Sell An Inherited House in San Antonio, TX
Inheriting a house can be a fantastic gift or a stressful and time-consuming ordeal. This can be a particularly challenging time for many reasons including having to make difficult financial and emotional decisions of what to do with the home.
There are steps that you will need to take and different options that you will have to complete the sales process. Selling an inherited house can be relatively simple or can become frustrating and expensive depending on which path you choose.
Educating yourself and seeking out the right guidance when you need to can help you avoid many of the pitfalls that sellers face when selling an inherited property.
The following article will help you understand the process of selling an inherited house and the different options that are available to you.
Inherited a House – What To Do First?
- Make sure the mortgage is paid. This may sound obvious, but if the person who left you a property also had a mortgage (unless it had no mortgage and was paid off, which is great!), you have to pay it (assuming you want to keep the property). Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. If you don’t qualify for a new loan, this may limit your options with the property.
- Check on the property taxes. Many times the property taxes can be deferred while the homeowner is living in the property, but they will continue to add up and are due when the homeowner sells or is no longer living in the property. This is more common with properties that do not have a mortgage but the taxes are still owed.
- Update the property insurance. Contact the insurance company and make the necessary changes to the insurance policy to make sure the property is protected while you work through the selling process.
Can You Sell The Inherited House?
A huge part of selling an inherited property is determining which people are authorized to sell the home. Is there a will, is the property in a trust, who are all the legal heirs?
- If there is a will, then the will most likely describe what is to be done with the property after the owner has passed on. The will also names an executor of the estate and the executor has the authority to act to distribute the estate’s assets. In order for the will and the executor to have this power, the will must go through probate. It is possible to sell a house without probate, and each state has its own set of rules for this process.
- If the property is held a trust, then the trustee must transfer or sell the property. The trustee of the trust that holds the property can either sell the property and the proceeds become assets of the trust, or the trustee can transfer the property to your name so that you can sell the property.
- If there is no will or trust, then the ownership of the property is split amongst the legal heirs. Determining who is and is not considered a legal heir to the property can be a quick or painfully long and difficult process. Working with a title company that has experience with inherited properties can often help you uncover who is a legal heir and how the proceeds must be split.
Almost any house can be sold if you work with the right people and follow the correct process!
Ways to Sell an Inherited House
There are two main ways that people typically sell inherited houses. They will choose to either list the house with a realtor or sell the house to a local cash home buyer. Many factors can affect which path is better for you including your timeline, condition of the home, and emotional attachment to the property.
Selling with a Realtor
Hiring a realtor to sell your property is a very common practice but may not always be the best decision when you are selling an inherited property.
Realtors charge a sales commission for selling your house and you will also have to pay additional closing costs for things such as title fees, document fees, attorney fees, and escrow fees.
Before a realtor will list your home, they will often ask you to make repairs in order to improve the chances of the house selling. Depending on the condition of the house, these repairs can cost thousands of dollars.
A realtor will need to show the property to lots of people to try to get an offer and if an offer is received, the new buyer will want to schedule inspections and appraisals. If all these things go well, then the closing can be scheduled.
Sell to a Local Cash Home Buyer
Selling to a local cash buyer with experience purchasing inherited properties is another option that you should consider.
A cash home buyer will not charge you any commissions or fees because they are the ones purchasing the home and not trying to find someone else to buy it.
They will pay for all the closing costs associated with the sale of the property. They can buy the property in As-Is condition and will not need any inspections or appraisals of the property.
These things allow a cash buyer to purchase and close on the property much faster than listing the property with a realtor.
Make sure you compare your options when selling an inherited house and decide what is best for you at this time based on your timeline, the condition of the property, and the amount of time you have to dedicate to this process.
TIP: Not all Cash Buyers are the same. Make sure that you are working with an experienced investor who has purchased inherited properties, knows the probate process, and has the resources and capital to quickly purchase the home.
You will need to evaluate the tax consequences when selling an inherited house. Estate tax, county taxes, and capital gains tax can all be part of selling an inherited property. We would always recommend that you contact a qualified tax professional to discuss these things, but here are some of the basics.
- Stepped-up Basis – Inherited properties are eligible for a stepped-up tax basis. This means that you are only responsible for taxes for the amount over the value of the property on the day that you inherit it.
- Estate Tax – Estate tax is a tax placed on estates when their value exceeds a certain limit. There is a federal estate tax and several states have their own estate tax. These estate taxes generally start when the estate is valued in the millions and do not affect most sellers of inherited properties.
- Report to the IRS – The IRS requires those who sell an inherited property to report the proceeds as taxable income. The IRS requires that you report the sale even if no taxes are owed.
Pricing Your Inherited House and the Sales Process
Pricing your inherited home will greatly affect whether or not you are able to sell the property. You will want to consider factors such as and debts or liens on the property, the condition of the property, and the condition of the current real estate market.
Don’t Price the Property Too High – You want to set a realistic asking price. Pricing the property too high will drive away potential buyers. Choose a reasonable asking price but leave yourself a little bit of room for negotiation.
Don’t Give Too Many Concessions – Buyers will often want a lower sales price, help with closing costs, and money for repairs to the property. If you have priced the property well, you shouldn’t have to give in to all their concessions.
Once an offer has been made and accepted, the title and closing process can begin. This process can be long or short depending on how you have inherited the property and how you have chosen to sell the property. Having an experienced professional who can guide you through this process can be extremely helpful.
Probate – If you inherited the property through a will then the property will need to complete the probate process before you can sell the home. Or you can see if you have the option to sell the property without completing the probate process.
Title – The title company will research any liens or judgments against the property. They will assist in researching any additional heirs to the property and they will also communicate with the document preparation attorneys to produce the sales paperwork.
Selling an inherited house can be an emotionally and financially stressful time. No matter how carefully you execute your plan, you are bound to run into some bumps in the road.
Having an expert in selling inherited houses to help you through the process can help relieve the stress and anxiety and make the process as smooth as possible.
Hopefully, this article has given you some information to make you better prepared for the process and if there is anything that we can do to help, please do not hesitate to contact us with any questions.