Inheriting property is almost always a challenge. There are complex legal requirements depending on the estate, and you have to manage the emotional impact of losing a loved one. It is often a sad, stressful time, and a reminder that life has changed forever.
The first thing you should do is put together a team of people who can help you. At the top of the list is a qualified estate attorney who knows the laws of your area. A Certified Public Accountant may also be valuable to you. And if real estate is involved, an experienced realtor is a good idea, too.
The estate attorney will answer the two biggest questions: Can you sell the inherited home? And if so, who is the authorized executor?
Some of these answers may need to wait until after the estate has gone through probate. During probate, the executor has the responsibility to keep all assets well-maintained and secure. The house must be insured, heirlooms must be safeguarded from damage or theft, and any maintenance issues that come up have to be addressed.
During probate, you will discover if there is money owed or mortgages on the property. It’s possible there may be more than one mortgage. You need to know all about this because if the market has moved, it may not be possible to sell the property for what is owed on it.
The sale of inherited property can come with a number of tax pitfalls. Your estate attorney or CPA will be able to walk you through those scenarios and share the information with your Realtor to help you come up with a plan to sell.
When you decide to sell, you have a few options. First is to prepare the property for sale or choose to list it ‘As-Is’ if you do not have the means or the desire to make repairs and updates to the property. There are pros and cons to each option, and you should discuss them at length with your Realtor.
Most sellers find it easier to list the home without the previous occupants’ personal effects in it. A garage or estate sale can help get unwanted items out of the home, and give you a little more money to help maintain the property while you wait for a buyer. Remember: the lawn needs to be cut, hedges trimmed, and maintenance kept up. The same thing goes for insurance and utility payments. You still have these responsibilities, even if the home is on the market.
You should also consider how you are going to secure the home against possible break-ins or vandalism.
After all this, you will have the home on the market and ready to receive offers! Work with your Realtor ahead of time to make sure they know what concessions if any, you are willing to make. There is no obligation for you to do so, but the more flexible you are, the easier it is to sell the property. It’s up to you.
After the sale process and closing, you need to settle all property-related finances and report the sale proceeds to the IRS. This will likely bring your estate attorney and CPA back into play. You may also need to write checks to other family members who had a stake in the proceeds.
As you can see, this process is very involved. Make sure you work with the members of your team closely and set the right expectations for all parties. Often, you will be pressured by other family members to hurry up and get on with it! Setting those clear expectations (including a general timetable) upfront will help keep the stress levels down during an emotional time for everyone.