The Ultimate Guide To Quickly Selling Inherited Property in 2021

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If you have just inherited a property, then you understand that it marks the beginning of a new journey that comes with extra responsibilities. Selling inherited property is not as easy as you may think. Figuring out what to do with the property is never an easy decision as it typically involves lots of emotional and financial issues. However, you are not alone, as many people who inherit property from their parents, relatives, or friends are often at a loss on what to do.

Generally, anyone who has inherited property has three primary options:

  1.   Live in the property

If the house you have inherited is an upgrade to your current living situation and has its mortgage paid off, then you can opt to live there. But, this is only feasible if moving to the inherited property will not affect your lifestyle, work, and family. Most people who opt for this option often do not live far away from the property that they have inherited. These properties also tend to have little or no mortgage to be paid off, which reduces the financial burdens on the heir.

  1.   Rent out the property

If you have inherited a house that was under the best maintenance and do not want to lose it, you could easily choose to rent it out. On the other hand, if the house is not in the best shape, you can opt to source funds and renovate it before turning it into a rental property. This is a feasible option if, as an heir, you have always wanted to become a landlord. It becomes an extra plus if you have invested in properties before and understand the challenges of being a landlord.

  1.   Sell the property

The final option you have is to sell the property. Over the past decade, this has increasingly become a popular option, given the burden of owning an extra property. Some of the challenges experienced by heirs include having the financial obligation to pay off debts on the property or the high costs of maintaining it. Alternatively, you could always opt to sell a well-maintained property without any debts, so you get the cash to settle in another place or meet other financial needs.

What Happens When I Decide to Sell an Inherited Property?

Selling inherited property is many at times, the best decision you can ever make as an heir since owning and maintaining a property is never cheap. It is always simpler to take this path if you have been named in the will as the sole owner because it eliminates the need to consult with other joint-heirs. On the other hand, if you are among the joint heirs to a property, there is a need for in-depth consultations and open communications before making such a decision.

 As such, before you rush to sell an inherited property, there are several factors that you must consider, and these are primarily:

  1. What are the financial and legal responsibilities of the property?
  2. What are the tax liabilities of the inherited property?
  3. What is the condition of the property?

The Financial and Legal Responsibilities of an Inherited Property

Inheriting a property is considered a blessing as there is the assumption that as an heir, you get full ownership of a home or real estate without having to pay a cent. But, this is not always the case as properties come with financial and legal burdens. This is because properties can be used as collateral as long as it has enough equity to cover the loan one wants. Equally, since it is expensive to acquire a property, most people have mortgages that take decades to pay off.

Therefore, as an heir, inheriting a property means taking over any existing financial and legal obligations on the inherited property. These obligations include:

  • Paying off the remaining mortgage on the property

You have the mandate to pay off the remaining mortgage balance on an inherited property. The odds are raised if the home has a reverse mortgage, which has become a popular option among retirees who want to leverage the property’s equity for monthly income. In such cases, there is a shorter window period to pay off the balance if you want to keep the property. This means having to compete against time by either selling the property as fast as possible or taking out a new loan under your name.

Similarly, if the property has a due-on-sale clause, you will have to pay the mortgage due in its entirety. This clause is commonly enacted when the property has been transferred to a non-family member. If you are a family member, you can be eligible to take on the current mortgage installments as long as you do not sell the property before completing these payments.

The worst case scenario is if the property is underwater, meaning that the debt due is much higher than the property’s current value. In such cases, the best choice is to negotiate with the financial institution to accept a short sale. By short selling the inherited property, the bank will accept less money than the total amount due.

The Tax Liabilities of An Inherited Property

It is no secret that you can never escape from the long arm of the IRS, even when you inherit a property. The tax liabilities that come with inheriting a property are:

  • Property Tax Payments

Inheriting a property equally comes with the mandate to keep up with the property tax payments. The downside to this is that it is a statutory requirement. Therefore, it does not matter whether someone is living on the property or not, these taxes must be paid. Most importantly, you will have to consider if there were any unpaid taxes over the previous years as these accumulate to the total amount owed.

Equally, you must be ready to pay higher property taxes as the new charges will be calculated based on the stepped-up tax basis. A step-up basis is an evaluation done by the IRS to establish Fair Market Value (FMV) of inherited property. This new valuation then becomes the basis for determining current and future taxes on the property. As a result, it not only influences the property taxes to be paid but also the capital gains made when you sell the house.

