How to Sell a House You Inherit
I am often asked how to sell a house you inherit. A few years ago a family member passed away and my husband and I had to work through this very situation. This blog will address a property left directly to your and or other family members.
Hopefully, the person who has passed away has left a will or placed a beneficiary deed on the property. (In Arizona, a property owner can identify the person they want to inherit the property upon their death. At the time of death, the property immediately passes to that individual without going through the probate process. The owner of the property can change the beneficiary deed at any time. They can sell or refinance the house without the permission of the named individual (s) on the beneficiary deed).
The executor of the will is responsible for distributing or selling the assets of the person who has passed away. An Executor will follow the directions in a will if there is one. If there is no will to be found, the executor should consult a real estate attorney to understand how probate works in Arizona.
#2 An Executor of the Estate
Once an executor has been identified, this person will work with the other beneficiaries to decide whether the house will be retained or sold. If the decision is made to sell the house, the first step is cleaning out the property. When deaths are unexpected, the heirs will likely find a house full of furniture and personal items.
Once the personal and family items are dispersed, the remaining house items must be attended to.
#3 Decision to Sell
Once the decision is made to sell the house, the executor will usually look for a way to sell the house contents. There are a few options to consider. Clothing in good repair can be donated to a number of places, such as homeless shelters, battered women’s shelters, Goodwill, etc. The furniture and decorating items ould also be donated.
#4 Estate Sale Companies
Another option may be to hire private companies that come in and hold an estate sale. These companies will price the items and have staff on hand for the sale. Estate sale companies charge a percentage of the proceeds for this work. However, this expertise ensures the house content is priced correctly. Also, these companies can also help identify collectible items or antiques. These items may bring more money if sold at specialty stores, perhaps bringing in more money.
#5 Determine If There Are Any Property Liens
The Executor will need to determine if there are any liens on the property.
The lien could be a home loan, a reverse mortgage loan, a tax lien, a homeowner association lien. Another lien type we see is a mechanic’s lien. A mechanic’s lien is placed on a property for work performed on the property but not paid for (remodeling or installation of a furnace or AC unit). Additionally, any liens would need to be satisfied before any proceeds go to the heir(s)
#6 What is Market Value
The representative of the estate should contact a real estate agent familiar with the area to proving information on recent comparable sales. It is key to understand the local pricing. Often, heirs out of the area who may think the property has a higher or lower value.
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#7 Who Will Maintain The Property
You need to consider how the property will be maintained before the sale is completed. Depending on where the inherited property is located, you may be hiring out this maintenance. As you are considering pricing, you will want to factor in upkeep on the property. Additionally, who will pay the utilities? Who will check on the property to make sure everything is safe and secure within. You will want to look at the need for landscaping or pool service. If you are in snowy areas, consider how the driveway will be plowed and how the steps or sidewalk to the house will be maintained.
Who will pay for these services while you are waiting for the sale? Can one or more of the heirs afford to carry this financial burden to pay these services monthly until the sale is complete?
#8 What is the Fastest Way to Sell The Property
Depending on the condition of the house, you may be able to sell the house quickly. Also, if the home is nicely updated, once the personal property has been removed, you could list the house. If there are condition issues, you will need to decide if you want to make reasonable repairs. You may want to do some repairs to the house, or sell quickly to investors. An investor will likely pay you the least amount of money, buying the house “as is”. The benefit to the seller is no repairs may be needed. If you are out of the area, this may be a big plus!
#9 Should You Get A Vacant Insurance Policy
Check with the insurance company to ensure they will ensure a vacant property. Insurance companies may treat a vacant house different an occupied property as there may be a more likely chance of vandalism.
#10 What Disclosures will you need to provide
The state of Arizona requires sellers to disclose material facts they know about the house. This information may affect the price buyer may be willing to pay. Additionally, if you have inherited property, you may know little about the house or have no knowledge of the property. The state of Arizona requires sellers to disclose what they know. Sellers are not asked if they lived in the property, but to disclose what they know. You may not know many things about the property, however, you need to disclose what you know.
#11 Consultant a tax attorney
Folks inheriting a property should consult a tax attorney to understand what their tax liability might be. Also, several factors go in to determine tax liabilities. A professional can explain your tax implications to ensure you are paying the lowest taxes. Everyone’s tax situation is different,
#12 Dealing With Family
When you are selling Mom’s or Grandma’s house it is very emotional. Additionally, countless kids and grandkids may remember all the wonderful memories of visiting mom or grandma. You need to break through the family emotions and look at the present. Grandma is no longer at the house. We take our memories. We need to look at the best financial decisions for the family.
#13 Should I hire an appraiser
It is a good idea to hire an appraiser to determine the current market value of a property. Also, this shows an heir what the likely sale value of a house might be. This also helps the executor of the estate pricier the property for sale.
#14 In Arizona, Seller Disclosures are Required
The state of Arizona requires sellers to disclose what they know about a property. This could be repairs and issues the seller has encountered. However, if you inherit a property, you may not be aware of the work done on the property. Disclosures also include any information the seller is aware, such as disclosures the seller received when they bought the house. Also included is any other information the seller may have, even it if it was from neighbors. When someone inherits a property, they may have limited information about the property. They would still want to complete the Seller Disclosures with any information they have and note on the seller Disclosure that they have limited information about the property,
Selling a property you inherit can be a challenge and you may have many questions. There are many things to be considered, especially if the property is out of town or even out of state.
If you decide to sell the house, finding a great real estate agent can help make the process smoother. Real estate agents usually have a network of professionals. A good agent can refer you to resources for questions, legal, or other professional advice.