Inheriting a home from a loved one can be an extremely difficult time in one’s life. Prior to inheriting the home, you were probably dealing with a family member who has been battling a sickness or moving on from old age. The last thing you are thinking about during this period of time is what you will do with their assets or real property. However, when the house is passed to you, figuring out what to do with it can present emotional and financial issues.

You will be placed with the task of making difficult decisions during each step of the process. There are several different topics that we will discuss and we will go over the best practices of each of these topics to help assist you through the sale process. Some of the categories that we will be talking about are:

  • The tax implications of the sale of an inherited home

  • Your selling options when it comes to selling the property

  • How to prepare for the sale

  • The art of pricing your home & it’s importance

  • Negotiation tactics & why they are important

  • The sales process and what to expect

  • And much more…

This ebook is meant to educate you on the process of selling your inherited home and answer any questions that you may have as you move along the process. The process of selling an inherited home can become very complicated. There are different procedures you need to be aware of when selling an inherited home compared to selling traditionally. The more you know on this specific topic, the easier it will be for you to manage the sale.

 

You Just Inherited A Home – Now What?

 

The initial steps of selling an inherited home are where the major differences will be noticed when comparing to a traditional sale. Most people think that inheriting a home is an easy process, providing the members or beneficiaries with a type of property reward. However, the truth is that being willed real property offers several unique challenges. The initial steps of this process can be the most aggravating and stressful as this process can take the court’s months to divide the deceased person’s assets, including their real property. These steps will help you know what to look out for in the initial months after you inherit a home.

 

Is There A Valid Will

 

The first step in the process will be to determine whether the deceased individual has a valid will. When a person dies and they leave a will they are referred to as a “testate”. If the decedent passes without leaving a will, they are referred to as an “intestate”. In the state of NY there are 3 different estate proceedings that can be followed, they are:

  • A Small Estate – If a person died with less than $30,000 worth of personal property. A simpler and less expensive way of dividing up decedents estate.

  • Probate – If the person who died had a will, then you will be forced to go through probate to divide up the assets in question.

  • Administration – If the person dies without a will, then you will file for an administrative and the property will be divided by law.

Generally speaking, the majority of the time, the assets that have been passed down will be pushed through probate. Probate is the court process by which a will is proved either valid or invalid. This process is held in the hands of the surrogate court and they will need to see that the will is proved to satisfaction. Once the will is deemed valid, the Executor, who is named in the will, will be appointed to distribute the estate. At this time they will attempt to move forward with the wishes of the individual who passed.

 

Filing For Probate

 

According to NYCourts.gov “The individual who has been deemed the Executor will file the original will and a certified copy of the death certificate with the probate petition and other supporting documents in the Surrogates Court in the county where the Decadent person had their primary residence”. Be sure that you list all of the “heirs” on the probate petition and these individuals must be served with a notice. Once this happens, the Surrogate courts will not have control over the “heirs”. At this point, the notice that was delivered will make the “heirs” aware that the executor has filed for an authority of the estate. If the will has beneficiaries that are due to receive assets in the will, they must be notified of the probate proceedings.

 

Estate Payments

 

Following the appointment of the courts; all estate, funeral expenses, taxes, and debts must be paid from the estate. During this point in the process, the personal representative will determine with liens or claims are legitimate and decide to pay those final bills from the estate proceeds. In some instances, you will be able to sell estate items to finalize these obligations.


 

Tax Implications When Selling Your Inherited Home

 

Before we get into your options to sell, I want to discuss the tax implications of the sale of your property. This will give you a better idea of what vehicle you would like to use when selling. If you decide to go ahead and sell the property that was passed down to you, you should understand how the taxes work when you complete the sale. You will have to share the information of the sale with Uncle Sam because you will owe income tax on a gain or profit from the sale. However, if you sell for a loss you may also be eligible for an income deduction. This is all going to depend on how you handle the property and when the decedent passed away.

 

Capital Gains Tax on Gains or Losses

 

The sale of your inherited home will be treated as a capital gain or a loss for tax purposes. You will have to pay these capital gains taxes if you plan on using this property for investment purposes (such as selling). If you plan on living in the home you will be eligible for the home sale tax exclusion, if you end up living in the home for more than 2 years. This means that you will not have to pay any tax on the profit from the property on anything under 250,000 if you are single and anything under 500,000 if you are married.  The good thing is that if you plan to use this property for investment purposes you will only pay tax on the difference between the sales prices and the "stepped up basis" at which you inherited the property. 

