If you've inherited a property and you’re thinking about selling it, you might have more options than you realize. Read this blog post to find out the 3 financial options you can pursue when selling an inherited property…
When a loved one passes and leaves you with a property, it might be a meaningful gesture but, the truth is, an inherited property isn’t always convenient to own. There are additional bills, expense, maintenance, upkeep, and stress; it can be time-consuming.
So if you are thinking of selling, you might first be thinking about selling with the help of a real estate agent. However, you might be surprised to learn that you have options that you may want to consider as well. In fact, did you know you have 3 financial options you can pursue when selling an inherited property?
First, Let's Talk About Selling Through An Agent...
There’s nothing wrong with selling through a real estate agent but you should be aware that an agent may want you fix up the inherited property first, then there are closing fees and the agents commission you’ll have to pay afterward. And, if the property does need repairs this method may take longer, so some people don't want to carry the house and its maintenance for a long time.
So, what are the other options?
Second, Let's Look At The Other Options...
Option #1. Refinance
One option, which is a type of selling, is to refinance the property with a bank and use that money for other things. Although you’ll still own the house, this is a financial option that some people might consider if they are selling in order to get the money.
You can still use the house, or rent it out, and you’ll need to pay back the loan to the bank, but it’s one option to consider if the market is slow or you are waiting for the right timing.
Option #2. Owner finance
Another option is to sell the house over the long-term by selling to a person that cannot get a conventional loan. There area various reasons a person cannot get a loan and it may not be due to poor credit. These are people who want to own a house – so they’ll pay the payments and over time they will own the house. Some of the reasons that people cannot get a loan is not being on their job for 2 years. Someone who has changed careers has to be in that career for 2 years to get a mortgage loan.
Self Employed persons. Some who are self employed will take every deduction that they legally can. This allows their taxes to be lower and their income will be lower than one who is an employee. Their cash flow can be great but on paper their income looks low. Business people can write off their vehicles, their office equipment, any business equipment like cell phones, machinery, etc. While we as regular people pay those things from our personal account after taxes, self employed people pay those and they become a business expense which reduces "their income."
If this type of sale is an option the buyer would have to meet your criteria for an owner finance. It normally requires a nice down payment and there are options how to handle their payment of the loan. You can do the owner finance note with a balloon payment in a certain number of years allowing them to get their credit organized and get another loan or you carry the note until it is paid off. That can allow you as the "lender" to make a bit of cash flow while the buyer is living in the home as in a traditional mortgage. The buyer will have the expense of maintaining the home.
Option #3. Sell Fast For Cash
One little-known option that owners of inherited properties might enjoy is the ability to sell the house fast for cash.
Instead of selling through an agent (and hoping they can find a buyer, which can take months), you can work with a house-buying company and they’ll often buy your house as-is for cash, usually in as little as a few days. It’s fast, simple, and doesn't require any work. We maintain a list of those investors who want to buy for cash.
Cash always works but be aware that cash normally means a lower sales price unless you have a real gem. Investors can pay cash but there is a profit motive behind their purchase and they figure the amount they will pay based upon a formula that produces a profit. There is no emotion involved as they do not plan on living in the home. They are strictly looking at this purchase as a business decision. Normally an investor paying cash will pay the closing costs which actually makes the deal a little better as a lower priced offer as the seller does not have that expense.
Will it work or not? The investors are taking the risk of repairing the house and reselling it so they expect to do that at a discounted price. Because that discounted price plus their cost to rehab and pay the expenses while it is being rehabbed is part of their calculation of the purchase price they will offer.
To go from
means an investor will hve to invest time and money into the property after they buy.
There you have it! 3 financial options you can pursue when selling an inherited property!