Selling Inherited Property In San Francisco Bay Area
Inheriting a property can be both good and bad, depending on the situation. This is especially true when dealing with loss. If you think inheriting the property is too much for you, your best bet is to sell it.
When selling an inherited property, you need to consider things like its market value, any remaining mortgage or debts, the status of the home transfer, and tax consequences (including capital gains taxes). Once everything is sorted out, choose how to sell the house. You can use a real estate agent, or real estate investor, sell it yourself, or go with an iBuyer.
What we mentioned above is just the beginning. There’s a lot to understand before you can sell your inherited home successfully, and honestly, it can get complicated.
Luckily, we’ve made the process easier in this useful guide. So, if you want to sell your inherited property quickly, read and save this page!
Variables to Consider Before Selling an Inherited House
Selling an inherited house is not as easy as selling a vacant lot or an old home. The process can be pretty confusing, and you have to consider a few variables along the way.
To illustrate, here are some aspects you should look into before you decide to sell an inherited house.
Outstanding Mortgage
There’s a chance that the property you inherited still has an outstanding mortgage. You can confirm this with the mortgage company that facilitates the loan. Once you find out how much still needs to be paid, that’s when you can start calculating how much you’ll earn from selling the house.
Outstanding Debts
Besides the mortgage, you should also verify any outstanding debts. Are there any unpaid bills? Have all property taxes been cleared? Is there a lien on the property, or does it possess a clear title?
By answering these questions, you’ll figure out whether the proceeds from the house sale would solely cover the debts. If so, it may be wise to delay the sale until everything is resolved.
Number of People Inheriting the Property
One important factor to think about is how many heirs there are for the property. It’s crucial that all heirs are on board with selling the property. Additionally, it needs to be decided who will lead the sales process and handle tasks such as clearing out belongings from the property.
Status of Home Transfer
You would only be able to sell inherited property if it is already under your name. To clarify, there are three ways for you to legally own inherited property.
Probate
Inheriting property through probate can be complex, often resulting in inheriting only a portion of the property due to settling debts and taxes.
The probate procedure varies by state and is typically initiated upon the passing of a family member who has property to transfer ownership. It involves gathering various documents specific to the location where the deceased owned property.
Probate can be lengthy and costly, particularly without a will. During probate, the court ensures that any outstanding debts owed by the deceased are settled before the property is transferred to the inheritor(s).
Living Trust
The best way to inherit property is through a living trust. This is a document that stipulates who will manage the property so the inheritors or family members can benefit after.
For instance, the parents (trustor) appoint a trustee to handle the sale of inherited property, allowing the offspring to evenly split the proc
Transfer on Death Deed
Also known as a beneficiary deed, this means you had inherited the property through a death deed or a document prepared by the owner of the house prior to passing. If you become a property owner through this document, you have the right to sell it.
Capital Gains Taxes and Other Tax Implications
Inheriting a property can affect your finances. You or your family may owe inheritance tax once you become the owner, or you may face capital gains tax upon selling.
Rules vary by location, but typically, you can’t claim a tax break for selling a home if you haven’t lived there for at least two of the past five years.
If you don’t sell right away, you’ll owe taxes on any increase in the property’s value.
To understand your tax situation fully, consult a lawyer or accountant. Tax laws, especially those on capital gains, sales, federal estate, and property taxes, have many complexities.
One thing is for sure, though, you will not be able to avoid paying taxes on the sale.
Where to Report Sale of Inherited Property
Should you decide to sell your inheritance, the sale process should be reported as taxable income according to IRS. The IRS provides instructions on reporting a sold property and determining the forms you need to use.
What to Do Before the Sale of an Inherited Property
The preparation in making the sale of your inherited property is as important as the sales process. To guide you, here is a detailed list of what you should do.
Clean and Sort Personal Belongings
If you’ve inherited a property due to a family member’s passing, it can be tough to go through their stuff and decide what to keep and what to toss. But it’s something you’ll need to tackle eventually.
It’s smart to get assistance since you’ll be dealing with a lot of belongings accumulated over the years.
Wait for the Property to Go Through Probate Process
As established earlier, your inherited property would go through probate if your loved one did not leave a legal will. You would have to pack some patience because this process takes time.
To make everything smoother, talk to a probate attorney or estate planner.
Determine Who Can Handle the Real Estate Transaction
If your family member left a valid will and appointed someone to handle dividing assets, selecting an executor isn’t needed. It’s like when property has a trustee.
But, if siblings inherit property and the parent didn’t specify who oversees sales and transactions, the siblings should gather and designate someone to have the final say in ownership.
