Did a family member or loved one recently pass away, naming you as the beneficiary to their real estate?
If so, it can be a sticky situation to be in, leaving you with three options: live in the home, rent it, or sell it.
Especially when you’re in the thick of the grieving process, you might not know which steps to take next. The only problem? Unless you have the cash flow to maintain the home, you’ll need to make a decision as soon as possible.
Today, we’re sharing a quick guide on how to handle inherited property. We’ll help you understand your choices so you can move forward with clarity.
Ready to learn more? Let’s get started.
Step 1: Attend to Administration
Even if you plan to sell or rent the house down the road, you’ll need to update the homeowner’s insurance policy to make sure the property remains covered in the interim.
Then, contact all the utility providers, canceling services (such as cable and internet) that are no longer needed. Pay the others for as long as you own the home. You may not plan to keep it for long, but you’ll likely want to keep HVAC services and running water.
In addition, keep up with any property tax payments or mortgage payments you inherited along with the house.
Step 2: Handle the Housekeeping
If you inherited an empty house, you can skip this step. Otherwise, you’ll need to decide what to do with the contents of the home.
If you’re one of multiple sibling inheritors, it’s often easiest to invite everyone over to the house and take a round-robin approach, allowing each person to choose one item at a time to keep. Once that’s done, the grandchildren can take a turn, along with any other relatives you want to invite.
If there are items left over, you can sell them in an auction or estate sale. Or, you can donate them to charity.
Keep in mind that although this step may be emotional, delaying it only means incurring more costs. Take action as soon as possible so you can limit your financial strain.
Step 3: Decide to Move In, Rent or Sell
Next, you’ll need to decide what to do with the house.
If you’re the sole beneficiary, the decision is all yours. Or, if a quitclaim deed made you and your siblings joint owners, you’ll need to decide together how to proceed. If there is any opposition, the only way to resolve it is through a lengthy and expensive court battle, so it’s best to be on the same page.
To help you make a decision, here are points to consider when taking each route.
If you decide to buy out your siblings’ inheritance and live in the home yourself, you can do so through mortgaging or refinancing the property. When you do, understand that local officials will assess the house at its current market value. This means your property taxes will likely rise.
Once you move in, it’s also important to have the home inspected for any maintenance or safety issues and fix those immediately. Especially if the home has sat empty for years, there could be structural damage you can’t see.
Renting It Out
Renting out an inherited property can offer a steady source of passive income, though it’s not without its risks. Unless you’re experienced in this realm, the business decision could quickly go south.
If you get the wrong renters, you could face property damage and eviction, not to mention financial loss. The same holds true with making the property a full-time vacation rental through an online platform. Unless you’re ready to become a hotel manager, the costs and labor required to maintain the property can be too much to shoulder.
If you do decide to rent, it’s wise to work with a professional property manager who can market, lease and manage the property, screening tenants beforehand to ensure a good fit. To mitigate any liability, make sure to schedule a home inspection and take out a landlord insurance policy. Also, check local city ordinances or HOA rules for restrictions against renting in the community.
Finally, you have the option to sell the inherited property.
Laws of inheritance state that you don’t have to pay capital gains tax on any increase in the home’s value during the time the previous owner possessed it. You will, however, pay it for any increase that occurs between the time you inherit it and when you sell it.
It can pay to have a real estate agent come over to assess the property and recommend any upgrades or repairs to make prior to putting it on the market. However, although it could help you increase the asking price, renovating is often an expensive and laborious process.
And, once you list the home, you’ll play the waiting game until it sells. In the meantime, you’re the one paying all the bills and keeping the property in top shape.
An Alternative Solution: Sell to Us
Instead of going the traditional real estate route, why not let us take your inherited property off your hands? Our three-step process is simple and straightforward, eliminating months or even years of guesswork and legwork from the process.
When you work with our acquisition team, you won’t have to worry about any of the following expenses or steps:
- Closing costs
- Agent commissions
- Repairs or renovations
- Bank approvals
- Acceptable inspections
- Open houses
Instead, you get cash in hand quicker than you thought possible. Especially in New Jersey, where single-family closed sales are down almost 4% and most homes in the Northeast sit on the market for an average of 83 days, it pays to get your home sold fast at a fair price.
Don’t Let Inherited Property Weigh You Down
When a loved one passes away, there are myriad details to attend to, not to mention emotional distress. You shouldn’t have to deal with the complicated process of managing an inherited property on top of everything else.
When you’re ready to sell and move on, we’d love to help.
Our team is standing by, ready to schedule a home visit and discuss details. Contact us today to connect and let’s take this next step forward together.