniture, or you may be able to rent or borrow some items.
Negotiations & Offers
Once you list the home and start seeing some buyer interest, you should hopefully start to get some offers, provided the home is priced correctly. Here’s what to keep in mind when it comes to negotiations.
Know the value of the home
If you did your research, you hopefully know what the property is worth. Buyers who find out yours is an estate sale might try to get a good deal with a lowball offer. In this case, don’t simply accept the offer; counter with a number closer to your asking price.
Don’t accept the first offer
You might be eager to close the sale and move on, but a little patience might come with some big rewards. Accepting the first offer you receive, particularly if it’s a lowball offer, could end up costing you quite a bit of profit.
Need Help Selling an Inherited Property?
If you’re looking for an agent who can help navigate the complexities of an estate sale, Ann Milton Realty is here for you. We know estate sales are often far from easy, so we want to help you out by taking some of the work off your plate. Let us know your story, and we’ll get in touch with all the ways we can help you out. Because you should never have to worry about selling a home alone.