Remote Landlord: What to Do with Your Rental if You’re Moving

Becoming a Remote Landlord: What to Do with Your Rental if You’re Moving

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Are you a landlord about to move to another city or state? Will you be leaving your rentals behind? Managing remote properties is not impossible, but there are some things to consider.

What Can You Do with Your Rental?

There are two options available to you:

1. Hold onto Those Properties

Whether you are relocating, or you inherited a rental in another state, you can manage your rentals from afar. Some difficulties will present that need to be addressed. For example, regular maintenance and repairs: your tenants can notify you of issues, but you cannot be hands-on anymore.

Another issue is collecting payments from tenants who are late and carrying out evictions. Also screening new tenants, managing lease agreements, and protesting property taxes – these are all responsibilities better handled in person, or by someone you trust to act in your best interests.

Remote landlords often hire a property manager to manage the rentals in their place. They handle property showings and inspections, maintenance issues and repairs. They also keep you in the loop and carry out your decisions.

If you hire a manager, you’ll have to pay them out of your rental profits.

2. Sell Your Rental Properties

Landlords who move often sell their rentals because the long-distance work is too much stress. They then use the sale proceeds to buy new rentals wherever it is they are moving to. You can sell to your tenant, another landlord, or a real estate investor.

Things to Consider if Selling

If you’re thinking about selling to your tenant or another landlord, there are some things to consider. First, when are you moving? Are you moving in a few months, or a few days?

A traditional sale takes time. Traditional buyers need to get mortgage approval, and lenders require warranties and house inspections. The sale is further delayed if the buyer or lender wants you to make repairs.

Sometimes a landlord buyer will not close till bad tenants are evicted, and evictions take time and money. Even if the lease is up, and you get your tenants out, you still have to clean and repair the property after them.

Do you have the time to jump through these hoops? It’ll be more difficult to manage a sale long distance if you do not settle it before you move.

Instead, Sell to a Real Estate Investor

Most investors offer cash for rental properties “as-is,” no repairs or renovations necessary. They will take on the rental with its tenants still living there, whether they are non-paying or filed for bankruptcy.

Investors do not require warranties or inspections, and will close on a date of your choosing, be it in 30 days or less. You can enjoy a quick closing with less paperwork and hassle, and use the profit to buy a new rental in your new market.

autumn house Pros and Cons of Selling a House in the Fall

The Pros and Cons of Selling a House in the Fall

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You may have heard spring and summer are the peak times to sell a house. Real estate is busy during those seasons, and the housing market cools down in the fall and winter. Still, this is not a bad time to list your property. Here are the pros and cons of selling a house in autumn.

Advantages

1. Buyers Are Serious

Buyers who missed out in the spring and summer are highly motivated to find a place in the fall. Whatever their reason – corporate relocation or the start of school – they are eager to buy and move in quickly.

2. Less Inventory

A lot of properties sell in the spring and summer, so the number of houses for sale dips in the fall. Your property, then, may stand out amidst the competition.

3. Weather is Nice

Touring houses and moving in the summer is a hot venture, sweaty too. The weather cools down in the fall, making buyers more comfortable during walkthroughs. Moving is also less taxing, and road conditions are still safe before the winter snow and ice.

4. House Shows Well

Autumn is a beautiful season. The changing leaves, seasonal flowers, and any fall décor you add enhance the curb appeal of your house. Staging the front door is easy, and aside from raking and bagging leaves, the natural beauty of your front yard will do the rest.

5. Settle into Your New Home Before the Holidays

Eager buyers plus low inventory can add up to less time your house spends on the market. Assuming a buyer makes a fast offer, and you close right away, you’ll be able to move into a new house before the holiday season.

Disadvantages

1. School is Back in Session

Fall is the school season, and moving your kids between school districts is hard enough without it being during school. Showings are also difficult if your children are home schooled.

2. Fewer Buyers

The majority of buyers found their new home in the spring or summertime, so there are not many left shopping the market. Getting their attention may be difficult, and you’ll have to compromise on some things, like the next point. 

3. Lower Your Listing Price

As eager as buyers are to purchase, they know sellers are just as eager to offload their properties. So they look for lower listing prices or negotiate with sellers to pay less.