Note: For capital gains, you will only pay taxes on the difference between the determined Fair Market Value (FMV) and the selling price. E.g., if the FMV is $400,000 and the property is sold for $450,000, you will only pay taxes on the $50,000 profit.

  • Inheritance Tax

There are no federal laws on inheritance tax, so it is never much of a concern unless you live in a state that collects inheritance taxes. Very few states do this, and they include; Maryland, New Jersey, Nebraska, Iowa, Pennsylvania, and Kentucky. Nevertheless, you can be exempt from inheritance taxes depending on your relationship with the descendant.

The Condition of An Inherited Property

Before you rush into selling inherited property, you will need to evaluate the property’s condition thoroughly. The real estate market is unforgiving, and if the property was not under the best care and maintenance, it would be an uphill task to sell the home ‘as-is.’ Unfortunately, it is always expensive to repair or remodel a property, and if the goal is to put it up for sale, you might have more losses than gains. Some of the most expensive repairs include:

  • Foundation repairs that can cost as much as $12,000
  • Complete roof replacement that runs from $5,000 to over $25,000
  • Plumbing and sewerage repairs that averagely cost over $1,000
  • Mold removal can cost between $400 to over $6,000 depending on the extent of the problem
  • Driveway repairs that run from as low as $300 to highs of over $4500

The Easy And Quick Way To Selling An Inherited Property

The disposition of inherited property can be quite challenging, especially if you have to use the regular channels in the real estate market. These channels are:

  1. Using a real estate company to sell the property
  2. Putting up the property for sale on your own

This is because it ordinarily takes several weeks that can quickly turn to many months or even years before you can sell a property. It becomes tougher to make the sale if you are cash-strapped and hoping to sell the property as-is without making any repairs or renovations that will attract potential buyers. 

Relying on a real estate company also means having to part with commission fees and other charges that these professionals will require as they seek a suitable client. 

Finally, you must be prepared to meet the expenses of maintaining the property until you make that sale.

The Stress-Free Solution

Luckily, you do not have to be limited to using the regular channels to sell an inherited property when there is a highly efficient out-of-the-box solution. Instead of bearing the burden of owning a property that is likely to lead to more losses than gains, you can avoid these legal and financial obligations by selling the property for cash.

Yes, you read that right. A simple and straightforward way to avoid the frustrations of owning an inherited property is to find a ready investor who will pay for it in cash.

How To Sell Your House Fast For Cash

Selling inherited property for cash is entirely different from putting up a property for sale. It involves approaching a team of ready investors who operate under a licensed home buying company to purchase the property. Since these investors have ready cash, you never have to worry about long and complicated financial processes that will take several weeks to complete.

All you need to do is provide information about the property, and we will get back to you with a fair cash offer. If you accept the offer, there will be a quick closing, and you receive cash for the property.

Is Selling An Inherited Property for Cash Really a Hassle-Free Process?

Opting to sell an inherited property for cash is not only the quickest way to get over the burden and stress of owning a property but one that comes with lots of other benefits. The top advantages of settling for a cash sale are:

  • You do not have to spend a single cent on any repairs, commissions, or fees. Cash investors buy a property as-is, meaning that you do not have to worry about that inspection report or hiring a contractor for repairs. Since most inherited properties are never flawless, this is the quickest way to gain value from the property without spending a cent. Home buying companies also eliminate the need for a middleman, and you never have to worry about agency commissions and fees.
  • It offers a clear-cut pathway to paying off any outstanding loans and taxes in the property. Rather than get deeper into debt trying to pay off an existing mortgage or accumulated taxes in the property, a cash offer enables you to meet these obligations effortlessly. After the sale, you will be in a position to pay off these overdue amounts and still get to benefit from the transaction.
  • You will receive fair value for the property. The best advantage of selling an inherited property for cash is that you will gain the desired value from the transaction. Selling a property for cash does not mean going at a loss; it means saving time and resources while looking for a ready market. The icing on the cake is that you get to call the shot as you determine whether to accept the cash offer or not.

Bottom-line

Every heir goes through a unique set of challenges when taking over the property left to them. The extra obligation of managing the inherited property is never a walk in the park and can quickly become a burden. However, there is an easy and practical way to avoid these challenges and frustrations. This is by selling the inherited property for cash and making gains before it is too late.