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Selling An Inherited House? Our Guide Covers Legal Steps, Taxes, and Tips.
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Beyond a shadow of a doubt, selling a house after the death of your parents is one of the last things you’ll want to deal with. Handling valuations, real estate agents, showings, and negotiations can be stressful even at the best of times.
However, with such an emotional component added to the situation, it’s going to be notably more difficult.
But there is always light at the end of the tunnel. The best way to navigate a hard situation is with as much knowledge as possible. Knowing what to do and what to expect will prepare you for the ups and downs.
It will break what probably seems like a mammoth task down into more manageable parts. And hopefully, it will help you move through the stages more quickly.
1. Selling my deceased parents' home
To start, let’s outline the essential steps you need to take when selling a deceased parent’s home in the US.
Selling a house after death of parents:
- Establish Ownership: Confirm your legal ownership of your parents’ home.
- Access the Will: Review your parent’s will to identify any listed executors or inheritors.
- Property Valuation: Have the property professionally valued to determine its market worth.
- Apply for Probate: If your parents left a will, apply for probate to validate it and gain the authority to manage the estate. If there is no will, apply to become the administrator of the estate.
- Prepare the House for Sale: Make any necessary repairs and consider staging the home to attract potential buyers.
- Hire a Real Estate Agent: Instruct a real estate agent to help with pricing, marketing, and selling the house.
- Handle Taxes: Organize the payment of any inheritance tax and/or capital gains tax that may be due.
Throughout this guide, we’ll delve deeper into each point.
We’ll also answer common questions about each stage and provide a list of key action points below each section to help you navigate the process efficiently.
2. Verifying Ownership of the Inherited Property
The very first stage in selling a property after the passing of parents is to figure out two things:
- Who owns the property?
- How do they own it?
You may already have the answer, but it’s crucial to remember there are a couple of ways a house can be owned.
The most common for married couples is joint ownership. In the event of your parents’ passing, you’ll need to make absolutely sure of their ownership status.
Namely, check they were not tenants in common.
Tenants in common Explained
If both jointly-owning parents pass away, the property will go to whoever is named in their will (often, this will be children).
However, this would not necessarily happen if the owners were ‘tenants in common.’
This is where each owner holds a percentage share of the house. Often a ‘tenants in common’ contract is used for those not in a close or marital relationship. This might be two friends or business partners making a real estate investment.
It can also be used when one person is paying more than the other or covering more of the deposit costs. In this scenario, the share held by the deceased will not necessarily pass to the other party, even if they are married.
The share will become part of their estate and will be handled according to their will.
You’ll only need to worry about this if your parents purchased their house with someone else who is still alive, like a second spouse or business partner. If so, you’ll need to make a mutual decision regarding the share with the other tenant in common. They might wish to purchase the share themselves, or they might wish to sell the house in its entirety.
Joint ownership
In the most common scenario, a married couple will own a house jointly. In the event of a divorce, the house can be sold and the profits split down the middle.
The only exceptions to this would be agreements made either at the point of purchasing the house or in a prenuptial agreement.
Similarly, when a house is jointly owned, the remaining spouse would automatically become the sole owner of the home if the other passes away. This is called ‘the right of survivorship.’ Their marital rights put them first in line to inherit the matrimonial home.
In this circumstance, when the last remaining parent passes, the house will go to whoever is named in the will.
If there is no will, and no other married or civil partner (e.g., a second spouse who is unrelated to you), children will inherit the estate.
Identifying Property Ownership Status
You’ll need to have a careful look through your parents’ house-related paperwork. Start by looking for the deed or mortgage documents. If you’re unable to find the information you need, you can search for property ownership information via your county’s property records office or online databases.
Locate documentation relating to your parents’ property ownership. If you’re unable to find any, you can visit or contact your local county recorder or assessor’s office to obtain the necessary information.
- Find any documents related to your parents’ property ownership.
- If you’re unable to find these documents, search for ownership information through your local county recorder’s office or the property records office.
2. Accessing Your Parent’s Will: Key Estate Roles Explained
Naturally, the process of dealing with an estate following your parents’ passing is made simpler if there is an established will.
First, let’s understand what is meant by a couple of terms.
Executor
An executor is a person designated to ensure the provisions of a will are fulfilled.