 

Stepped Up Basis

 

The properties “stepped up basis” is the full market value of the property at the date of your parent’s death. This is very beneficial to the new owner because now you will only be paying tax on the difference between the final sales price and the stepped up basis price or current full market value of the property. For example suppose you inherit a property that was purchased for $100,000 in 1995 and it is now currently worth $200,000. You will receive a step up from the original cost basis of $100,000 to $200,000. If you were to sell the property right away for the $200,000 or full market value then you would not have to pay any capital gains tax. However if you ended up selling the property for $250,000 a year later then you would have to pay capital gains tax on the difference ($50,000).

 

Reporting the Sale Proceeds to the IRS

 

The IRS requires those who sell their property for a gain to report that gain as taxable income. So your first step is going to be to subtract the amount you sold the property for from you’re stepped up basis price. From here you will know the total amount that you are going to be required to file for. You will then report this gain or loss on your schedule D. This is the form used to calculate capital gains or losses. Finally, you will have to copy the gain or loss over to your form 1040 tax return. 

 

Even if you do not end up paying capital gains tax on this property it is still a good idea to report the sale to the IRS.
 

Your Options When Selling Your Inherited Property

 

  At this point, we have the more detailed specifics out of the way in regards to the inherited sales process. Those initial steps can become very complicated. It is best if you take the extra time and continue to educate yourself on the Will, so you can be more comfortable throughout the process. You now understand the preliminary steps and the tax implications of the sale, let’s discuss the exit strategies you have when it comes to selling.

When it comes to the sale of the real property in the Will, there are a couple options that you can consider. Each option will offer its own unique benefits to the inherited homeowner. The option you choose will depend on:

 

  • The market conditions

  • Your current financial status

  • The condition of the home

  • The location of the home

  • Your knowledge of Real Estate

  • Your intentions for the home

 

There are 4 different options that you have when it comes to selling your property. These 4 options are:

 

  • Listing with an agent

  • Selling to a real estate investor

  • For sale by owner

  • Renting the home out

  •  

Listing With An Agent

 

Selling your home with a real estate agent is the traditional route that most homeowners use to sell. If this is the vehicle that you intend to use, I recommend that you hire a real estate agent who has worked with this specific situation. Hiring a real estate agent does not mean that you are no longer involved in the transaction. You should do some research on your local market. This will help you better understand the market conditions. Find out if we are in a buyer’s market or seller’s market.

 

The benefits of listing your home with a real estate agent are:

 

  • They do understand the market & the conditions

  • They have the tools to price your home right

  • They will handle all the negotiations

  • They are in charge of the showings/open houses

  • They handle the marketing & paperwork

  • They should have a network of other agents, who can bring potential buyers

  • Have access to the MLS to list

 

The negatives of listing your home with a real estate agent are:

 

  • Home can sit on the market for months

  • The longer your home sits the more holding costs you have to pay

  • Have to prepare the property for sale

  • Closings can take months

  • If the property is run down, will be hard to find a buyer

  • Will have open houses/ showings – people walking through property often

  • Have to pay real estate commissions on sale

 

Selling To A Real Estate Investor

 

Selling your home to a real estate investor offers a lot of appealing benefits to people who have just been willed a property. Before you decide to move forward with this selling vehicle, we suggest that you do some preliminary research to find a company that is trustworthy and responsive while having the ability to meet your needs. The process of selling to a real estate investor is a bit different from selling the traditional route, solely due to the fact that you will be more involved with the process. Even though, you will be more involved in the process, a good Real Estate Investment Firm can make home sales very simple.

