Get good advice before putting mom and dad’s house on the market.
Via Amy Hoak, MarketWatch.
Selling an inherited house isn’t easy.
There’s the emotional aspect of getting a loved one’s home ready for sale — which likely includes clearing out his or her belongings and depersonalizing the rooms. There’s the financial cost of making necessary updates to attract buyers. Sometimes heirs have to deal with costly liens or other hidden problems, and there may be disagreements among siblings about the sale price.
And understandably, sometimes family members drag their feet. Images of growing up in the home with Mom and Dad prevent them from springing into action. They can’t let go.
“Everyone takes their time to deal with the passing of a loved one. And you need to take the appropriate steps to learn the market, educate yourself and have a Realtor and tax attorney who are reliable — you need someone who is going to be empathic and is there to help,” said Leslie Piper, consumer housing specialist for Realtor.com and a San Francisco real-estate agent.
Get some advice
First, learn about the house’s status and verify your ownership, getting the advice of an estate attorney, said David Fairman, a real-estate agent with ERA Solutions Realty in Central Ohio.
“Depending on state law, and other factors, a License To Sell Real Estate may be required from the Probate Court,” said Sally H. Mulhern, an attorney and founder of the law firm of Mulhern & Scott, PLLC, in Portsmouth, N.H., in an email interview. “In addition, there will most likely be a ‘creditor claims’ period, which must pass before assets, including real estate, can be distributed to the heirs.”
Connect with a tax adviser to understand any tax implications of selling the home, Fairman added. Heirs should also check and see if there are any liens on the property.
In fact, in certain situations — including when there are environmental concerns or the mortgage is underwater (meaning the home is worth less than what is still owed by the borrower) — heirs may even choose not to accept the home at all, allowing it to go into foreclosure, said Kelly Zinser, a bankruptcy attorney in California and legal analyst for Avvo.com, a site that rates lawyers and connects them with consumers.
Those who don’t want the property should speak with an attorney about disclaiming it — and promptly, Mulhern said. The process will likely involve filing disclaimer paperwork, she said.
Assess the market
It might be clear that Grandma’s kitchen needs some major upgrading. But before doing any work, contact a real-estate agent to help you understand the local housing market.
“You have to figure out what the other houses on the street are selling for, and get an idea of what the house is worth before improvements are made,” Fairman said.
A real-estate agent can also provide some advice on what changes would be worthwhile to make. From a financial perspective, it’s often best to do the minimum amount of repairs required to secure a buyer — and allow them to get financing. (Federal Housing Administration-backed mortgages, for example, require certain safety, soundness and security requirements for homes.)
If the home is in very poor shape, it’s sometimes best to market it to an investor, Fairman added. Cash buyers looking for bargains are more likely to purchase a home “as is.”
In areas with a hot rental market, it may make sense to keep the property and rent it out. A local real-estate agent can help people sort through the options.
Prepare for listing
Success in selling the home — and for a desirable price — will often depend on its condition, and cleaning up the yard, painting the home’s interior and other minimal improvements will go a long way, Piper said. Upgrading flooring can also be helpful, as can minor improvements to the kitchen and baths, Fairman said.
Removing your loved one’s belongings will also make the home more appealing to the masses, both the ones who view photos online as well as those who do a walk through, Piper said. See Decluttering tips for boomers.
“Doing the cleanup is essential,” Piper said. It helps people view the home as a blank canvas.
If a home’s major mechanical systems are old, sellers might want to pay for a home warranty instead of replacing them, Fairman said. Buyers typically react positively to that incentive, he said.
Expect an emotional process
The process of selling a relative’s home is likely going to be emotional, from the sorting of the personal belongings to the finalization of the sale at the closing table. Expect that. And surround yourself with professionals who will be empathetic and helpful, Piper said.
Also, it will help to set expectations on what price you’d be willing to accept at the beginning of the process, Fairman said. That way, you can more rationally evaluate buyer offers, minimizing the chance of getting emotional over lower-priced bids. Clearly established expectations are especially important when multiple heirs are selling the home.
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