They are responsible for ensuring that the beneficiaries named in the will receive the maximum value of their inheritance. If the executor sells a property for less than its market value, the beneficiaries can claim the difference from the executor.
Executors are also tasked with ensuring that any inheritance and capital gains taxes are paid.
An executor can be anyone over the age of 18.
- They do not have to be a spouse or family member.
- They could even be a trusted professional, such as a family attorney or accountant (although there is usually a charge associated with this).
Usually, just one or two executors are appointed, but there can be up to four. Some parents might name all of their children as executors.
However, keeping the number of executors as low as possible is usually advised.
This is because all executors must agree unanimously on all decisions and actions. The more executors there are, the more likely there will be differences of opinion.
Beneficiary
A beneficiary is an individual named in a will to receive money or assets from the estate.
The creator of the will can name as many beneficiaries as they wish. It is also possible and quite common for the executor to be one of the beneficiaries.
Intestate
If a person dies ‘intestate’, this means they have died without leaving a valid will.
In the US, if there is no will, the state’s intestacy laws will determine the distribution of the estate. If there are no surviving relatives, the estate typically transfers to state ownership.
Administrator
In the event your parent or parents die intestate, and there is no named executor, you can apply to become an administrator of their estate. Your legal rights will be the same as that of an executor.
Having a clear understanding of these roles and terms will help you navigate the process of managing your parents’ estate more effectively.
3. Conduct a Home Appraisal
Before applying for probate, a home appraisal will need to be carried out.
This is because you’ll need to submit the valuation with your probate application. The most common way to do this is with a local real estate agent. They will be able to arrange a valuation appointment for free. This is (or should be) a no-obligation appointment.
Real estate agents understand that valuations are needed for reasons other than to sell immediately.
Here’s the kicker: It’s strongly recommended you obtain two or three appraisals.
Real estate agents will understand you’re likely to have other agents round to value too.
Home appraisal is not an exact science. Some agents may overvalue to try to secure business, others may undervalue in the hopes of a quick sale. With three separate opinions, you’ll be able to get a clear picture and a reliable average of values.
Pro tip: It’s highly recommended to obtain two or three appraisals.
This is especially important if you are an executor of the estate. You have a legal obligation to market the property at a correct and optimal value.
It’s uncommon, but it is possible for real estate agents to make misjudgments and undervalue a house.
If this happens, you, as the executor, may be liable for compensating the beneficiaries for any financial losses they incur.
Real estate agents will understand you’re likely to have other agents round to value too.
Home appraisal is not an exact science. Some agents may overvalue to try to secure business, others may undervalue in the hopes of a quick sale. With three separate opinions, you’ll be able to get a clear picture and a reliable average of values.
Do I Need a Certified Appraiser's Valuation?
You can choose to have a qualified appraiser value the house.
You’ll need to pay a fee for this, usually between $300-$600.
An appraisal will be slightly more data-driven.
A real estate agent might price optimistically, especially if they’re anticipating an upswing in the market.
A certified appraiser will value based on previous sale data and mortgage approvals in the area. In short, you don’t need an official appraisal for these purposes, but it can provide a more precise valuation if required.
Having multiple valuations ensures you can confidently determine the market value and meet your legal obligations as an executor.
This step is crucial in ensuring that you market the property accurately and fairly for all beneficiaries involved.
Something to consider:
When it comes to selling an inherited home, especially in situations involving multiple siblings or other family members, a cash sale can often be the most efficient and stress-free option.
Traditional sales through a realtor can take months, involving numerous showings, negotiations, and the uncertainty of buyer financing.
This delay can cause tension among family members who may be eager to settle the estate and distribute funds quickly to meet other financial obligations. A cash sale, on the other hand, provides a much faster resolution.
By selling to a local investor, you can avoid the lengthy process of listing the property, reduce the risk of the sale falling through, and swiftly release the money tied up in the property, allowing everyone involved to move forward.
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4. Navigating the Probate Process
You’ll need to apply for probate to obtain formal permission to handle the sale of your parents’ property.
The process involves verifying the validity of the will, which can take several months. The sooner you apply, the better.
You’ll need to do this if you were named as the executor of the will. If there is no will, you’ll need to apply for “letters of administration,” so you can become an “administrator of the estate.” You don’t need to apply for probate before putting the house on the market.