 

This is the process of selling to a real estate investor:

 

  • Seller contacts real estate investor (phone or internet search)

  • Real estate investor collects property to date and seller information

  • Real estate investor sets up appointment to meet owner and evaluate property

  • Real estate investor will run his numbers

  • Real estate investor will propose a no obligation cash offer

  • If you agree, seller will sign purchase contract

  • Paperwork will be sent to attorney

  • Closings within 21 days – Seller has check within 21 days of signing

 

The benefits of selling to a real estate investor are:

 

  • Quick sales

  • Cash offers

  • Fast closings

  • No repairs

  • No commissions

  • No hidden fees

  • No open houses/ showings

  • Limited holding costs

  • You have a buyer

 

The negatives of selling to a real estate investor are:

 

  • Discounted sale price

  • Seller in charge of negotiations

  • Investor do not need a license to buy – do your research on the investment firm that you choose to move forward with

 

This option offers several unique benefits to the seller of an inherited home. If you have a reputable investment firm in your local community it is worth taking a look into. The offers that they give you will be obligation free so you will not have to accept what they offer and you can negotiate off of that price. We would suggest experimenting with this process before listing with a real estate agent to see if you can come to an agreement on price since this will be your easiest option.

 

Selling For Sale By Owner

 

Selling for sale by owner will be your most difficult option and I do not recommend using this vehicle unless you have educated yourself on what this process entails. However, with that being said, it is definitely possible to go this route. Selling for sale by owner entails that you will be involved throughout the whole process – from the market research to the closing.  The more you are prepared for this process and the better the plan you have put together, the better odds you will have of selling for sale by owner in Syracuse NY. Here are 5 topics that you should begin to educate yourself on if you are considering selling for sale by owner:

 

  1. Comparable Market Analysis

  2. Flat Fee MLS Listing

  3. Marketing

  4. Paperwork

  5. Preparing to show/ Open Houses

 

The benefits of selling for sale by owner:

 

  • No real estate commissions

  • No contracts

  • No middle man

  • Get rewarded for your hard work

  • Can capitalize on low equity situations

 

The negatives of selling for sale by owner:

 

  • All of your own research

  • Handle all negotiations

  • Home Pricing

  • Marketing of home

  • Handling all of the paperwork

  • Showing the home

  • Preparing the property for sale

  • Takes up a lot of time

 

If you choose to go this route, make sure that you educate yourself on all of the different steps of this process. Try to come up with a game plan on how you will approach each step and execute the plan. If you are prepared and aware of how this process plays out, you will have good odds of executing a successful sale.

 

Renting Your Inherited Home

 

Another option that you have at your disposal is renting the home out. If you have experience in being a landlord or would like to make some extra money, this can be a route that you consider. If you do not have experience with being a landlord, we suggest that you also begin to educate yourself on how to evaluate a property, screening tenants, hiring property management and hiring construction work for necessary rehabs. If you do decide to rent your inherited home out, do some due diligence on these specific topics:

 

  • Run The Numbers – Cap Rate , Net Operating Income, Rental Rates, Cash Flow, Repair Costs, Expenses

  • Check and see if there is a mortgage on the property

  • Understand the current rental market

  • Is the property in a good location

  • What is the average rent going for comparable properties

  • Will you be able to put manageable tenants in place

 

The benefits of renting your inherited home:

 

  • Extra Income

  • If you have mortgage – can build equity

  • Tax Advantages

  • Learn How to, Landlord

 

The negatives of renting your inherited home:

 

  • Possible Costly Repairs Prior and During Occupancy

  • Disputes With Tenants

  • Evictions

  • Business Expenses – Renovations, Tenant Turnarounds, Property Management

 

Consider both the pros and cons to renting your inherited home. If you are in a good financial position, then this may be a good option for you.

 

How To Prepare For The Sale Of Your Inherited Home

 

This step of the process is never easy. You will be tasked with managing your emotions while also handling the sale of your loved one's belongings. This will be an emotional and physically draining task, that will force you to make quick decisions on what to keep and what to throw away. However, this is an important part of the sale of the home you inherited. Getting your inherited home in good condition and following some best practices will leave you with a better opportunity to complete a hassle free sale.

 

Cleaning Out Personal Belongings

 

When you inherit a home from a loved one, you will be tasked with the challenge of cleaning out the residence that she once lived in. Depending on how your loved one lived, this job has the capabilities of being very labor intensive and challenging. Here are some tips that will help make this part of the process a little easier on you and your family.

 

  •  

  • Divy up the physical labor

  • Be meticulous, even when you are tired

  • Hire a professional estate appraiser to value certain belongings

  • Locate all financial statements

  • Keep all sentimental photos and memorabilia

  • Consider a liquidator

 

Although this process will be very difficult on you and your family, it will be an opportunity to say your final goodbyes and remember your most cherished memories with the loved one who past. Do not rush this step of the process, make the most of it and use this time make a final connection with the residence and your loved ones.

