After a person dies in North America, something must be done with their “estate”. The average estate here will include things such as personal bank accounts, a car, retirement accounts, life insurance, valuable items, and a home. In the overwhelming majority of inheritance cases, the most valuable asset is the home. How to manage that home as an asset for all the family members on the will can be a tricky task made all the more difficult due to the fact that everyone involved is still likely grieving for the deceased.
Hopefully this blog post will illuminate how the process of selling an inherited home will go and the suggestions within will aid you if you are the person responsible for managing this.
While the house is probably the most important asset, it will likely end up being the last thing you deal with. First comes sorting through all the personal items that belonged to the deceased, such as clothing, jewelry, appliances, etc. You will need to evaluate everything and decide if it is worth giving away either to the heirs who want it or to others. In most cases, the proceeds of anything sold should be split among the heirs as evenly as possible. Once everything is either sold or thrown away, the home will be empty and easier to prepare for sale. In this empty condition it can be thoroughly inspected and appraised, and can even be staged by a professional to make selling it easier, if that is what you wish to do. The only caveat is if the home is under a will or trust, then that agreement will stipulate what is to happen to the home; this can mean not selling it or holding on to it for some period of time before you can sell it.
Executors and Trustees
Before this can begin, you must determine who will be the person with the authority to carry out the needed decisions for selling a home. If the deceased had a will, then this authorized person is referred to as the executor. If the property is within a trust, then the person with the authority to sell the home is a trustee.
A probate estate must be filed whether you have a will or not in order to be given “Letters Testamentary”, but If there is no arrangement, then that means the person who takes the initiative to petition for legally recognized authority over the assets in probate court will be the one selling the house. The title of the person who wins this authority is “administrator” of the estate. Letters Testamentary is the formal authority that allows banks and insurance companies to settle the affairs of the deceased with you. There are other ways, but they all depend on just how well the family gets along. The level of cooperation can dictate just how smoothly this process can move along!
The Home Sale Dilemma
In a slow housing market, there is a bit of a dilemma faced by the executor, trustee, or administrator: insurance companies do not like insuring empty homes. You want to get rid of the house as fast as possible while still pleasing all the heirs, following the law, and getting as much value from the sale as possible. You have options during this time; you can try to sell more aggressively on your own, you can rent it out, you can let a family member live in it, or you can look for a fast home buyer like Cash Home Buyers. Becoming a landlord for the first time at a time like this is often not what anyone wants to do, especially not a landlord over another relative. That is why many people in the Phoenix, AZ area choose to have Cash Home Buyers buy the property quickly for a cash offer.
Another thing that must be considered is the need for title insurance. Any sale of inherited property will require title insurance because there can be unforeseen claims against the property. One issue that few people know about is that probate property stakeholders, such as creditors and heirs, must be notified about the property. Letters sent directly to these people and publication in the newspaper will suffice. If the property is in probate, there will be a 6 month claims period that must pass before net proceeds can be dispersed.
Underwater Inherited Homes
Since the 2008 downturn in the economy and the housing bubble bursting, many inherited homes have been in a condition sometimes referred to as being “underwater”. Underwater homes are homes that still have a way to go on the mortgage payments but the home value is worth less than what is owed to the lender. Heirs to the underwater property can disclaim the property, but the lender can file a claim on the other assets of the estate to cover money lost on the home.
This may be avoided if the property value is maximized before a sale. You can have the property professionally cleaned and repaired. Thankfully, while underwater homes saw a rise in occurrence, the majority of homes inherited are not in this condition.
Communication is Key
This is obviously a stressful and emotionally trying time. For many reasons, some families begin to break down and stop communicating adequately. In other cases, families were never particularly close, and are only brought together by the need to handle the estate. It is important that the person in the executor, trustee, or administrator position communicate early, often, and thoroughly about all developments affecting the inheritance of the heirs. For instance, if you have a home appraisal and consultation with a realtor, all of their comments and suggestions should be shown to all involved. If there is an intractable disagreement, the probate court can be petitioned. Once the judge weighs in, the sale must happen within the boundaries set.
Just Remember, you have Options
A home is usually the most valuable asset or one of the most. There may be several people and entities interested in what happens to the property. You may feel overwhelmed but do not despair. You have options. There are many lawyers who specialize in helping people navigate this, and for those in need of a fast way to sell a house gained through inheritance, Cash Home Buyers is here for you.