However, if probate is not granted in time, the sale cannot be completed.
This becomes extremely difficult if complications arise after the point of contract exchange.
We’ll look more at timing the sale of your property in section 6, ‘Hiring a Real Estate Agent.’
How To Apply For Probate?
You can apply for probate by visiting the probate court or the official state government website.
You’ll have the option to apply either by mail or online.
Before you begin, make sure you’re using the right form. If your parents have written a will and you are named as an executor, you should use the relevant form for executors.
If no will has been written, you should use the form for administrators. In this case, you will become the ‘administrator’ of their estate instead of an executor. If there is no will, you’ll need to apply for “letters of administration,” so you can become an “administrator of the estate.”
There are fees involved in applying for probate. Approved probate fees vary from county to county but are usually between 1% to 6% of the value of the estate.
You’ll also need to provide documentation alongside your application forms, such as the death certificate and the official will (if there is one).
This article provides a good summary of how probate works, with or without a will.
Using A Probate Attorney
Another option is to hire a professional. A probate specialist is usually an attorney or accountant, and they charge accordingly.
You might consider using an attorney if the estate is particularly complicated. For example, if the estate includes a business, is still earning an income, or has a complicated tax history.
Another scenario might be if there are claims or disputes regarding the will.
Key action points:
- Complete an application for probate by mail or via the government website.
- Pay the probate administration fee (varies by state).
- Supply the will (if there is one) and the death certificate to the probate office.
5. Preparing the house for sale
While waiting for probate approval, you’ll have time to prepare the house for sale.
This process can be lengthy, ranging from a few weeks to several months.
During this period, there are many tasks to keep you occupied, especially organizing and preparing the house for sale.
Hopefully, there will be some positive aspects to this stage of the process.
There are no strict deadlines, and you might uncover cherished possessions and memories along the way.
At the very least, it offers a break from the paperwork.
However, sorting, organizing, and preparing a house for sale can be daunting.
Here are some tips to help make this part a bit easier for you (and anyone else involved).
Organize Specific Bequests
If the will specifies certain items to go to named beneficiaries, those items need to be identified and set aside. These items, known as specific bequests, can include valuable possessions like jewelry, antiques, or furniture.
It’s wise to have these items appraised if you believe they might be valuable. Mark these items clearly and leave them in the house to avoid confusion or disputes until probate is completed.
Handle Unspecified Items
There will likely be many items in your parents’ home that are not mentioned in the will. These everyday items, such as cutlery, clothes, and soft furnishings, are not governed by specific laws for distribution.
If friends and relatives want to keep mementos, you can arrange this among yourselves. Conflicts can sometimes arise when dividing these unnamed possessions.
A good approach is to have each person list five items they would like, in order of preference. Ideally, everyone will have different priority items. If there are overlaps, you can negotiate and work down the lists, ensuring everyone gets something meaningful to remember your parents by.
Clearance
For items not designated to beneficiaries or taken by family, you might need a professional house clearance service. These companies can efficiently clear out the house. It can save you significant time and effort compared to doing it yourself.
Timing the House Clearance
Houses generally sell better when furnished, as it helps potential buyers visualize the space.
However, any clutter should be minimized to make the house more appealing. When houses are empty, imperfections like wall marks, chipped paint, and worn carpets become more noticeable.
Because of this, you might prefer to wait until you’ve found a buyer before clearing out the house. However, most buyers prefer not to deal with leftover items. Once probate is granted, sales can proceed quickly.
You might choose to clear the house gradually or wait until a buyer is found, but be prepared to clear it quickly once the sale is imminent.
Remember: If you list the house, quickly find a buyer, and that buyer is eager to move in, you’ll have a limited amount of time to clear out the house.
Should I Renovate The House or Not?
Should you redecorate or leave the house as is? Deciding whether to strip wallpaper, replace carpets, or install a new kitchen can be challenging.
Interestingly, it’s often best to leave the property as it is. In the US, a small proportion of home sales are probate sales. These properties tend to attract buyers specifically because they often need renovation, presenting opportunities for buyers to invest and personalize.
Investors are particularly keen on probate properties as they can be renovated for rental purposes or resale at a profit.