 

Estate Sales

 

An estate sale is an inevitable situation that each and every one of us will find ourselves in someday. At some point in time, a relative is going to pass or move into a nursing home. During that time the survivors will be responsible for deciding on the best route to liquidate these assets, both items and real property.

 

This can be a very difficult period in your life because in a sense you will be mixing your emotions with business while trying to sell belongings that still hold meaning.

 

An estate sale by definition is "A sale that occurs when a homeowner dies or moves to an assisted-living facility. Those who inherit the home get the proceeds from the sale. If the owner dies without naming someone in the will to sell the house, an estate sale is called a probate sale, because a probate court appoints a relative or friend of the deceased to handle the sale."

You will have several different mediums that you can use to sell both household items along with the property that is in consideration. Your first option to consider will be hiring an estate sale company (which we will touch on later), you can sell your household items on craigslist, ebay or an auction house. In regards to real property that is in question, you can list with a real estate agent, sell FSBO or receive a quick sale from a real estate investment firm. Here are some quick tips to consider when handling an estate sale.

 

1) Hire an Estate Sale/ Liquidation Company - It can be very time consuming and possibly costly to try and manage and run an estate sale by yourself. There are professional services that have years of experience dealing with these types of circumstances. Connect with a firm that has experience in this field, read reviews and do your research on the best local companies in Syracuse NY. The biggest benefit to hiring this type of service company is the pricing, organizing and display work they put together for your sale.

There are some concerns that you need to overcome before choosing a firm to hire:

  • Some estate sale firms have minimums regarding the total value amount of possessions

  • Commissions can run up to 30% of proceeds to advertise and manage the sale

  • Understand each company's requirements, since they all are different

 

2) Convenient Sales Dates- Choosing dates that are not on around holidays will be beneficial to your estate sale in Syracuse NY. Typically when events are held around holidays, they see less foot traffic then if they were on specifically chosen dates with no contradictions. You should also try and plan around the weather - even though we all know that is nearly impossible in Syracuse. Obviously we do not want to hold an estate sale on day where it is rainy or really windy.

3) Do Not Throw Anything Away- I understand that you may think that there is no value in some of the items that have been left behind but a customer at your estate sale may disagree. Do not try and guess on the value of items that will be sold in the estate sale. If you are hiring a liquidation company to organize and price your items, let them decide the value of all of the items in the home. If you are going to manage the estate sale yourself, I recommend that you do your research so you better understand the value of all of the items that you will be selling.

 

4) Greet Every Customer - Just like any other business or sale, customer service is the most important aspect of the transaction. You will make each customer more comfortable and willing to ask questions if you welcome them to your sale. You will also mitigate some of the risk of customers trying to steal. For some reason customers have a hard time stealing from people that they have just looked in the eye (not all of them though). Make sure that you are friendly, honest and helpful throughout the whole day and try to get an understanding of what customers may be looking for. Try to ask questions and listen to what they have to say. Treat this like a business transaction even though it is under the current circumstances of an estate sale in Syracuse NY.

 

- Whether you decide to go with a liquidation company or manage the sale yourself, one of the most important aspects of the sale will be creating a good amount of foot traffic. In order to create this foot traffic, we must do a good job of marketing and advertising. In today's day and 5) Marketing / Advertisingage there are several different mediums we can efficiently market on that are either free or very low cost. If you do end up hiring a liquidation firm make sure that you ask questions on how they intend to market.

 

This is for 2 reasons:

 

1) You want to understand their marketing plan and how they are going to bring people through the doors

2) You want to make sure that you are not double dipping on any of the marketing techniques they intend to use.

 

Liquidating your Real property After Your Estate Sale in Syracuse NY

 

So we have discussed some specific tips to help you sell your specific household items that have been willed to you.

 

The next question is what will you do with the property that you had the estate sale for?

 

You have a few options when it comes to liquidating the real property from the result of an inherited property. Each option offers different benefits to the new owner. The vehicle you use to sell will depend on your specific intentions, current property condition and market conditions. If the property is in good condition, there is no repairs that are needed and you are in no rush to sell, you should consider listing the property with a real estate agent. This situation makes the most sense for a traditional sale. Especially in the current real estate market conditions, where there is a lack of supply and above average demand for housing. This option and situation has the potential to result in an efficient full market sale.

