Perhaps you and some friends purchased a vacation rental home years back and now want to sell it. Maybe you and your siblings inherited your parents' old home but no one wants to spend the time or money on upkeep.
No matter the reason, selling a jointly owned property is a bit more involved than selling a single-ownership property. Working with an experienced realtor can save time and money while reducing the stress associated with this type of transaction.
Read on to learn about additional considerations associated with a multiple owner sale.
Determine How the Home Was Purchased
When multiple owners go to purchase a home, they usually conduct the transaction under a joint tenancy or a tenancy in common agreement. Depending on how you and the co-owners purchased the home, different laws apply to each.
Owning a home as tenants in common (TIC) means you each own an undivided share of the entire property. This is most commonly used when two parties own a duplex but occupy separate units. While it's a technicality, even though you live in one half of the duplex, you still have partial ownership in the other half.
Joint tenancy includes the right of survivorship, which TIC does not. If one owner of the shared property passes away, their share will go to the other owners whereas under TIC ownership, the share passes to the owner's heir.
Determining how the home purchase was set up can help dictate how the sale needs to proceed. Consult with your real estate agent to find the best, more profitable, and quickest way to sell the home under your particular ownership.
Sellers in Disagreement Cause Lengthy Delays
You know the old adage, too many cooks spoil the broth? It rings true in real estate as well. Often, when a married couple owns a home, they agree on transaction stipulations as they are a joint pair.
However, when many separate groups of people buy a house together, they often don't think about the potential resale process down the line. Getting multiple parties to agree on an offer, closing date, and move out date can be difficult.
Before even contacting a realtor, set some guidelines for price, sale date, and anything else you might think could cause arguments during the transaction. That way, there is a base-level price you'll accept and a closing date that works for everyone involved.
All Must Agree to Sell
The rules of joint tenancy state that all property owners must agree to sell the property. If one disagrees and no contract was drafted prior to ownership that lays other rules, then the home can't be sold. One party in the joint tenancy can file a partition lawsuit to force the sale through.
The cost of a partition lawsuit will be divvied up among all owners. Usually, settling before court proceedings will ensure each joint owner makes a sizeable profit instead of throwing money away on court fees.
Responsibility of Repairs, Staging, and Selling
If the owners didn't specifically spell out responsibilities in the initial agreement, now is the time to lay out the rules. Selling a home is an arduous endeavor and while an experienced realtor makes it easier, the owners will still need to provide input.
Perhaps the home is especially old and rundown or needs a huge overhaul to make it stand out in a hot market. Agree as a group to proceed with certain repairs or appoint one owner to hire contractors, correspond with the realtor, be present for showings, etc.
Dividing the Proceeds
In most cases, shares of the home are split evenly amongst all owners. In special cases, joint owners should have stipulated who will receive what percentage at the time of a sale. Perhaps one family maintained the property and believes they are entitled to a larger share.
Conversely, one family could have used it infrequently, causing little wear and tear, and believe they are entitled to more of the profits. It's vital to lay this out before even purchasing the home but if you haven't, proceeds will be divided evenly.
There are specific tax breaks and exclusions for sale of a home under joint-ownership. These exclusions can vary depending on what type of property it was and if the owners had other property sale profits throughout the year.
Involve a Realtor
Even if one of the owners is a realtor by trade, it could be beneficial to consult with a third, unbiased party. That way, each owner is fairly considered and represented by the hired real estate agent.
This knowledgeable realtor will offer invaluable guidance during the entirety of the home sale. If need be, they can point joint owners in the direction of trustworthy attorneys, financial advisors, accounts, and more.
Clever Partner Agents around the country have plenty of experience selling jointly owned properties. Their flat-fee commission of $3,000 or 1% if the home sells for over $350,000 works to save the sellers' pockets. Contact Clever today for a no-obligation on your joint-property home sale.