A real estate sale is often more than just a financial transaction. Our homes offer shelter and they give us a sense of place and belonging. We fill them with memories and mementos, and we associate them with the family or friends who lived there. That’s why selling an inherited home can be such a complex transaction — this involves navigating the sales process and working with sellers who may be emotionally distraught over the loss of a loved one at the same time.
Let’s take a closer look at the challenges of selling an inherited home:
Tackling conversations with grieving families:
Everyone experiences grief differently. The best approach is to take your cues from the family, acknowledge their loss and be understanding of extended timelines. If multiple people inherited the property, it can take awhile to get everyone on the same page. Accept that these conversations will be difficult and awkward at times.
However, let the family know that while you can work with them at their pace, there may be expenses associated with putting off a sale. Unfortunately, property taxes, utilities and the mortgage won’t wait, so the family will need to decide how to manage those expenses until they are ready to sell the home.
Looking past an emotional connection to a home:
It might be difficult for your clients to look at the home impartially. This is where your expertise comes in. You might gently coach them on what needs to be done to get the home ready to sell: clearing out personal belongings, cleaning up, making minor improvements and getting the yard and exterior spruced up. Refer them to professionals you trust if they need assistance. For example, a professional organizer might be able to help them sort through their loved one’s belongings and make those tough decisions about what to keep and what to donate.
If they prefer to sell the home “as is”, be realistic with them about the sales price, and give them space to think through their options.
Working through financial considerations:
The family might be overwhelmed by the financial considerations associated with the property. Ask the family if they’ve considered the financial side of things. If they aren’t currently working with an accountant or attorney (or ideally, both), encourage them to do so.
A collaborative approach is best, so you may want to coordinate with the attorney and accountant to advise the family on common issues. The family needs to consider the tax implications of the sale — inheritors may owe capital gains taxes, depending on the sales price of the home.
If the house still has a mortgage, the family will need to contact the loan servicer. They may need to provide proof of their right to the home, but they shouldn’t need to prove their ability to repay the mortgage. If there are life insurance proceeds, those could be used to pay off the mortgage or help with expenses until the home is sold. Although it might seem straightforward, a recent survey showed that one-third of Gen Xers weren’t confident about the nuances of life insurance. Encourage families to contact any life insurance companies promptly and coordinate with the appropriate professionals. Refer them to trusted professionals if necessary.
Understanding the legal challenges:
You will also need to work with the family through potential legal hurdles. Siblings who inherit a home together may not have the same goals. Probate, or the management of a deceased person’s will and property, can take time, and if there isn’t a will, things become even more complicated. If the family is having trouble locating documents such as a will or mortgage life insurance papers (a strategy for obtaining life insurance coverage with a pre-existing medical condition), confirm they’ve checked the obvious places like a safe or safety deposit box. If they have, suggest they talk to their loved one’s advisors. Current or past attorneys, accountants, financial advisors and others might be able to point the family in the right direction. Obviously, avoid giving legal advice and direct the family to an attorney when appropriate.
Thoughtfully guiding families through the sale process:
Once you have the all-clear to put the house on the market, you’ll need to guide the family through the rest of the sales process. Review and set a timeline for selling the home. When offers come in, talk them through the process. Some might want to take the first offer that comes in, while others might want to hold out for an unreasonably high sales price. Do your best to help the family make a decision that’s in their best interests.
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