If you’ve inherited a property and you’re thinking about selling it, you might have more options than you realize. Read this blog post to find out the 3 financial options you can pursue when selling an inherited property …
When a loved one passes and leaves you with a property, it might be a meaningful gesture but, the truth is, an inherited property isn’t always convenient to own. There are additional bills, expense, maintenance, upkeep, and stress; it can be time-consuming.
So if you are thinking of selling, you might first be thinking about selling with the help of a real estate agent. However, you might be surprised to learn that you have options that you may want to consider as well. In fact, did you know you have several options you can pursue when selling an inherited property?
First, Let’s Talk About Selling Through An Agent…
There’s nothing wrong with selling through a real estate agent but you should be aware that an agent may have you fix up the inherited property first, then there are closing fees and the hefty agent commission you’ll have to pay afterward. And, this method can take months, so some people don’t like how long it takes.
If you would like to go the Agent Route but don’t have the time, the money or the expertise to make updates and repairs or maybe even empty the house, please know that there are a few agents out there that specialize in listing homes as they sit, with all the stuff. They work with you to list it at the most optimum price for the condition of the home as it sits. You do nothing but provide the agent with the keys, they put a sign in the yard and they market it as it sits. The Home will not command top dollar, but it will get the most buyers into the house and potentially sell for the most money.
This route will take some time and during that time the house still has utility bills, real estate taxes, insurance, and yard upkeep that are racking up bills. Plus the agent will have a real estate commission that needs to be paid. If you are looking for an agent that will do this for you, we have an agent on our team that will do this for you. When you call, ask us about listing options from Realty Resource. This is a very good option also if you are dealing with property that was a rental property or investment property, to begin with.
Second, Let’s Look At The Other Options…
Non-Financial Option. Move In
We have worked with people selling an inherited home that they moved in to when their loved one passed away or maybe they already lived there. We have purchased numerous homes where the last living parent had passed and the child or grandchild moved in.
In some cases, this was a great fit for the child or grandchild, but they memories get to them and they call us to buy it fast. In many other cases, the child just does not have the financial means to maintain the home, we have purchased many homes that the child had inherited and thought, wow, free house. They did not take into consideration the expenses of property taxes that needed to be paid and homeowner association dues that need to be paid. Both the county and the homeowner associations will eventually foreclose on a house if these are not paid.
So before you move in, make sure you have the financial means to own the house and that means the ability to pay the mortgage over the long term if there is one as well as the ability to pay county taxes and the homeowner association dues.
Financial Option #1. Refinance
One option, which is a type of selling, is to refinance the property with a bank and use that money for other things. Although you’ll still own the house, and all the obligations that go with owning a house, this is a financial option that some people might consider if they are selling in order to get the money.
With the refinance, you then have the funds to make the fix-ups necessary. But again this is racking up time . . . time to refinance, time to make the repairs, time to list it and market it and time to get the buyer closed.
With the refinance, you could also move into the home yourself, or rent it out as well. Do keep in mind the costs of owning the home and maintaining the mortgage.
You can still use the house, or rent it out, and you’ll need to pay back the loan to the bank, but it’s one option to consider.
Financial Option #2. Rent It Out or Rent It To Own
Another option to consider is renting the home to a tenant for cash flow. Still keeping in mind the financial obligations of the mortgage, taxes, and HOA, plus upkeep associated with owning the house.
Another option is to sell the house over the long-term by selling to a tenant. Typically, these are tenants who can’t get a mortgage but want to own a house – so they’ll pay you rent and over time they’ll be able to buy the house (either by paying you an additional amount of their rent that will go toward the purchase of the property, or, by waiting until their credit is cleaned up to purchase the house with a mortgage.)
With this option, there is another rent to own option to think about and that is to rent it to own to an investor. If you want to sell the home, but don’t need the cash right away, you might find a very stable, local real estate investor who would put so much money down and make you payments over time to own the home. With this option, you don’t get a lump sum of cash at once, but you typically will get more for the home either over time.
We have purchased quite a few houses from heirs that went with this option. They found the joys of being a landlord or a lending institution were not for them. So they put the home up for sale. We have been able to buy with payments from them over time or pay them all cash as in financial option #3 below.
Financial Option #3. Sell Fast For Cash
One little-known option that owners of inherited properties might enjoy is the ability to sell the house fast for cash. Instead of selling through an agent (and hoping they can find a buyer, which can take months), you can work with a house-buying company (like what we do here at kcmoHomeBuyer) and they’ll often buy your house as-is for cash, usually in as little as a few days. It’s fast, simple, and doesn’t require any work.
There you have it! 3 financial options you can pursue when selling an inherited property in Lees Summit!
We do want to offer you one other word of advice, whatever option you choose, please consult with your insurance agent to determine if the insurance your loved one has on the property will still cover the home in the option you choose. We have seen many an heir that had the home sitting vacant while they determined their course of action, during that time something happened to the home, and when they went to the insurance company, the company said sorry, the home was vacant for more than 30 days and despite you keeping the premiums paid, we will not cover your loss.