Inheriting a home can be a blessing or curse, depending on the location of the property, its overall condition, and your individual circumstances.
In most cases, there are three options for what you can do with an inherited house: move in, rent it out, or sell it. However, if you have decided on the latter, there are several pitfalls you should be aware of in order to avoid costly misunderstandings during the selling process.
In the article below, we will share some of the most common issues that may arise when it comes to selling an inherited house. Apart from understanding the variables of an inherited home and possible tax implications, you should also wait for the probate process to end, consider hiring an experienced agent, and adequately prepare the house for selling.
Continue reading to learn more about the pitfalls you need to avoid when selling inherited property and sell yours for the maximum profit.
The first and most common issue when selling inherited property is the probate process.
This is the legal process that needs to be completed in order to confirm the validity of the will and transfer ownership of the property to the heirs.
In most cases, the probate process can take several months or even years to be finalised, which can put a hold on your plans to sell the house.
However, if you decide to wait for the probate process to end (How long does probate take? Check here), you should be aware of the taxes that will be applied. As the inherited property has already been subject to estate tax, you might have to pay a capital gains tax on the profits when you sell it.
The amount of tax you have to pay depends on whether the property is a principal residence or not. Part of the money you gained from the sale would be exempt from capital gains taxes if it is your primary residence.
However, if it is a second home or investment property, you will be taxed at the ordinary capital gains tax rate.
As a result, if you believe that selling the is your best option and you want to avoid paying the capital gains tax, you should consider renting it out for the time being. You can either do it by yourself or use one of the numerous services that offer help in finding tenants.
Another common issue that may prevent you from selling an inherited house is its condition.
Depending on the state of affairs in your family, you may inherit a home in need of significant repairs and improvements. If this is the case, you should carefully consider whether or not it is worth your time and money to invest in potential repairs or improvements before putting the house on sale.
If the investment is too big and you are not certain it will increase the value of the property significantly, you should consider other options, such as renting it out or moving into it.
However, if the house only needs minor repairs or just a thorough cleaning, you should consider investing this time and effort into getting it ready for sale. These small improvements can make a huge difference in how much money you can get from the sale.
Home Value Appraisals
Another major issue when selling inherited property is obtaining a home value appraisal.
The document is crucial for the buyer’s lender since they have to make sure that make sure the home is actually worth its purported value. That is why they will hire a professional appraiser who will conduct a home inspection and provide a detailed report on the property’s condition, value, and future sales potential on the market.
If the appraisal is low, the buyer will gain ground for negotiating and you will have to decrease the final price.
After all, no one wants to overpay for a major investment such as a property. You might agree; however, if you still believe that the house is worth more you will have to look for another buyer, which may take some time.
That is why it might be good to obtain a home value appraisal before putting your house on sale. You will gain insight into how much you can get, and alternatively, you can look for ways to increase the value of the property.
Preparation for Sale
The last major issue to be aware of when selling inherited property is the preparation of the house for sale.
In order to ensure that the process goes as smoothly as possible, you should be adequately prepared for home staging. This includes decluttering the house room-by-room, cleaning it from top to bottom, reorganising closets and storage spaces, removing any personal items, and making other necessary improvements.
In addition, it is a good idea to hire a real estate agent with experience in selling an inherited property. Even if you plan to sell it yourself and find a buyer through an online platform like Zillow or Realtor.com, it is preferable to consult with an experienced realtor for advice and tips on how to proceed.
They can also help you estimate the value of the house and prepare it for sale.
Although there are several potential issues and pitfalls associated with selling an inherited property, there are ways to avoid them. In most cases, it is necessary to wait for the probate process to end and confirm the validity of a will.
You should also make sure that you hire a professional appraiser who will provide you with an accurate home value appraisal report and determine the best strategy for putting your house on sale. In addition, you need to make sure that the house is ready for sale and hire a real estate agent with experience in this area.
Overall, the most important thing to remember is that you should not rush the process. If you decide to sell an inherited property, take your time and make sure you do not make any irreversible mistakes. As a result, you should get the maximum profit while avoiding potential issues and problems. Good luck!