Hire a Mediator
Disagreements in selling inherited real estate often occur among multiple heirs, potentially escalating into major conflicts. To prevent this, hire a mediator or lawyer specializing in property matters. Their expertise can facilitate resolving familial disagreements and reaching a decision on selling the property.
Choose How to Sell the Inherited Property
After following the advice mentioned, you’re all set to sell your property. Your next move is deciding how to do it. You can hire a realtor to sell an inherited property, sell it independently, sell to a real estate investor, or use an iBuyer. We’ve covered all of this in the next section so stay glued to this article.
4 Ways to Sell an Inherited House
1. Real Estate Agent
If you want to get the best value of your inherited property, engage a real estate agent. They’ll act as your advocate, assisting in determining the optimal selling price, promoting your property, and managing negotiations for offers.
Here are the pros of selling through a realtor:
- Realtors can set a price that can attract buyers but at the same time help you gain more income from the sale. They can help you refrain from overpricing and undervaluing your inherited property.
- They can make your property stand out through strategic marketing.
- They know how to work on the financial and emotional issues of interested buyers.
2. Real Estate Investor
Real estate investors can be found through home buying companies that give you a cash offer for your home in a matter of days.
Here are the pros of selling to a real estate investor:
- They buy houses as-is, so you don’t have to worry about repairs and the sale process.
- You can sell while out-of-state because you don’t have to prepare or clean the house.
- Once the investor has seen your house and it passed the assessment, they can give you the cash payment at closing (as fast as 7 days).
- There is minimal paperwork since you will work directly with the investor.
3. For Sale by Owner
If you have a lot of time, you can also sell your inherited home all by yourself. This means you won’t seek the help of realtors.
Here are the pros of personally handling the sale of your property:
- It can help you net more money because you don’t have to pay the agent for commissions. (Note: This is possible if you are really an expert in the industry.)
- You’ll get a better price compared to selling to a property investor.
4. iBuyer
iBuyers are similar to real estate investors, but they typically charge a fee. iBuyers operate only in large real estate markets (major cities).
Here are the pros of selling to an iBuyer:
- You’ll get a cash offer in less than 48 hours.
- You don’t have to go to any office because the real estate transaction is primarily made online.
- You’ll have control over the sale’s timeline.
- You don’t have to repair anything or make improvements to the property. They’ll deduct it from the money you’ll receive.
Tips on Pricing an Inherited Property and Negotiating Offers
Choosing to sell your inherited property without the help of a real estate agent entails setting its price independently. This may seem enjoyable as it gives you autonomy over the pricing, but it’s not as straightforward as it appears.
Determining the price of your inherited property would depend on numerous factors such as any remaining mortgage and debts, outstanding bills, the local housing market conditions, and more.
Here are some tips to help you set a price and negotiate offers for your inherited property:
Don’t Sell the Property for a Very Cheap Price
When you inherit a property with sentimental value, it’s common to aim for top dollar when selling. But buyers typically want a bargain.
To secure a sale, some inheritors lower their asking price to attract buyers, but they often end up settling for less than the property’s true value. Avoid this mistake.
The eventual selling price should fall within the range of minimum and maximum listing prices, reflecting the fair market value.
Think Before Making Concessions
Buyers who are experts in haggling would submit an offer for your inheritance that is way below your selling price and then demand you to help them with the closing costs or repairs. Before you agree to these concessions, talk with a real estate professional.
Don’t Be Hasty
We get it – your priority is selling that inherited property quickly, but hold off on accepting the first bid unless it matches your asking price. Consider the lasting impact of offloading your inherited property for a lowball offer.
Typically, initial offers come in well below your listed price. Wait for a buyer ready to haggle for a reasonable deal.
Research on Negotiation Tactics
If you don’t know the strategies of possible buyers, they may sway you into accepting their proposals and deals. Understanding buyer strategies can help you spot if you’re getting offered a low price.
It’s also crucial to study negotiation strategies as the seller, so you can decide when to counteroffer, find middle ground, or step back from the transaction.
What to Expect While Selling Inherited Property
The process of selling an inherited property is multi-step. It can span from weeks to months, depending on several factors. But generally, you should expect a few things to happen within that span of time.
Open Houses or Showings
Hosting open houses and property showings are crucial aspects of collaborating with a real estate agent, as they attract potential buyers to your property. Therefore, while you’re promoting your home and arranging viewings, it’s vital to keep it well-maintained and in excellent shape. If you prefer to steer clear of occupants in your inherited property, opting for a cash buyer may be more suitable.
