Have you recently inherited a property? Depending on your situation, it could be a blessing or it might end up feeling like a curse. Sometimes people inherit a house that they expected to eventually get but it happens sooner than expected. It’s also possible that you might inherit a house you didn’t even want. Or you might now find yourself having inherited a house along with your siblings, which can introduce a whole new slate of concerns and problems. While an inherited house might be a welcome addition to your real estate portfolio, it could also be a financial problem that will hang over your head until you’re able to move on from it or sell it fast.
You do have some options when it comes to deciding what to do with a newly inherited house. First, you can choose to live in the house and become the new homeowner. Second, you can rent out the inherited house and try to earn some extra income as a landlord. Third, you can choose to sell an inherited house. And if you inherited the house with your siblings, sometimes certain owners want to do different things altogether.
If selling an inherited house is how you and your siblings want to proceed, you have a couple of options to consider. You can sell the inherited house on the open market or you can sell it as-is to a cash home buyer like Element Homebuyers. The latter option can be completed very quickly and can put cash in your hands fast. But if you decide you want to try the housing market, here is a handy guide to selling your newly inherited property with your siblings.
Understanding Inherited Property And How To Sell It
Understand The Probate Process
Since you’re trying to sell an inherited house, you’ll want to familiarize yourself with the probate process as much as possible. You not only want to understand what probate is but how to sell a house in probate.
Probate is the name of the process that goes into effect when a person dies and their last will and testament are confirmed. The point of probate is to take the time to verify that the will is a legal document and that the decedent’s intentions are performed as requested under law. Probate is also possible when a will doesn’t exist, which involves a private court deciding the most ideal way to distribute an estate’s assets to anyone who is in a position to receive them, such as spouses, children, and other relatives.
If we’re talking about a small estate, the probate process will likely take a short amount of time, like a few weeks or a couple of months. It can be a very fast process when everything is clear and documented correctly. However, if you’re talking about a larger estate, the probate process can take a lot longer and has even been known to take years to complete. This is especially likely if one of your siblings or someone else feels as though they have a legitimate claim to estate assets they were not granted in the will, they can file a petition with the probate court. Issues like that will delay the process and cause costs to accumulate.
While some people assume that having a will can help you avoid the probate process, that’s simply not the case. That said, a will helps guide the probate process towards a faster conclusion than what would happen if one did not exist at all. A will can also make life easier for those who survive the decedent, especially if they plan to sell an inherited house.
How To Sell An Inherited Property With Multiple Owners
When you inherit a property along with siblings or other people, it creates a distinct possibility that you’ll find yourself in a disagreement over what to do. If you and the other siblings agree on what to do, then consider yourself lucky. But inheriting property can often create friction between siblings, especially if certain people want to sell the inherited house and others do not.
The ugly truth is that it’s very possible this can become a legal issue, potentially involving lawsuits. It’s not that uncommon to see siblings sue one another over an inherited property and what they think should be done with it. We want to try to avoid that as much as possible, so let’s dig into some specific things you can do to sell inherited property with multiple owners.
Buying Out The Other Owners
If you’ve inherited a house or property with your siblings, that means that you each have a percentage ownership of it. If there are two of you, you likely have 50/50 ownership. If there are three of you, you all probably own 33.3% of the house. And so on and so forth. If one of you wants to sell but the others don’t, the logical solution is for one of you to buy out the other owners.
In order to do this, the sibling who wants to buy everyone else out will have to finance their own value and then transfer full ownership. They can give their siblings cash for their ownership of the house and then transfer the deed over to them so they own it fully. At that point, the sole sibling who owns the inherited house can do whatever they want with it. Also, any profits from the sale would go directly to that sibling as the others have been bought out already and are no longer eligible to receive profits. There are costs to consider as the sibling who retains ownership will be responsible for closing costs, appraisal, and potential real estate commission fees.
Dividing Inherited Property Between Siblings
Hopefully, when siblings inherited a house or property, it has been divided equally. This helps to avoid any kind of jealousy or fairness issues that tend to crop up in these situations. Most of the time, the decedent wants anything they leave to their children to be a positive and not a reason for any problems.
If all of the siblings are in agreement about what to do, they might want to consider creating a partnership agreement. This can help establish rules about how the house can be used, who gets priority when, and any kind of rental or guest privileges. It should also spell out how financial costs and considerations will be handled and divided.
If none of the siblings want to keep the house, the easiest thing to do is sell the property and split the proceeds in accordance with the estate. The sale should be treated as any property sale would be. The house should be appraised and the fair market value should be considered in case anyone wants to buy out the other siblings. The siblings can also determine the sale price required in order to avoid arguments.
Selling The Property For Cash and Divide the Money Among the Owners
If you want to sell an inherited house fast, there often isn’t a better way to do that than to sell the house for cash to a real estate investor like Element Homebuyers. This is especially true if the house is in need of major repairs or comes with other structural or financial concerns. Selling your house as-is means you don’t need to worry about making any repairs or even cleaning up. You also avoid using a real estate agent, which means you avoid real estate commission fees, which can take a chunk out of your bottom line. You won’t have to list the house on the open market, risk paying the costs involved to market the inherited house, deal with the whims of market buyers, or pay all the commissions and fees that come with selling an inherited house on the market.
Tax Considerations
If you and your siblings inherit property, one of the biggest concerns is likely to be what kind of taxes you’ll all have to pay if you sell the house. The good news is that there is no federal inheritance tax. The potentially bad news is that some states do have an inheritance tax. Unfortunately, Nebraska is one of them and it actually has the highest top rate at 18%.
And of course, you’ll also have to pay capital gains taxes on any capital gains, though there are a bunch of deductions and considerations that come with an inherited property that you’ll want to be familiar with. Element Homebuyers can walk you through many of those, whether we buy your house for cash or not.
Renting Vs Selling the Inherited Property
Aside from selling the inherited house or moving into it, there’s another option you and your siblings can consider. You can rent your inherited property out to tenants and generate income from it.
The biggest thing to consider is whether or not you want to hire a property manager. If so, you’ll have to pay them to handle all of the renter issues and problems that come up. You can also try to save costs by acting as your own property manager, but that also means you’re directly responsible for dealing with tenants, fixing problems, and being available to visit the property.
Renting the property out also means you’ll need to get rental property insurance that covers a wide swath of concerns regarding tenant safety and health. You’ll also have to consider the possibility of months when you don’t have a tenant, which means no income, leaving you to cover the costs you didn’t intend to.
Conclusion
As you can see, selling your newly inherited property with your siblings has the potential for some serious problems, but if you consider the route that works best for you and all of the other owners of the property, you’ll make life a lot easier for everyone. And if the best solution for you and your siblings is to sell your inherited house for cash fast, consider reaching out to Element Homebuyers today. We can start the process ASAP and get you an offer in as soon as one day. And if you accept the offer, we can buy your house for cash within a matter of weeks and help you and your siblings solve any potential issues before they even happen.