Many people choose to leave their real estate property in their estate to their children or another family member. From here, you can decide what to do with it. Rent it, live in it, or sell the home for cash.
Before you can do anything, however, you need to understand the process of selling an inherited home.
Here’s what you need to know if you want to sell the inherited home fast (and for cash).
1. Wait for Probate
If the home is part of an estate, you can’t do anything with it until it goes through probate.
If your family member’s estate was worth tens or only a few hundreds of thousands of dollars, you may qualify for summary probate. Summary probate means you don’t need to use a lawyer and you can settle it quickly.
However, if your estate goes through the full probate process, you need to wait for the process to come to an end.
1a. Get Permission from the Other Heirs (if Applicable)
If you received the house in your name alone, then the decision to sell is entirely up to you once probate concludes. You can move on to step two. However, if two or more people share the property, things become more complicated.
You need the permission of all beneficiaries who have a share of the property to sell. To prepare for sale, the executor of the estate must then petition the court.
If everyone is on the same page, then this process is straightforward. However, when one beneficiary doesn’t want to sell, you may need to negotiate or even buy them out. There are exceptions made by the court when you need to sell the property to settle estate debts, and the sale is not for personal profit.
Is the process too complicated? You may need a probate attorney to help your family navigate the process.
2. Get Ready to Sell
You have two options when you have the court’s permission to sell. Go the traditional route on the wider market or sell the house for cash.
If you don’t have a mortgage on the property, your options are flexible. If you do have a mortgage, then you need to skip to 2a.
Selling the house for cash means you can skip the realtor fees, the mortgage process, and all the inspections that come with it. It also usually means that you don’t need to sink money into repairs, cleaning, and upgrades. Although a cash offer is generally lower than the traditional market price, it is a lifesaver for those who don’t have the money to sink into the cost of selling a house they inherited.
2a. Selling an Inherited Property with a Mortgage
In some cases, inheriting a property also means inheriting the debt attached to it.
Before you sell, you need to find out what you need to pay off and thus how much you need to sell for. Use a home sale proceeds calculator to do the math quickly.
Be wary of other outstanding related debts, like property taxes. You also want to cover those in the sale price.
This can become even more complicated when multiple people inherited the property.
3. Understand the Tax Implications
When you inherit the house, you inherit the home’s value on the day the original owner died. You don’t owe taxes on that number.
However, things change when you sell, particularly if you get more than the house was worth.
Unless you lived in the home for at least two of the past five years, you must pay tax on any money you get from the sale over the home’s value in the will. For example, if the house was worth $350,000 and you sell it for $375,000, then you pay tax on $25,000.
This may impact how and when you choose to sell. A real estate agent will want to get the best purchase price, and competition can drive up the amount you receive after the sale, which will increase your tax bill.
If you do need to go the real estate route, consider making it your primary residence for several years to save money on the sales costs.
If you find a cash buyer who buys at the home’s value or just below, then you don’t have to worry about dividing the gain. You’re free to declare your income as usual.
4. Clean the Property and Hold an Estate Sale
A cash sale means your obligations before the sale are limited. However, you still need to prepare the property for the transaction.
At a minimum, you need to clean out all personal belongings from the house. Doing so can take a significant amount of time, particularly when it’s a family home. So, be prepared to do this well in advance of the sale.
A cash offer for a home usually comes fast, so be ready for the speedy timeline.
You may then choose to hold an estate sale to get rid of more valuable belongings. You can use the estate sale route or hold a yard sale, depending on what it is you have to move.
Remember, you can’t sell anything in the house – or the house itself – until the estate goes through probate.
Those who use a realtor and have house viewings will need to ensure everything is out of the house as soon as they’re ready to list. That means you need to have everything ready months before you make the sale.
Selling Your Home for Cash Makes Sense
If you inherited a home and you don’t intend to live there and can’t sink the money to turn it into an income property, then selling is the next best option.
Selling an inherited home for cash is possible. In many ways, it also solves many of your problems because you can avoid expensive upgrades and realtor commissions, and speed up the timeline.
Do you need to sell your house fast? Get in touch to learn how you can get a cash offer in as little as 24 hours.