Inheriting a property can be overwhelming, especially if you are dealing with the recent loss of a loved one at the same time. While the situation can be difficult emotionally, once you have processed the loss, there are important decisions that need to be made with the inherited property.
If the home is not located nearby and moving is not in the cards for you, selling the property might be the best course of action. While this takes additional effort and research, a sale can be the best way for everyone involved to share the proceeds from the inheritance and avoid any disputes within the family.
Here are some of the steps you should take to get ready for listing and selling an inherited property.
Research the Local Market
Headlines and news stories today discuss the strength of the current real estate market, including price increases, low and rising interest rates, and a high demand for home purchases. These industry trends are generally true nationwide; however, there are still specific parts of the country where sellers have not seen much action. Researching areas near the inherited property can help legacy homeowners get a better idea of prices and how long the home might be listed on the market.
In your research, examining how comparable homes in the area are selling for will help you determine a reasonable range for the listing price. Asking a local agent can help with this process. Depending on the length of time your friend or family member owned the property, the home's price may have appreciated due to many different reasons, such as more demand from buyers in the area. Conversely, properties can depreciate and sell for less than market value if they have fallen into disrepair or the general neighborhood has lost desirability as a whole.
Engage In Dialogue With Family
Many families find themselves in an all-out battle over inherited property and the proceeds from the sale. To avoid these circumstances, the new homeowner should include family members in a conversation that sets expectations. Upon completion, each person should agree on the property's asking price, the minimum acceptable asking price, and how profits will be distributed from the sale. Some families choose to make this discussion official by having a lawyer draw up paperwork, while others are content with a verbal contract.
Be Prepared to Do Some Work
Once you've decided to sell, there are steps that should be taken before putting the home on the market. Some of these small, yet essential tasks might include:
- Organize and dispose of any clutter or items in storage areas.
- Make minor home repairs, such as patching existing holes in the drywall or painting over stained surfaces.
- Remove extra furniture from crowded for better spacing.
- Clean carpets and floors to for a well-kept feel and fresh smell.
- Remove debris from gutters and power wash the home's exterior.
- Mow, rake or tend to shrubs and outdoor plants.
These small improvements can entice buyers and leave a good first impression on the home. After all, research shows that people take three seconds to make a first impression upon visiting a home. Properties that hit the market without a facelift can linger on the market for some time, which often leads to the seller reducing the asking price.
Prepare For Taxes
Included in the sale of the property is the taxes after the transaction. Most people will pay capital gains tax on the money from the sale of an inherited property. The actual amount of tax owed can vary based on the property's assessed value, which occurs at the time of the owner's death. Because of this rule, legacy homeowners should only pay taxes on the difference between this assessed amount and the amount received when the property sells. Properties sold at a loss are considered a capital loss on taxes, allowing legacy owners to deduct up to $3,000 on their taxes.
We’re Here to Help
If you need help selling an inherited property, contact Clever today. We make it easy for you to sell your home with a full service, flat fee agent nationwide. Click here to get started with Clever.