Financial Obligations
Even if you’ve put your inherited property up for sale, you’re still responsible for covering its utility costs such as electricity, water, internet, and waste disposal. If there’s an unpaid home loan, you’ll need to keep up with payments promptly, as you’re now the owner.
Maintaining the property’s upkeep requires additional expenses that can impact your earnings.
For all these fees, including the mortgage, ask the help of your fellow inheritor to lighten the financial burden. After all, the ownership of the property is divided among you.
Home Inspection
When selling through a realtor, a qualified home inspector will assess your inherited property for common issues such as foundation cracks, roof leaks, structural decay, and plumbing problems.
Consider getting a pre-listing inspection to address any issues before listing your property. This is advised to prevent potential buyers from negotiating a lower price or backing out due to unexpected repair needs discovered during their own inspection.
Conflicts
When multiple individuals are listed as property owners, conflicts over ownership and financial duties in managing the estate may arise.
These personal disputes can prolong the selling procedure, particularly if other assets are at stake. Certain beneficiaries may desire to sell the property and liquidate all of the deceased’s belongings, whereas others may wish to retain them.
There may also be issues regarding some legal nuances and tax implications that could further drag the sale.
Challenges You May Encounter in Selling an Inherited Property
You should definitely celebrate with champagne once the closing day arrives because selling an inherited property can be quite a journey. Your patience will be put to the test a few times before the house is successfully sold.
Here’s a list of challenges you may encounter while selling inherited property:
Estate Being Kept in Probate
While you’re eager to sell the property, it may not happen if it’s stuck in probate with ownership issues. It could take years for the court to sort it out.
But this situation can be beneficial if the executor or a family member needs to occupy the house temporarily since the legal transfer won’t occur until probate is complete.
Equal Distribution of Estate Value and Assets
If the personal will does not state how the value of the house would be divided among the heirs, disagreements may arise.
For instance, if five siblings inherited a home and one of them took care of the parents until their death, that sibling may ask for a higher percentage, and this could lead to conflicts.
Discarding Belongings
Receiving a property from a deceased family member, particularly if they’re your parent, can be emotionally taxing. When you have to go through their personal items and choose what to keep and what to let go of, it can bring about a lot of sadness. This process may feel even harder because of the feeling that you should have kept their belongings and property.
Inherited Property is Underwater
Inheriting a property from a family member can turn into a nightmare if it is “underwater.” In real estate, this means that the worth of the property is less than the mortgage or loan taken for it.
It is also possible that the property is under lien; hence, legal issues when selling it right away.
Too Many Repairs
As mentioned earlier, a qualified home inspector will check the property to identify necessary repairs. Should the prior owner neglect upkeep, you may be responsible for repair expenses, potentially totaling thousands of dollars.
To circumvent immediate hefty repair bills, seek a cash offer from a trustworthy We Buy Houses firm. Cash buyers acquire properties in their current condition, sparing sellers from any renovation tasks.
Final Thoughts:
Selling An Inherited House In San Francisco Bay Area
Selling an inherited house can be overwhelming, with all the processes you must go through before the actual sale.
We hope that through reading this guide, you don’t feel that lost anymore and are now more enthusiastic to begin the journey of selling your property.
If you need help selling inherited property, connect with us at We Buy Houses in San Francisco Bay Area! We can connect you with a local cash buyer in the town where your inherited property is located. Reach us at (408) 557-7554 to get a quick cash offer or fill out the form below!
San Francisco Bay Area Resources
We Buy Houses AS-IS In San Francisco Bay Area
Our fast home sale service gives you advantages that pay off in profits to you. We are a local company that buys houses and land as professional cash home buyers, not agents or brokers. You can sell your house for cash in San Francisco Bay Area. Our goal is to serve homeowners with a simple selling experience and provides a financial solution for sellers. You can start to sell your house in San Francisco Bay Area and surrounding areas by calling us or filling in the online form. Within days, you can schedule a closing date and get cash for your house.
Alameda CountyThe Easiest Way To Sell Your House Fast In San Francisco Bay Area
You’re in the driver’s seat when you accept our cash offer for your house. We make the process simple, fast, and easy to follow when working with us. You have no obligation to accept our cash offer for your home when contacting us for a fair cash offer for your home. No matter the reason you want to sell your house, we want to buy your home as is. Remember that you get many benefits that include no real estate agent commissions, no cleaning, no improvements, and no stress. Our cash offer for your as-is house assures you of fast cash payment at closing with a reputable Title company. You can count on our company to give you a fair cash offer for your home! If you’re still thinking, “I need to sell my house fast”, calling us could be your best decision all day. 🙂
Author: Saini
My name is Saini, and I founded the We Buy Houses in San Francisco Bay Area team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.