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How to Sell an Inherited Property

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Losing a relative is hard enough, but there are many headaches when settling an estate. The biggest of these is deciding what to do with an inherited property. You can move into it, rent it out, or sell it. If you choose to sell, these steps can help you avoid pitfalls and other surprises.

Step 1: Get Through Probate

Probate is the official proving of a Will to verify it’s genuine. During probate, the estate is administered, and beneficiaries are named. If you are the sole inheritor of the property, you can sell it while in probate. You may want to discuss your options with your probate attorney first.

Step 2: Sort Through the Deceased’s Financing

Sadly, when you inherit a property, you inherit its debt as well. Run a title search to discover if the property still has a mortgage, owes taxes, has liens or bills. All these need to be satisfied, some before selling and others with proceeds from the sale.

Step 3: Hire a Real Estate Agent (Optional)

There is a lot to do when someone passes away. If you don’t have the time or ability to sell a property FSBO, you might hire an agent. An agent can list and market the property, schedule appointments, and handle buyer negotiations on your behalf. In return, you pay them 3% to 6% of the sale price.

The agent must reside in the same city as the property. This way, they can access the local MLS and are licensed to operate in that market.

Step 4: Clean Out Personal Belongings

It is an emotional challenge to sort through a loved one’s belongings. It takes time and often involves other family members. Set aside cherished mementos, then organize the remainder of stuff into piles – what to keep, what to sell, and what to toss.

By removing clutter and depersonalizing living spaces, you improve buyer impressions during a walkthrough. Buyers want to envision themselves living in the house but cannot do so with another owner’s belongings in sight.

Step 5: Perform Maintenance and Clean Often

Consider hiring a professional home inspector to identify issues with the property. Decide with your agent which problems cannot be overlooked and make repairs.

For as long as the property is on the market, it is good to perform monthly maintenance and cleaning. This keeps the property functional and appealing to visiting buyers.

Step 6: Review Insurance Policy

A vacant property is more susceptible to vandalism and break-ins. For this reason, the recommendation is for the beneficiary of the property to get a vacant home insurance policy. The policy stays in place till the property sells and covers most incidents.

Step 7: Set the Price

After repairs and cleaning, schedule an appraiser to value the property. They will give you a fair, more accurate idea of how much the property is worth than an online search.

Skip the Stress, Sell to an Investor

The loss of a relative is not easy. There is enough emotional stress without adding the sale of an inherited property. For this reason, you might consider selling it to an investor.

Most investors offer cash for properties “AS-IS”. You can forgo repairs, maintenance and cleaning, and even leave behind those belongings with less sentimental value. The investor will close on a date that is most convenient for you, giving you time to adjust and make arrangements.

gavel and block at probate court

How to Sell a House in Probate?

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Are you going to inherit a property you cannot afford to keep? Is it in probate? Probate is a legal process by which the estate’s debts are settled. It also ensures all beneficiaries receive what is promised to them in the will.

You can reject your claim by signing a disclaimer of interest, but a property is not something you just set aside. It has value, and you can sell it, even in probate. There are strict sale procedures outlined by the probate court and real estate law in your area. You may want to check with these first, but here are the basic steps to sell a house in probate.

Step 1: Hire a Probate Attorney

A probate attorney advises you and helps prepare legal documents. They can represent you in probate court, sparing you the stress, and handle important matters involving title, insurance, and tax returns.

If you hope to sell, and the house is in good shape, a real estate agent who knows the ins and outs of probate can also help. They can evaluate the condition of the property and assess what needs to be done to make it sellable. They also recruit appraisers and inspectors and navigate buyer negotiations on your behalf.

Steps 2 and 3: Appraise Property, and File a Petition with Probate Court

To sell a property in probate, you must file a petition with the probate court. With your petition, you must also provide an appraisal that estimates the current value of the property. It is only with the court’s approval can you list the house on the market or auction it off.

Step 4: List for Sale

If you decide on an open market sale, offer buyers disclosure. You must disclose the house is in probate, all material issues, and that the purchase agreement is dependent on approval from the court. Waiting for court approval can add a month or more to the sale timeline; so will repairs and necessary upgrades.

If a buyer makes an offer, collect a 10% deposit from them.

Steps 5 and 6: Petition Court for a Hearing, and Advertise the Sale

Petition the court to confirm the sale. The court (or you) publicizes the date in local news to give others a chance to bid on the property. This is to get the best price for the estate, which helps if there are debts to pay.

Should someone outbid your prior prospective buyer, you will refund them their 10% deposit. The winner will present a cashier’s check for a deposit to the court. If the court accepts a buyer’s bid, their deposit applies to the purchase price.

Step 7: Close on the Sale

Only the executor or the court-appointed representative can sign real estate documents. This is on behalf of the deceased. Check the legal description of the property before the deed is recorded with the county.

Make sure the buyer’s financing is sufficient. The full amount goes into the estate fund, and once the debts are paid, the remainder of the funds is divided among the beneficiaries.

Step 8: Report Sale to IRS

You must pay capital gains taxes from the sale of an inherited property. The IRS taxes the difference between the fair market value and the price at sale.

For example, if the house is valued at $200,000, but you sell it for $250,000, you pay capital gains taxes on the $50,000.

There are ways around paying taxes, and you can ask your probate attorney for solutions.

Need to Sell Fast? Skip the Hassle

You can forgo some of these steps by selling the inherited property to an investor. Our investors have knowledge and experience buying real estate in probate. They will buy the house “as-is,” whether it is degraded, vacant, or mid-renovation, for cash.

They also pay all closing costs and fees associated with the sale. You choose the closing date, which can be as soon as you have the court’s approval of the investor’s offer.