 

If the house was willed to you and is tight on equity, in other words the value of the home is close to the mortgaged value, you may want to consider selling the property for sale by owner. Selling for sale by owner can be complicated, however if you understand the process and know what to expect, it is very possible to sell using this option

 

Now if you have been willed a house that is in average to poor condition, you no longer want to deal with property and are interested in a quick sale, your best bet may be to sell to a real estate investment firm. These firms will be able to purchase your house in cash, you will not have to make any necessary repairs, they will be able to close in around 21 days (pending certain paperwork) and will typically result in a hassle free sale.

 

Determine The Price of Your Inherited Home

 

There are two reasons that a home doesn’t sell. One is due to the condition and the other is due to the price. These two variables correlate with each other. If your inherited home is in poor condition, it is obvious that you will need to price your home below market value. If the home is in great condition, you will be able to sell at or above market value depending on market conditions. Remember that your main goal in this situation is to choose a price point that will allow you sell at a reasonable price in a short amount of time.

 

One thing is for sure, pricing your home right is one of the most important components in the selling process. If you set the price to high, you run the risk of:

  • Turning off potential buyers

  • Your home will not compare favorably with other properties

  • Buyers may not see the listing, since they will be using lower price points

 

Comparable Market Analysis

 

 

Pricing  your home based on condition, location and amenities of comparable properties in your area while also taking in consideration market conditions will allow you to price your home competitively to sell.

A comparable market analysis is an evaluation of similar, recently sold homes (pending sales) that are located near the subject property in question.

 

A detailed comparable market analysis will take in consideration several different features to determine an accurate price for you to list your inherited home:

 

  • Similar Square Footage

  • Similar Age of Construction

  • Similar Amenities, Upgrades & Condition

  • Location

  • Market Conditions

  • If Necessary : Repairs Report

 

Be sure to take your time with this step. If you are going to sell the traditional route, consult with a professional realtor. If you decide to sell to a real estate investor or by yourself, do your research and come up with a price range that you feel your home is worth.
 

What You Need To Know About Real Estate Negotiations

 

In any transaction, negotiations transpire. The buyer will ask for a certain price and terms and the seller will push back. If you are buying, you are looking for the best deal and sellers will be looking for the highest price. When dealing with an asset like real property, negotiations are extremely important because a lot of cash can be at stake.

 

“Prepare by knowing your walk away [conditions] and by building the number of variables you can work with during the negotiation... you need to have a walk away... a combination of price, terms, and deliverables that represents the least you will accept. Without one, you have no negotiating road map.” - Famously stated by Mr Thomas C Keiser.

 

In real estate, the market conditions will determine who has the upper hand. If we are in a buyers market, those looking to buy can walk away because their is a large supply of property. However, in a sellers market, sellers will have the upper hand due to lack of supply and high demand. So when you decide to sell, know the market conditions and which state of the market you are selling in.

 

Educate Yourself on Negotiation Tactics

 

In today’s economy, the concept of negotiations are becoming a lost art. Typically we see a price and we are expected to pay that price. There are only a few circumstances where price is deemed negotiable and one of those exceptions is real estate. Here are a few tips that I want you to remember when you are negotiating the price of your inherited home.

 

- The first thing I want you to understand about negotiations is that everything can be negotiated, not just price. For 1) Everything is negotiable instance within a real estate transaction, you have the ability to negotiate:

  • Closing Costs

  • Closing Dates

  • Contingencies

  • Home Repairs

  • Appraisal Contingencies

  • Furniture

  • Appliances

  • Inspections … among more

     

2) Always Make A Counteroffer - Acknowledge that under the current circumstances you will be receiving low ball offers. It is best not to be offended by these offers but to accept them and begin the negotiating process. Since you do have a buyer that may be interested in purchasing, it is worth your effort to try and come to a mutual agreement.

 

3) Avoid Emotional Decisions - This whole process can take a toll on both you and your family and it is very easy to become emotional during the sale. After all, you probably have several memories in the home and understand that your deceased loved one spent their last moments in this home. Do not get too caught up in the words, price or terms that are offered. You need to treat this part of the process as a business decision and choose the option that is right for you and your family.
 

