In short, the answer is yes, but let’s dive in a little deeper. The majority of Americans leave behind some form of real estate to their heirs. In addition, dealing with the life event that just occurred, you now have a property that you need to figure out what to do with. Many times there are a lot of emotions and memories attached to these properties, so it can be difficult to sell home fast in a lot of cases.
One question often asked is, “Can I sell inherited real estate right away?” Yes, but there is a specific set of five steps that allow you to do this. So, please continue reading to learn more about these five key steps.
5 Steps to Verify Who is the Correct Heir of the Property
If someone close to you has recently departed, you may believe that you are the first in line. However, you must first verify if there was a will, trust, or estate that designates the owner or joint-heirs who share the property rights.
If there is a trust, there will be a designated trustee, oftentimes it’s the attorney that wrote the document or a family member the person appointed to handle the estate for them. It is the Trustee’s responsibility to follow the instructions spelled out in the trust. Additionally, an estate is almost identical to the trust process.
If there is a will, it depends on the laws in the state the property is located in. Arizona, as an example, only requires a will to be written by the deceased and presented to the court through a process called Probate. The court will then follow the will and appoint who was listed in the will as the heirs to the property legally. In other states, a will must be written by an attorney and recorded, so check the laws within the state where the property is located.
If there is no will, trust, or estate plan, then Probate is the process in which the court of the state the property is located in decides who should inherit the property. Typically immediate family members are designated, but it’s up to the state. Having an attorney represent you in this process is important to ensure it’s handled quickly and efficiently.
If you lack funds to hire an attorney, oftentimes the attorney will allow you to hire them on a small retainer basis and pay them in full once you sell the property. If you are working with a cash investor to purchase the home after the Probate process, the attorney will often get involved with the investor to ensure they’ll receive their compensation at the close of escrow. Many cash investors will wait 3-6 months to close while the Probate process occurs.
If there are multiple heirs, it will require locating and having each sign documents that the court and attorney require to transfer ownership for you to sell the home. Some, but not all, investors will offer you cash offer on house.
As an illustration:
Housing Solutions REI, LLC agreed to buy a home in the Phoenix area in July 2019. There was a will where a woman, who was the deceased and single owner of the property, had willed the property to her multiple children and a few grandchildren.
However, the will was over 10 years old when she passed away, uncertain of what to do since several of his siblings listed in the will had also passed, one of the children let the home sit for 3 years. Squatters had broken in several times and the roof had completely failed and the home was in total disrepair.
This son had reached out to several other investors, but they all gave up after finding out how many family members were involved in the process and the fact the family lacked the funds to hire an attorney.
Housing Solutions REI, LLC (HSREI) Stepped-In
And began working with the family in July 2019. We agreed on a price with the family to ensure it was a win-win end result for all members of the family. HSREI contracted a Probate Attorney and advanced the attorney the initial retainer fee, which would be reimbursed at closing. HSREI was able to locate all members of the family that were missing and even one that was in prison.
In total, there were 21 family members in the transaction. The process from Probate to having the ownership change to the family members took approximately 3.5 months to complete and HSREI purchased the home allowing the attorney and family to receive their compensation immediately after the closing. The best part of this process was HSREI was able to reunite family members that hadn’t spoken in many years!
What’s the Best Way to Resolve ANY Questions?
The best way to resolve any inheritance questions is with an attorney. This option opens up the inheritance to title experts who can verify and complete any heir confirmation. This also ensures that there are no questions or liabilities if you decide to sell the home.
The home may still have a mortgage. This would be required to be paid in full based on the “due on sale clause” in the deed of trust. Any balance after mortgage debt, liens, taxes, and attorney fees will be your profits. If it’s paid off, then you have full access to the equity minus liens, taxes, and attorney fees.
Tips for Preparing to Sell Your Inherited Home
Once the property is under your name, you are free to sell or keep it as you wish. If your plan is to sell the home, you will need to decide if you plan to go the typical retail route or if you want to sell it in it’s AS IS condition. Selling retail will mean you need to prepare the property for a buyer that intends to live there.
This could mean potentially spending thousands of dollars to fix deficiencies in paint, carpet, and mechanical components, the list goes on and on. This typically means getting multiple contractors to the house to get bids, scheduling the work to be done, then overseeing the work to ensure it is done correctly and on schedule.
Most lenders today require homes to meet certain condition requirements to pass their underwriting process. Things that matter to a traditional buyer will not matter to an investor buyer that will accept the property in AS-IS condition.
5 Useful Tips to Sell Your Inherited Home
If you plan to sell to an investor for cash, you eliminate the need to make repairs or updates. Most times, you can leave any items that you don’t want in the home and let the investor deal with them after the close. This will save you from spending funds out of pocket upfront and could net you the same amount of profit in the end.
Make sure to explore all options upfront and review the NET figures since most cash investors will pay all of your closing costs in order to make it an easy and seamless transaction. Another benefit of selling for cash to an investor is most investors will close quickly (typically within a week or less, where a traditional sale can take 30-120 days before you’ll see your proceeds, not including the amount of time it takes to make the updates and repairs to prepare the home to sell traditionally.
Since this is an inherited property, you will likely have to pay taxes on your inheritance and the value of the home. So selling for more can mean more taxes you’ll owe to the IRS. Selling to a cash investor could mean less tax burden.
One way around this is to hold onto the home and live in it for two years and one day, then sell it. This constitutes a tax exclusion with the IRS. Make sure to consult with your tax adviser to determine how this works in your situation.
Whether you’re looking for a cash offer or looking to meet with a licensed real estate professional, Housing Solutions REI can help. We have a cash offer division plus licensed real estate professionals on our team that understands how to guide you through each process and can help you with finding the right attorney, escrow company, and show you what you’ll net in each scenario, and that’s the best tip of the day.