4. Time is Brief

Besides the start of school, there are the fast-approaching holidays, starting in October with Halloween. Selling a house and moving during the holidays is a nightmare, so you want to sell in the early fall months.

5. Curb Appeal (Can) Diminish

But wait: did I not say fall enhances your curb appeal? I did. To clarify though: this condition depends on where you live. In some parts of the country, the weather shifts rapidly, and foliage loses all its leaves and snow falls early.

Sell to an Investor

If you want to sell fast, before school or the holidays start, consider selling to a real estate investor. Most investors make a cash offer for a property “as-is,” no repairs or renovations necessary.

Investors do not require mortgage approval, or traditional sale warranties and inspections. They pay all closing costs and additional sale fees, actually saving you money. And they let you choose the closing date, which can be in a month, 15 days or less, giving you time to pack and move out.

handshake house sale Pros and Cons of a Short Sale

Pros and Cons of a Short Sale

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When a homeowner is financially distressed and cannot pay their mortgage, their best option is to sell. A traditional listing takes too long. Even if a buyer showed immediate interest, they (and their lender) will request repairs. There is no time to restore the house, no time for negotiations. You need to sell fast and pay off the lender.

Home sellers in these situations often turn to a short sale. It is a better option than facing foreclosure. Let’s compare and discuss the advantages and disadvantages of a short sale.

Why You Should Avoid Foreclosure?

Foreclosure is when the lender takes possession of the mortgaged property because the borrower defaulted on mortgage payments. The lender will then try to sell the house to cover their losses.

The consequences of a voluntary foreclosure include:

  • Credit Impact: your credit score plummets as much as 160 points, and “foreclosure” stays on your credit report for up to seven years.

 

  • Housing Issues: it will be several years before you can buy another house, because a foreclosure discredits you with lenders.

 

  • Deficiency Judgement: there is a chance that if the lender sells the house for less than what you owe, you will be ordered to pay the difference.

 

  • Debt Relief Taxes: even if the deficiency is forgiven, the IRS views the canceled debt as taxable income.

What is a Short Sale?

A short sale is when a property owner at risk of default sells their property for less than the amount owed on the mortgage. The lender must approve the sale after being given collective documentation by the seller as to why it’s a good idea.

A short sale is actually a chance for a lender to get more money than if the property were to go to foreclosure auction. Once they receive your package, the short sale process takes more than 30 days to complete. If approved, and a buyer makes a good offer, the lender will issue a short sale approval letter.

Pros of a Short Sale

The advantages of a short sale include:

  • Avoiding foreclosure and being released from your mortgage obligation.

 

  • Recovering your credit score sooner.

 

  • Getting financial approval for another house more quickly.

 

  • The lender might pay the closing costs.

Cons of a Short Sale

The disadvantages of a short sale include:

  • More parties are involved in negotiations: the lender has a higher stake and must approve a buyer’s offer.

 

  • If there is more than one mortgage or lien against the property, all lienholders are involved in negotiations.

 

  • A buyer’s pre-approval for financing could expire before the lender approves their offer.

 

  • If the property is in bad condition, the buyer’s lender may not approve a loan to purchase.

 

  • A deficiency judgement could still be issued if the lender does not forgive the difference between the sale price and outstanding mortgage balance.

 

  • Your credit score will still take a hit, also as much as 160 points, and a short sale will stay on your credit report for up to seven years.

Short Sale versus Foreclosure: Credit Score

I have said here that both foreclosure and a short sale will hurt your credit score. So which is the lesser evil? The difference is:

  • With foreclosure, the entire unpaid loan amount, as of the date of foreclosure, is shown on your report.

 

  • With a short sale, the reported balance is the outstanding loan balance minus the sale amount received.

If the difference between these balances is significant, the negative impact will be less severe with a short sale.

Sell for Cash to an Investor Buyer

You can speed up a short sale by selling to a real estate investor. Investors pay cash for a property “as-is,” be it damaged, neglected, or vacant. They do not require traditional sale warranties, an appraisal or inspection. Forgoing these steps will save you time and headaches.

The investor pays 100% of closing costs and associated sale fees, saving you and the lender money. Furthermore, you and the lender choose the closing date, which can be in 15 days or less. You can offload the source of your financial distress, satisfy your debt, and start over with a new home.