However, if the house does not require extensive renovation, minor touch-ups can be beneficial. Simple tasks such as painting baseboards and filling holes can create a positive first impression without significant expense. Additionally, while furnishing the house can make it look more inviting and help buyers visualize the space, removing clutter and depersonalizing the home is equally important.
Key action points:
- Leave As-Is for Major Renovations: Many buyers, especially investors, prefer probate properties that they can renovate themselves.
- Minor Touch-Ups: If the house is in decent condition, minor repairs and sprucing up can enhance its appeal without significant costs.
- Staging: Consider leaving essential furniture for staging while removing personal items and clutter to help buyers envision their future home.
By understanding the needs of potential buyers and the typical market for probate properties, you can make informed decisions that maximize the appeal and value of the home.
Enhancing Curb Appeal
Items like sofas, beds, tables, and plants are excellent for staging a property, helping potential buyers visualize the space.
However, decorative items and clutter should be removed to create a cleaner, more appealing environment.
The exterior of the property is equally important; while some signs of wear are acceptable, the overall outdoor space should be manageable for buyers.
Removing old garden furniture, repairing dilapidated sheds or greenhouses, and fixing broken fencing are key steps in making the property more attractive.
Finally, trimming the grass and pulling weeds can significantly enhance the home’s curb appeal.
Key action points:
- Identify and set aside specific bequests for beneficiaries.
- Distribute unspecified items among family and friends.
- Use a clearance company for remaining items.
- Decide on minor renovations to improve the house’s appeal.
- Maintain the exterior to create a good first impression.
6. Hiring A Real Estate Agent
One of the more challenging aspects of selling a parent’s house is beginning the actual sale process. This step can feel emotionally overwhelming, as it often signifies a significant shift.
You might find it difficult to hand over the keys to an agent or to think about strangers entering your parents’ home. These feelings are normal and part of the process.
To ease the emotional burden, try to view this step positively.
Finding the right buyer means the house will be cared for and loved, creating new memories for another family rather than remaining empty. As an executor, you have some control over choosing the right offer, ensuring the best outcome for your parents’ wishes and the beneficiaries.
When Should I Bring a Realtor on Board?
You may choose to engage a real estate agent before probate is granted, but you’ll need to inform them about the status of your probate application.
Prospective buyers will want to know the expected timeline. If you’re the executor, acting promptly can help resolve the estate efficiently.
The best time to instruct an agent depends on the the anticipated time it will take to sell the house.
If the house is affordable and located in a desirable area, it might attract buyers quickly.
Keeping the buyer informed about the probate timeline can help retain their interest.
However, if the property is unique, high-value, or requires significant repairs, it may take longer to find a buyer.
In such cases, it’s beneficial to instruct an agent sooner rather than later to avoid prolonged waiting periods after probate approval.
Key considerations:
- Assess how long you think the house might take to sell.
- Inform the real estate agent of your probate application status for their guidance on the market timing.
- Be realistic about the time it will take to sell the property; it can vary based on many factors, including market conditions and property condition.
It’s important to have realistic expectations about how long it might take to sell your parents’ property.
Working with a real estate agent can take several months, as the timeline will depend on various factors, including market conditions and the property’s condition. However, if you need to sell quickly, partnering with a fast home-buying company could be a viable option.
You can use our cash buyers’ study to find a reliable and trustworthy service, and decide whether expediting the sale of the house is right for you.
By understanding the steps involved in selling an inherited house and preparing accordingly, you can navigate the sale process more smoothly, ensuring that you honor your parents’ legacy while fulfilling your responsibilities as an executor.
7. Organize for Payment of Inheritance and Capital Gains Taxes
When selling a house after the death of parents, managing the payment of taxes is crucial, as this process involves strict deadlines. While there is no specific deadline for applying for probate or putting the house on the market, inheritance tax (IT) and capital gains tax (CGT) have defined timelines that must be adhered to.
When To Pay Inheritance Tax (IT)?
If you believe estate taxes may be owed on your parents’ estate, it’s wise to consider making partial payments as soon as possible. This is because federal estate taxes are typically due nine months after the date of death, not after the sale of the house.
Any delays in the probate process or the sale of the property could push you past this nine-month deadline. After that, the IRS will begin charging interest on the unpaid balance.
