If you’ve inherited a property in the Kansas City Metro and you’re thinking about selling it, you might have more options than you realize.
Today we take a look at 3 financial options you can pursue when selling an inherited property …
When a loved one passes and leaves you with a property, while they may mean well, owning an inherited property may not be for you. You will suddenly have all these additional bills for the property with maintenance, upkeep, and possibly needed repairs. It can be stressful and it can be time-consuming.
So if you have inherited a property that you don’t want and are thinking of selling, keep in mind you have options. Your first thought might be selling with the help of a real estate agent. However, you might be surprised to learn that you have other options you may not have thought about.
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 want you to fix up the inherited property first. Then there is always agent commissions you’ll have to pay out of your proceeds. 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. They work with you to list it at the most optimum price for the condition of the home as it is right now with no repairs, no nothing. 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.
Now, Let’s Look At The Other Options…
Non-Financial Option. Move-In
We have worked with people selling an inherited home that they moved into 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 the 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
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.
But before you decide you want to be a Landlord or a Small Business Housing Provider as the industry would rather be referred, do your homework.
First, you need to know laws and basic regulations so you don’t end up getting sued for asking a potential renter the wrong question for not accepting a potential renter. The rules and regulations are changing rapidly and COVID and the eviction moratorium have just sped up this process. There are so many Fair Housing Laws that can be unknowingly be violated and cost hundreds of thousands.
Next, you need to have good forms and documents. Rental Applications, Leases, Move-In Checklist, Move-Out Checklist, Pet Lease. What if they don’t pay? What if they want to blame everything on COVID? We suggest getting good forms and lining up a good attorney to help you through all of this.
Third, you need to have a good handle on the money. What should you charge in rent? How much should you set aside for repairs? And if you didn’t know, studies show that only about 7 to 9 cents of every dollar coming in from rent is profit. If you get a free inherited house, those numbers do improve.
If you decide to rent out your inherited house, we highly recommend working with a good property manager. Not only can they help you with everything you don’t know, but they can probably save you money, get you more in rent and keep you out of jail or at least from being sued over a fair housing complaint.
We have purchased quite a few houses from heirs that went with this option. They found the joys of being a landlord were not for them. So they put the home up for sale after their renter moved out or got evicted and left them with a huge mess and lots of damage.
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 a while), 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 Kansas City!
Double-Check Your Insurance
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.
Thinking about selling your inherited property fast for cash or for payments over time? We can help! Click here now and fill out the form.
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Fantastic Experience . . .
..Scott was great working me through the entire process. His patience, availability and willingness to answer my questions were greatly appreciated.