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How to Avoid Capital Gains Tax When Selling a Rental Property

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Selling a rental is not the same as selling a primary residence because the IRS sees it as a business investment. When you sell a rental property, the profit (or gain) is reported as a taxable sale. Here’s what you need to know about capital gains and how to avoid them.

How to Calculate Capital Gains Tax?

There are two kinds of capital taxes, depending on how long you held the rental in your portfolio. The income from the sale is taxed based on a long-term or short-term capital gains rate. What does that mean? 

  • A short-term rate applies if you held onto the property for less than a year. If that is the case, the tax rate is the same as your normal income tax rate. The maximum you can pay is 37%.

 

  • The long-term rate applies if you held onto the property for more than a year. These tax rates are 0%, 15%, or 20%, applied according to income and filing status.

Avoid (or Lessen) Capital Gains Tax on a Rental Property

While there is no guarantee you will not pay any capital gains tax, you may be able to lessen its impact on your profit.

1031 Exchange

With a 1031 deferred exchange, also known as a 1031 like-kind exchange, you can defer capital gains tax if you invest the proceeds in a new property or portfolio of equal or higher value. Special rules apply:

  • You cannot use the proceeds from the sale of a rental property to buy a primary residence or vacation house. The new property must be used for rental income.

 

  • You have 45 days from the sale to find a new property, and you must close within 180 days. Check the due date for your tax return to make sure it is not due sooner.

 

  • Any cash left over after the purchase of the new property is taxable.

The 1031 exchange can be a complex process. A CPA or company that has experience with these transactions can help ensure that you meet the requirements of the 1031 tax code.

Live in the Rental to Turn It into a Primary Residence

There are different tax requirements for the sale of a principal residence. The first $250,000 earned is excluded from taxable income, as long as the seller lived in the residence for at least 2 of the 5 years of ownership.

Section 121 of the Internal Revenue Code allows you to reduce the capital gains by:

  • Making the second house the primary residence for 2 years before selling.

 

  • The 2 years of residence can occur anytime during the 5 years of ownership, prior to selling. Those 2 years do not have to be consecutive.

 

  • If the property was part of a previous 1031 exchange, you must hold it for a minimum of 5 years to be eligible for the gain exclusion.

However, turning your rental into a residence may not help reduce the tax bill if you substantially depreciated your property or owned it mostly as a rental, since you can only prorate the capital gains exclusion based on years of qualified (residential) use.

Offset Gains with Capital Losses

Let’s say you sell your rental property for more than you paid for it, but your portfolio takes a hit. You can offset your loss with the capital gained from the property sale.

You can also deduct normal business operating expenses and non-cash depreciation expenses to minimize the amount of taxable income.

The key is to deduct as much as possible to offset the gain so it breaks even or as close as possible. Ask your CPA for more details on this option to make sure you can take advantage of it.

Choose an Installment Sale

An installment sale, also known as seller financing, is a great way to reduce taxes by spreading out the payments over a longer period of time. 

It makes it easier to offset gains, since it results in a lower tax than the tax on a lump-sum gain. Usually, installment sales are structured, and how long you hold onto the property will determine how it’s taxed: long-term or short-term.

For further details on the advantages and disadvantages of an installment sale, read our article on Lump-Sum Sale vs. Seller Financing.

What Happens If I Sell to an Investor?

Selling to an investor has its benefits, most of which do not come by selling to a traditional buyer:

  • Sell the property “as-is” – damaged, neglected, vacant, or with bad tenants.
  • No appraisal, inspection, or other contingencies attached.
  • You choose the closing date, in several months, 15 days or less.
  • Decide if you want cash or an installment sale!

You may have specific questions about selling your rental property to an investor, and we have the answers. We can also match you with investors in your area who are ready to buy your property, no matter its condition or situation.

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How to Sell a Rental Property

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Selling a rental property has more challenges than selling a primary residence. Often, it is easier and more profitable not to sell it the traditional way. Here are the steps to selling your rental property, even if it is occupied with tenants.

Step 1: What to Do with Your Tenants

Review the lease. Is it a month-to-month lease? If so, give your tenants notice to vacate and when they need to move out. If they and their belongings are not gone by the scheduled date, you can start the eviction process, or opt to sell with tenants.