Finalize The Deal | The Closing Process

 

When either buying a house or selling a house, you will finalize the sale of the home through the closing process. Once your offer has been accepted, the inspection has been completed and financing is in order you will then have to attend the settlement or closing (In NY if you are selling, you do not need to attend). Once you have reached this point in the sale, a lot of the work is out of your hands and in the hands of the attorney. (so choose a good one)

 

However, there are points throughout this process where a deal could fall through.

 

Here are the top 4 reasons a deal could fall through after a contract is signed:

 

  • Buyer financing - lack of commitment from bank - cash offers are the best.

  • Home doesn’t appraise - this will probably not apply to the sale of your inherited home.

  • Hiccups in Title Work - Liens, unknown mortgages, violations and such can hold up a sale.

  • Investors / Buyers Remorse - Some buyers get cold feet throughout the process and pull out of the purchase

 

The Closing Process

 

Now that you understand the reasons a sale could fall through, let’s talk about how the closing process actually works. If you are selling to a real estate investor or a cash buyer, typically closings will take less than a month depending on title, abstract and survey availability. If you are selling to a homeowner who needs financing from a lender, closings could take anywhere from 45 days to 120 days (with much better odds of the deal falling through). The closing process consists of several different components that we should touch on so you have a better understanding of what tasks your attorney will be performing.

 

1) Title Search- The title search is run prior to going to the closing table. This ensures that the seller of the property has clear title to the property, that there are no liens/judgments on the property as well as other information that is important to the closing.

 

2) Survey- This goes along with the Title Search. If the seller has the survey he will be required to give it to the title company for review for closing.

 

-The buyer's attorney begins preparing the paperwork for changing the 3) Preparation for the sale of your inherited hometitle / deed and will prepare title insurance, and a final closing date is scheduled on or around the date indicated in the contract.

  • If you are buying the property you will be required to bring the total discussed amount needed to close to the closing table.

 

4) Final Walk Through- A final walkthrough will be performed prior to the closing to ensure that the property is in the same condition as when the process began.

 

5) Closing Table- At the Closing table, the buyer (and seller) sign all closing documents, including the HUD-1, and the final loan documents.

 

6) Down payment- The buyer pays the remaining funds in their down payment to an attorney or a representative of the title company (who is present at closing) via cashier's check

 

7) Record- The representative from the title company or your attorney will then record the transaction and deed with the appropriate municipality.

 

8) Keys- Buyer receives the keys and is granted ownership to the property.

 

The closing process, for the most

part is fairly simple. As with anything, educate yourself on the process prior to going to the closing table. Be sure that you are prepared in order to make this process go as smooth as possible. Make sure you communicate with your buyers, realtors and title company throughout the process.

In Conclusion

 

As we conclude this ebook, we hope that we were able to give you a fairly detailed look into the process you will or are experiencing. Each step of the process has its own complications and difficult decisions that need to be made. Our main goal was to give you a better understanding of how to handle each decision that you will have to make, so that you will be more comfortable with the sale of the home you inherited. As we stated earlier it is never easy to deal with the death of a loved one, so if you can simplify the process of liquidating the assets that your acquire, it will be easier to focus on the good times and memories you experienced with the individual who deceased.

 

As you have gone through this book, we hope that each chapter has offer some unique tips to move you forward depending on which step of the process you are in. If you have any other questions be sure to reach out to us. We would love to further elaborate on any other topics or concerns you may have. Also if you have decided that you are going to go the simplest route and sell to a real estate investment firm, we would love to be apart of this also. In order to get started with this process, head over to www.hspropertyfunds.com, submit your property information, explain your situation and we will begin the process of purchasing your property if it will benefit all parties involved.

 

We hope that you enjoyed this e book and we want to thank you for taking the time to read it. We wish you the best with the sale of your inherited home. We believe that if you follow the best practices preached in this e book, you will have no problem executing a successful sale.

 

 

The Supreme Guide To Selling An Inherited House in Syracuse NY

We are committed to serving you with quality and value. We believe that everyone deserves to have an alternate, hassle free home selling solution. We offer our expertise to get you the outcome you want.

Reserve A Complimentary Property Consultation With the Experts at

HS Property Funds 

315-516-8023

5701 East Circle Drive #163

Cicero NY, 13039

  • Wix Facebook page
  • Wix Twitter page
  • Wix Google+ page