How to Sell Inherited Property
Inheriting valuable property can be a blessing, especially if you plan to live in the home. But even if you have no intention of taking up residence in a house you recently inherited, your inheritance can still be a blessing in the form of a sizable financial windfall.
However, converting an inherited house into cash by selling it can be emotional, complicated, and often, lengthy. There are several steps involved in the process of selling an inherited house, which you can learn all about below.
Determine the Home’s Mortgage Status
As the up-and-coming owner of the house, you must figure out whether there’s still an active mortgage on the property. You’ll also want to determine if there are any outstanding tax liens, a reverse mortgage, or a home equity line of credit.
Regardless of the fact that the property is passing to a new owner, lenders expect the mortgage to be paid on time each month. If the previous mortgage holder was behind on payments, it’s crucial that you bring the account current as promptly as possible. Otherwise, the home could move into foreclosure, and you could potentially lose the opportunity to sell the house.
Know Your Ownership Timeline
How did you inherit the property? Through probate? Via a living trust? Through a transfer on a death deed? You’ll need to know this because the manner in which you inherit the property determines when you’ll actually become the legal owner of it. And your ownership status ultimately determines when you can sell the house.
If you inherited the home via transfer on a death deed (also referred to as a beneficiary deed) or a living trust, you’ll take ownership of the property quickly since no court approval is required. But if you inherited the house through probate, you could wait a week to six months to become the legal owner.
Determine if There Are Other Heirs or an Executor
Even if you’re the only named heir to the property, that doesn’t necessarily mean you’re authorized to make decisions about selling it. The executor (personal representative) of the will is the individual who has that authority, so you must determine who that person is.
The executor or administrator of the will is responsible for notifying creditors of the person(s) who passed down the house. If the deceased person(s) had debts that must be paid, some of the proceeds from the sale of the home may need to go toward those outstanding debts.
If there is no named executor, and there are multiple heirs to the property, decision-making authority rests with all named heirs. When this is the case, the sale of an inherited property can and frequently does result in lengthy legal battles. If you’re in this type of situation, it may be in your best interest to hire a mediator who can help all the named heirs come to an agreement.
Establish an Estate Account
If you’re the personal representative, you’ll want to open a bank account in the name of the deceased individual’s estate, which you’ll use to manage shared assets. This account is where you’ll place the proceeds from the sale of the property and any other income. If you’re not the representative, that individual will handle the account opening for you.
The money in this account will be used to pay off the deceased’s mortgage (if applicable), property taxes, and any other outstanding debts. When those financial obligations have been handled, the remaining money will then be distributed to you and any other heirs.
Determine Your Tax Liability on the Inheritance
If you choose to sell the house fast, you likely won’t be eligible for the home sale tax exclusion because qualifying for the exclusion requires you to live in the home for two of the last five years. But that doesn’t necessarily mean you won’t qualify for any tax break on the sale of the home.
You may be able to take advantage of the stepped-up tax basis, which only requires you to pay capital gains tax on the profit you make over and above the fair market value of the home at the time of the previous owner’s death. If you qualify for this break, it can save you from a huge tax liability if the home appreciated significantly throughout the time the previous owner owned the house.
List the Home With a Realtor Who Specializes in Probate
If you’re looking to get the highest offer possible, you’ll want to hire a realtor who’s experienced in probate sales. But keep in mind that selling a house on the open market can take several weeks to several months, so if you want to sell your house fast, this may not be your best option.
What’s more, selling with a realtor inevitably involves substantial fees. Commissions, closing costs, title fees, etc. can strip you of tens of thousands of dollars you would otherwise earn on the sale.
Sell the Home for Cash
Another option for selling an inherited property is selling directly to a cash home buyer. And this option may be your best bet if you’d like to sell the house as quickly as possible. Cash buyers are willing to purchase properties regardless of their condition, and they typically offer fair market value for the home just as it stands.
When you sell to a buyer of this type, you don’t have to worry about paying commissions, making repairs to the property, cleaning, or preparing the home for sale. The process is quick and simple because we pay cash.
Sell Your House Fast With We Buy Salt Lake City Houses
Want to sell an inherited property quickly? Don’t hesitate to get in touch with our team at We Buy Salt Lake City Houses! We buy houses in any condition and can close on your sale within a matter of days. To learn more about how we buy houses and what we can offer you for your Salt Lake City area home, give us a call today at 801-758-5005 or contact us online to request a no-obligation offer!