I Inherited a House and Want to Sell It – What’s Next?
Inherited a house and want to sell it? This article is your step-by-step guide on how to go about selling an inherited house.
Getting an inherited house is a blessing, but it can turn into a curse if you let it.
You’ll have three options when you inherit a house:
On the positive side, you now have a valuable asset. And, on the negative side, inheriting that asset and then selling it can be a pain in the neck.
Don’t worry though. By the end of this article, you’ll have all the information you need to not let this be an inconvenience.
Let’s get started.
How Many Persons are Inheriting the Property in Question?
Sometimes, it’s more than one person that’s getting a single house or portion in inheritance. So, you’ll first have to ask the other benefactors whether they want to sell the house or not.
If they agree to sell the house, the task becomes simpler. However, if not all of the stakeholders are ready to sell, you are in a pickle.
There is a solution to that conundrum though. You can sell your portion of the property to another benefactor.
The person that’s going to buy your share will have to pay for the appraisal and the closing cost.
Or, you could have a promissory note recorded and set an installment plan for buying that portion of the property.
Moreover, if an agreement is not possible, you can then file a lawsuit for partition. However, this will prolong the process and you’d have to pay a legal fee too.
Find Out the Property’s Worth
Before you put the inherited house on sale, you need to find out its actual worth. Your property’s cost is determined by multiple factors.
- The location
- The property’s condition
- The area’s market condition
You don’t have to do that yourself though; you can get in touch with a professional and get the valuation.
Find Out If There is Any Mortgage Left
Next, before selling the house, you want to know if there is any outstanding mortgage on it. If so, you’ll settle it in the amount of the sale.
Also, check if the mortgage has the due-on-sale clause. In that case, you’ll have to pay off the loan in full or assume payments.
But, what if the mortgage is higher than the worth of the house? Then, you’ll have to go through the short-sale route.
A short sale is when the amount of mortgage takes over the value of the property in question. In that case, the bank will sell the property to a suitable buyer while accepting the loss.
Unfortunately, it’s not always that simple. Sometimes, the lender can file a “deficiency judgment” where you’d have to pay the exceeding amount.
Fortunately, many states have devised laws against that. But, it’s a good idea to read the short sale documents to make sure you don’t have any personal liability.
Look for Any Outstanding Debt
In addition to paying the mortgage, you’ll also have to pay any other outstanding debt on the house. It could be the property tax or utility bills.
When there is any outstanding debt attached to a house, it gets deducted from the amount of the sale.
Do You Need to Pay a Tax on the Inherited Property?
You do have to pay the capital gains taxes to the government if you want to sell the inherited property.
The amount of this tax will depend on the sale price and taxable income.
Moreover, when you inherit a house, you benefit from a step-up tax basis. So, while selling an inherited house, you only have to pay the taxes based on the gains that you get between the date you inherit it and the date you sell it.
Do You Need to Repair It?
You do not need to repair the inherited house to be able to sell it. However, if you do so, you’ll most likely sell it faster and at a higher price.
So, it’s a good idea to have the house checked for any major works.
Total Financial Implications of Selling an Inherited Home
You’d need to cover several financial costs while selling an inherited house. These can be the property listing costs like the cost of staging, surveys, repairs, and the costs associated with the mortgage.
Plus, you’ll have to pay the capital gains taxes to the government as well.
How Should I Sell My House?
If you have inherited a house and want to sell it, going the real estate route will be expensive and time-consuming.
Whereas, you can sell your home faster and with a higher profit by going with a cash offer.
Here are a few more benefits of selling your house for a quick cash offer:
- No fee (no closing costs)
- Guaranteed sale
- No repairing costs; sell “As Is”
- No walkthroughs
- No delays of any type
But, that’s not the case when you sell your house through a real estate agent/agency.
- You pay a commission and a closing cost
- You wait a lot
- Buyers can ask you for repairs
- Realtors do multiple showings
So, it would be a better idea to sell your house for a real cash offer instead of taking on a more complex and expensive route.
I Inherited a House and Want to Sell It – Final Thoughts
Inheriting a house can prove to be a huge inconvenience. But, you can make the process smooth by following the right path.
You need to be mindful of a few things before putting your house for sale. This article will serve as a guide for you, making the sale easier.
Moreover, while you might want to get help from a real estate agent to sell your inherited house, that won’t be a smart choice.
A real cash offer is quicker, cheaper, and more convenient.
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