If the lease is for a fixed term, check for an early termination clause. Early termination means you, the landlord, can break the lease if you need to sell the property. If no such clause is in the lease, your options are limited. You can either:

  • Wait for the lease to expire;
  • Pay your tenants to vacate; or
  • Sell with an active lease

Only investors will purchase occupied rental properties.

Step 2: Evaluate Repairs

Whether your tenants stay or go, a rental property has to be up to par with health codes and regulations. It is your job, as the landlord, to perform regular maintenance and make repairs.

Evaluate the property and assess its damages, if any. Schedule time to make repairs when your tenants are not home. If your reason to sell is because there is property damage, you can sell to an investor who intentionally seeks out properties that need TLC.

Step 3: Clean!

You are going to have walkthroughs with potential buyers. Remember to give notice to your tenants prior to every showing. Ask them to clear clutter and not be present at the scheduled time.

Bad tenants are less inclined to follow your requests, so you may have to pay for professional cleaning and landscaping services.

Step 4: Hire a Realtor

Being a landlord is hard work. If you do not want to sell FSBO, you can hire a real estate agent to manage the sale for you. They will list the property, schedule walkthroughs, and help with sale negotiations.

A few things to keep in mind though:

  • Agents / realtors receive a commission of 3% to 6% of the sale price upon closing.
  • If your rental has damage, and you plan to sell AS-IS, your property is less likely to sell to a regular homebuyer and more likely to be of interest to investors.
  • Tenant-occupied properties will only be purchased by investors.

When your most potential buyer is an investor, you will profit by selling directly to the investor instead of bothering to list the property.

Step 5: To List or Not to List

Identifying your ideal buyer is perhaps one of, if not the, most important step in this entire process. It will save you time and stress, and even prevent you from losing money to identify the target buyer. How do you choose?

You should list your rental if:

  • It is vacant;
  • In great condition; or
  • Needs only minor repairs or quick fixes, which you plan on having done.

You can sell directly to an investor if:

  • The rental is tenant-occupied. You’ll need to disclose if they are non-paying tenants.
  • The property is outdated or needs major repairs.
  • You already tried listing it but it didn’t sell. Failed listings often get the “something must be wrong” label after 30 to 45 days on the market, and consequently sell for less than the asking price.

Step 6: Conduct Walkthroughs

If you are trying to sell, and the lease is expiring, but the tenants still live at the property, ask them about their schedule. Just like with regular listings, and the owners are asked to not be present, ideally your tenants will not be present during showings. However, if you decide to sell to an investor, meeting the tenants may be beneficial, since an investor is the only type of buyer who will purchase a rental with tenants. Keep the parties separate though if you suspect there is a risk of bad impressions.

Step 7: Pay Capital Gains Tax

When you sell an investment property, you pay tax on depreciation recapture and capital gains taxes. The amount you are expected to pay depends on multiple factors:

  • The total depreciation expense claimed;
  • Your tax bracket;
  • If you plan to buy a replacement property within 180 days of selling your rental; and
  • If you sell to receive a lump sum or installments (via seller financing).

We work with investors who specialize in purchasing rental properties, and you can discuss options with them. Even so, we recommend you also speak with a tax advisor to find out possible deductions and do the math to break even or maybe get a refund.

Final Thoughts

There are numerous reasons to sell a rental property. High equity, high demand, an increase in value, and the house being in good condition all make it favorable to place it on the market.

Other times the best option is to sell to an investor directly, so you can avoid costly fees and repairs. If your rental is occupied with good or bad tenants, your best, if not your only, option is to sell to a real estate investor.

Our investors offer to pay cash, as a lump sum or installment payments, to purchase the property “as-is.” There’s no need for an appraisal or inspection. Plus, you choose the closing date, in several months, 15 days or less, giving you time to handle last-minute items.

wad of cash seller financing versus lump-sum payment

Lump-Sum Sale vs. Seller Financing

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Seller financing (or owner financing) is an option to consider if you’re a landlord with rental property. It means the seller finances the purchase for the buyer. Rather than give them a loan, you extend a line of credit to cover the purchase price, minus the down payment. The buyer, then, makes installment payments.