If you use your own funds to make an estate tax payment, you can be reimbursed from the estate once it is settled.
Should you overpay, the IRS will issue a refund once the probate process is complete. If you anticipate difficulties in making this payment, you can apply for an extension or request a payment plan from the IRS.
If estate taxes are owed, they must be paid within nine months after the date of your parent’s death. Failure to meet this deadline can result in interest charges or financial penalties.
As the executor of the will, it is your responsibility to ensure these taxes are paid on time. This involves assessing the overall financial picture of your parents’ estate, including any outstanding debts. These debts must be paid as a priority once the estate is liquidated and funds are available.
If the estate includes assets used in farming or a business, it may qualify for certain tax reliefs under federal or state law. Additionally, any substantial gifts your parents gave in the last few years may be subject to a “gift tax,” which could impact the overall tax liability of the estate.
After the estate is sold and debts are settled, the final estate tax bill can be calculated. As of 2023, if the estate’s value, after debts, is under $12.92 million, federal estate taxes will not be owed. However, any amount above this threshold is subject to estate tax.
For those needing assistance with calculations, the IRS provides tools and resources, and consulting with a tax professional is advisable to ensure accuracy.
Executor Responsibilities
As the executor, it is your responsibility to ensure inheritance taxes are paid on time to avoid penalties.
This includes assessing your parents’ overall financial situation and prioritizing the payment of any outstanding debts once the estate is sold. If the estate includes a business or farming operations, it might qualify for tax reliefs.
Additionally, valuable gifts given by your parents within the last seven years could be subject to inheritance tax.
Capital Gains Tax (CGT)
Capital gains tax applies to profits made from the increase in value of inherited items, such as property, antiques, or stocks.
While there is no immediate urgency to pay CGT at the time of inheritance, it becomes due when the inherited assets are sold.
The stepped-up basis rule helps minimize CGT by resetting the asset’s value to its market value at the time of the original owner’s death, thereby reducing the taxable gain.
Estate Tax
In addition to capital gains tax, you may also need to consider the potential impact of federal estate tax.
The estate tax is levied on the total value of the deceased’s estate if it exceeds the federal exemption limit, which is $12.92 million as of 2023. However, most estates do not meet this threshold.
If the estate’s value does exceed this limit, the executor must file a federal estate tax return and pay any owed taxes within nine months of the decedent’s death.
Depending on your state, there may also be state-level estate or inheritance taxes to consider. Consulting with a tax professional can help you navigate these obligations and ensure compliance.
For additional information on estate taxes, refer to the IRS’ website.
Resources For Further Help
IRS Inheritance Tax Guidelines: Click Here
Estate and Inheritance Tax Information: Nolo
The organisations listed below are currently offering support via email and online chat.
Free and impartial money advice: Consumer Financial Protection Bureau
Support and Guidance on Bereavement: Debra
If, after reading this guide, you decide that selling the property for cash is the right choice, we can connect you with reliable buyers.
Selling an inherited home for cash is often the quickest and easiest option, especially when multiple family members are involved. Unlike traditional sales that can take months, a cash sale avoids long delays and the uncertainty of buyer financing.
This allows you to settle the estate and distribute funds quickly, making it easier for everyone to move forward.
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We aim to support as many homeowners as possible. That’s why we’ve put together this detailed guide. If you’re planning to sell your home, contact us at hello@homesalehardy.com.
Based on your needs and circumstances, we’ll connect you at no cost with one of our thoroughly vetted, ethical partners. They will assist you in selling your home for the most realistic price possible.
They handle all legal details and fees, and you’ll receive the payment directly into your bank account. Our partners can facilitate a very quick sale or a more extended timeline if you’re not in a hurry.
While quicker sales typically fetch a lower price, they do save you time.
Ultimately, the best approach depends on your personal needs and preferences.
Final Thoughts
A parent passing away is always a huge turning point in our lives.
It is an emotionally challenging experience, and managing the sale of their home adds to the burden.
By understanding and preparing for the tax obligations involved, you can navigate this process more smoothly. If the process seems overwhelming, consider consulting with a probate attorney or a tax advisor to ensure all legal and financial responsibilities are met.
Use our cash buyers comparison table to find a reliable and trustworthy service, and decide whether expediting the sale of the property is right for you.
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