When you inherit a home, it can either be a welcome addition to your properties or be a burdensome issue. It all depends on your situation and circumstances. When you inherit a home, you have a few options on how to move forward. Firstly, you can choose to live in the house. Secondly, you can rent out the house and earn some income as a landlord. Thirdly, you can choose to sell the house.
If you decide to sell the property, you have a couple of ways of doing that. You can either hold an estate sale, sell it on the open market, or sell it as-is to a cash buyer like Four 19 Properties.
Some of these options require more work than others. But if you plan to sell your inherited property on the open market in Texas, below is a handy guide to explain all of the many steps and potential pitfalls that are ahead of you.
Inherited Property In Texas And How To Sell It
Know What You’re Getting Into
If you decide to sell the home you’ve inherited in Texas, the first thing to find out is how much it’s worth. The easiest way to determine this is to look at similar homes in the area that have sold recently and see what they were sold for. There are likely differences based on the condition of houses and features included in each property, but it gives you a good idea of the going rate.
Next, you need to know the current financial situation and how it will affect the value. For instance -how much is still outstanding on the mortgage? Is the home free and clear? Are there potential foreclosure issues or liens attached to the home? Are the property taxes up to date, or have they been adding up while the previous owner dealt with hardships? Once you answer all of these questions, you’ll get a clearer picture of the house’s true value and what it should be listed for on the open market.
Prior to listing, you will also have to be clear on the ownership of the property. Will you be the sole inheritor, or did multiple family members inherit the house? If the latter, is everyone in agreement that the home should be sold? If that is not the case, you may need to “buy out” the other inheritors in order to proceed legally. That could be a number contingent on the final sale price or an upfront payment. However, you proceed to make sure that everything is documented and authorized legally.
How Does This Impact You?
When you sell an inherited property, there are lots of financial obligations that you need to take into consideration because you might not be aware of them beforehand. You could be on the hook for taxes related to the proceeds of any inherited property sale. Though Texas doesn’t have an inheritance tax, you will be responsible for federal taxes, which will be determined by the house’s value. The tax rate depends on how high or low the home value is.
Remember, inherited properties do not qualify for a home sale tax exclusion unless you first live in it for two years. So that could be a tax code bonus that you could miss out on. But, the good news is that you can take advantage of the stepped-up tax basis. Basically, this means you won’t pay a capital gains tax on anything prior to the previous owner’s death. You will only be on the hook for as long as you’ve been the property’s legal owner.
When you sell, you will have to report the sale proceeds to the IRS because they see inherited home sales as taxable income. That exact number is based on any improvements you make to the property as well as the fair market value. Even if you don’t owe any taxes, you still need to make sure you report it to the IRS to not run into issues down the road.
Prepare The House To Sell
Once you’ve got all the financial considerations sorted out, you need to make preparations to sell the house on the open market. Which means you’re going to have to first get rid of any personal belongings left behind. For instance, if the previous owner was a hoarder, that means you probably should bring in a cleaning crew that knows how to handle that kind of situation. You will also need to do some decluttering in order to get the house looking suitable for buyers. That could mean depersonalizing rooms, hiring a stager, and a photographer who understands the best way to present a home.
When it comes to removing personal belongings, this can be difficult, so it would be good to think about where everything should go. If you want to keep some keepsakes, you should gather them right away. You also should check with other family members or friends to see if they would like to save anything. As for what’s leftover, you will need to decide what should be given away, what should be thrown away, and what items you can or should sell. Selling certain things can help pay costs on taxes related to the home sale. You can also hold an estate sale or yard sale to find motivated buyers for furniture and home items.
The Price Is Right
Pricing an inherited property can be a hard decision to make. As we’ve mentioned, there are a lot of factors to consider. Truthfully whatever you decide to list at, you are unlikely to get your full asking price. It really depends on the current market conditions. Buyers often try to bring the price down based on several factors, especially if it’s a buyer’s market. The home’s current condition and any of the financial issues we have discussed could affect how offers come in as well.
Ideally, be sure to understand how much the home is worth so that you know what your price floor is. Potential buyers will try to get you to go lower, so you will need to have your own conditions that can’t be broken. Don’t let memories or emotions related to the home or the previous homeowner cloud your negotiations. You don’t need to make concessions just because you are eager to sell or because it’s an inherited property.
During this process, make sure to stay up on utilities and mortgage payments while selling an inherited house. You wouldn’t want to turn buyers away with any last-minute revelations that will make the potential buyers decide to run. Then you are stuck at square one, starting over, and now have bad conditions you have created that you will have to deal with.
Sell the Inherited House As-Is
As you’ve probably noticed, there are a lot of financial implications that come with an inherited property, not to mention all of the headaches and steps you need to deal with when selling an inherited house on the open market.
There is an alternative that will allow you to sell the house without dealing with all the hassles, which is selling it as-is to a cash buyer like Four 19 Properties. They’ll look at the home in its current condition, make you an offer within 24 hours, and pay you in cash for the home on your timeline. You wouldn’t need to make upgrades, you don’t need to declutter, and you won’t need to deal with traditional buyers. Instead, you get cash for the inherited property, and you get to move forward.