There are three types of seller financing:

  • Free and Clear: The seller owes nothing on the property and sells it for monthly payments.

 

  • Wrap-up: The buyer procures the title but takes the property subject to the current home loan, which stays in the seller’s name. So the buyer makes monthly payments on the seller’s existing mortgage.

 

  • Contract for Deed: The seller holds onto the title till the purchase balance is paid off, similar to a rent-to-own agreement.

Seller-financing deals tend to be short-term. Whichever type of seller financing you choose, there are two key steps you need to take before agreeing to anything:

  1. Run a credit check on the buyer to discover their debt and payment history.
  2. Draw up a promissory note, stating the interest rate, payment schedule, and consequences of buyer default.

With only two parties involved, minus a bank and its strict lending requirements, seller financing is a quick, profitable way to sell your rental property. Let’s take a look at the advantages and disadvantages of seller financing.

Advantages of Seller Financing

  • Can sell “as-is”: No costly repairs, renovations, or maintenance are necessary. You can sell the property in its current condition “as-is.”

 

  • Higher sales price: When an interest rate is agreed upon, you make more money as the buyer pays off the purchase price.

 

  • Retain title: In the case the buyer defaults, you keep the down payment and any money paid on the house.

 

  • Continuous income: Similar to a rent agreement, seller financing gives you a steady source of income.

 

  • Less work: When you transition from landlord to lender, you have less responsibilities with the property.

 

  • Tax advantage: The IRS recognizes an installment sale as a way to defer capital gain. You can spread out your tax liability over several years instead of paying 100% of the tax in the sale year. It also makes it easier to offset the gains.

 

  • Sell faster: Without need for mortgage approval, you can sell and close faster.

Disadvantages of Seller Financing

  • Buyer uncertainty: If a buyer defaults or refuses to make payments, you may have to initiate the foreclosure process, depending on your agreement with the buyer.

 

  • Abandonment of sale: If you accept a smaller down payment, the buyer may later abandon the sale because a small investment is at stake.

 

  • Repairs: If you take back the property, and there are damages, you may be responsible for repairs, depending on your agreement with the buyer.

What is a Lump-Sum Sale?

A lump-sum sale is a one-time payment for the total amount due, rather than that payment be broken into smaller installments. This is a better option for homeowners trying to sell their primary residences. With a lump-sum sale, capital gains is not so much an issue as it is when selling rental property.

Selling to an Investor for Cash (or via Seller Financing)

Real estate investors will pay cash for properties in any condition. These properties can be a primary residence or rental property, and be damaged, neglected, or have bad tenants. In fact, if you have tenants, only an investor will purchase your property, so you can skip listing and keep the 3% to 6% commission you’d pay a realtor.

If your goal is also to avoid capital gains, seller financing is a great option. We screen investors to avoid scams and frauds. You can request an offer on your property, and we’ll pull offers from trustworthy investors, guaranteed to have the financial backing to pay you.

If you have any questions about investors, we have the answers.

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Most Common Questions When Selling A House to An Investor

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If you are selling your house or another property, we have a question for you: Have you considered selling to a real estate investor?

No doubt, you have heard rumors about investors – the most common being they offer less money. We want to put your mind at ease by answering the most frequently asked questions about investors by sellers.

1. Why should I sell to an investor?

An investor is your best option if you want to sell fast and without making costly repairs. Most investors offer cash for a property “AS-IS.” They also let you pick the closing date, whether it’s in several months or a few days, giving you time to move out.

Investors do not require mortgage approval, an appraisal, or a house inspection. You avoid all the obstacles of a typical home sale. Owners who sell to an investor find themselves in one of the following situations:

  • Bad tenants
  • Bankruptcy
  • Code violations
  • Divorce
  • Downsizing
  • Financial hardship
  • Inherited property
  • Outdated (needs renovations)
  • Pre-foreclosure
  • Probate
  • Rundown (needs maintenance/repairs)
  • Tax defaults
  • Upgrading (make room for family)
  • Work relocation

2. I hear investors make low ball offers. Is this true?

It depends on a few things: (1) the condition of the property, (2) its real market value (sorry, but Zillow is often wrong), (3) when you need to sell, and (4) the type of investor.

There are two types of investors: house flippers and rental property owners. Flippers usually pay 70% of the property’s value AFTER repair value. Their offer estimates how much they can sell it for after flipping minus repairs. Flippers, then, are looking for distressed properties that need TLC.

Rental Property Investors, on the other hand, prefer properties that require minor or no repairs. They want a deal that gives them a monthly income of 1% of the purchase price. Their offer is based on how much they can rent it out for, minus repairs. If your property is in top shape and in a high-rent area, you may get its market value.

3. How does an investor make their offer?

We have simplified the process! You can click below to request your free offer today. All you have to do is provide some details about your property.

Our investors may also conduct their own research on the property, where it’s located, and compare it to similar properties for sale in the area.

4. Can I sell virtually?

Yes, if you prefer a virtual sale, many of our investors are capable of doing such. They may ask you to do a video tour or send pictures of the property so that they can assess its condition and value. All documents will be exchanged and signed electronically, and your cash offer wired to your preferred account.

5. What fees or commissions can I expect?

Zero! Unlike when you sell with a real estate agent, who expects you to pay a 3% to 6% commission, selling to an investor means avoiding fees and closing costs.

6. Do I need a real estate agent?

No, you do not need a real estate agent if you are selling to an investor. In fact, you are recommended not to so you avoid paying their commission fees. The investor can handle all the paperwork and necessary details of the transaction. All you have to concern yourself with is accepting their cash offer, picking a closing date, and signing the purchase agreement.

7. How soon do I get my cash?

You get your cash at closing.

8. Does the property need to be cleaned out?

No. Take what you want with you and leave the rest. Just tell the investor you are leaving belongings behind prior to closing.

I Have More Questions

You do? Wonderful! The more you know about investors and SolidOffers, the better you can make a decision about how to sell your house. Check our Frequently Asked Questions to learn more.

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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.

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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.

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How Much Do Real Estate Agents Get Paid? Fees House Sellers Should Know

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Real estate agent commissions take the biggest cut of your house sale. Is it worth it then to even hire an agent or realtor? Or should you sell your house for sale by owner (FSBO)? Here is a rundown of real estate agent fees to help you decide.

What Are You Paying a Real Estate Agent to Do?

Seller agents may do the following:

  • Assign a fair, accurate price to your house.
  • Market your house across the MLS, social media, and print marketing.
  • Schedule walkthroughs.
  • Advocate for you when dealing with house inspectors and appraisers.
  • Help negotiate terms of sale between you, the buyer, and buyer’s agent.

How Much Does a Real Estate Agent Get Paid?

An agent earns commission upon sale of the house. Typically, their cut is 6% of the sale price, though a recent survey shows the national average is 5.45%. This downward trend is attributable to competition and a shortage of houses for sale in certain markets.

You can negotiate agent fees by arguing these points:

  • Time it takes to sell: if the house sells fast (in less than a month).
  • Anticipated sales price: if your house is priced high (e.g., $500,000s and up), a low rate is still a good chunk of change.
  • Buyer’s agent: if there is no buyer agent for the commission to be split with.
  • Agent’s workload: if you take on some responsibilities in the home sale process.

 An Agent Does Not Keep What They Earn

An agent does not keep all of the commission because they do not act alone. Most agents work under a real estate broker. The broker, then, takes half of the agent’s commission.

The seller agent then splits the commission with the buyer agent, and they with their brokerage. If we do a quick calculation, as an example, here is how it might play out:

  • Your house sells for $250,000;
  • 6% of the sale price is $15,000;
  • each brokerage gets $7,500; and
  • the brokers each pay their agents $3,750.

Once paid, your agent has to cover expenses. These include membership dues to real estate institutions and technology, but also money spent to market your house. You can see then that an agent does not make a huge profit. That is why they handle multiple house sales at a time.

Who Pays the Real Estate Agent?

You, the seller, pays both the buyer and seller agents. True, the buyer is purchasing your house, but it is out of your profit that the 6% is paid to these agents.

Instead of an Agent, Sell to an Investor

If you want to forgo agents and commission rates, consider selling to an investor. Most investors will make a cash offer on a house, regardless of how it looks and without a buyer agent. You, then, only pay your share of closing costs. You enjoy a quick closing and a profit which you then use as a down payment on your next house.