ETTA - SELLING YOUR INHERITED HOUSE

SELLING YOUR INHERITED HOUSE

SELLING YOUR INHERITED OUR INHERITED HOUSE

ETTA

Table Of Contents

Dealing with Inherited Homes: Best Practices for Families 2

Essential Insights for Selling an Inherited Home 6

Managing Personal Property in an Estate

Navigating the Challenges of Inheriting and Selling a Family Home

How Selling a House in an Estate Differs from Regular Home Sales

How to Accurately Determine the Value of Your Inherited

Four Strategies for Selling Your Inherited Home 28

Inherited Home Sales & Taxes

Preparing an Older Home for Sale

10. Transform Small Details Into Big Profits

11. Marketing an Inherited Home

12. Maximizing Value: Elevating Curb Appeal to Sell Your Inherited Home 50

13. Picture Perfect: Elevating Your Property Listing 54

14. A Practical Guide to Selling Inherited Property 58

Preface Selling a home can be a complex process, but selling an inherited home comes with its own unique set of challenges. Often, these homes have been lived in for decades and are filled with cherished memories, sentimental belongings, and furnishings that may no longer appeal to modern buyers. The interior design and condition of the home may also be outdated, making the prospect of selling feel overwhelming for families and loved ones. That’s where this book comes in. My goal is to help you navigate the process of selling your inherited home—whether you’re preparing it for sale to maximize its value or simply looking to sell it as-is with minimal hassle. Over the years, I’ve developed a specialty in selling homes that are considered “hard to sell.” From properties requiring extensive updates to those filled with items from a lifetime of living, I’ve learned how to overcome these challenges to achieve the best outcomes for sellers like you. When I first entered the real estate industry, I did so with the mission of making the home-selling experience smoother and more rewarding for clients. Since then, I’ve accumulated years of expertise in helping sellers avoid the headaches often associated with selling a home. My approach focuses on reducing stress, selling in the least amount of time, and—most importantly—helping you and any other heirs get the most money possible for your property. This book is my gift to you. It contains insider advice and strategies to help you successfully sell your inherited home and achieve your real estate goals. Inside, you’ll find:

• Proven techniques to sell your home for the highest

possible price • Marketing strategies used by top agents to attract the right buyers • Tips on making your home appealing to today’s buyers, even if it’s outdated • And much more! Whether you choose to prepare the home for sale or sell it as-is, this book will serve as your trusted guide. If, after reading, you’d like me to assist you in selling your home, I’d be honored to meet with you and create a customized plan to meet your needs.

Happy reading, and here’s to your success in selling your inherited home!

About ETTA Etta's journey began in a small Texas town, though much of her childhood was spent in California. With a retired Marine father and a mother in the medical field, she witnessed firsthand the value of hard work, integrity, and perseverance. These lessons shaped her into the dedicated professional she is today. Her great aunt, Ettalene Wilson—an inspiring educator and accomplished pianist—played a pivotal role in Etta's life. She encouraged Etta to pursue higher education, emphasizing that focus, determination, and hard work would not only help her achieve her dreams but also empower her to inspire others. Following this guidance, Etta earned a Bachelor of Arts degree and a Master of Business Administration, laying the foundation for a career defined by excellence and service. After a successful 25-year career in the pharmaceutical industry, Etta transitioned to real estate, a field that ignited her passion for helping others navigate complex decisions. Since obtaining her Florida State Real Estate License in 2013, she has specialized in guiding clients through the buying and selling process in Southwest Florida. Etta's extensive experience equips her with the insight and strategies needed to handle even the most challenging transactions, including the intricacies of selling inherited properties. Her innovative approach, combined with expertise in sales and marketing, consistently delivers exceptional results. Known for her strong work ethic, energy, and genuine compassion, she is trusted by sellers, first-time buyers, investors, and families navigating the emotional process of selling a loved one's home.

Etta's professional achievements reflect her unwavering

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commitment to excellence. She has been recognized with accolades such as:

• Sales Representative Specialist (SRS) • Certified Global Luxury Professional • Accredited Buyers Representative (ABR) • Marquis Who's Who Listee 2023 • Rising Star for 2022, 2023 and 2025 • President’s Club Award Winner • Circle of Excellence Award Recognition

Based in Lakewood Ranch, Florida, Etta balances her career with cherished moments spent with family across various states. When not assisting clients, she enjoys writing, tennis, dancing, and dining with friends—always bringing the same passion and enthusiasm to every aspect of her life.

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CHAPTER 1 Dealing with Inherited Homes: Best ed Homes: Best Practices for Families Dealing with an inherited home involves navigating complex legal, emotional, and financial landscapes. A quick online search for "selling inherited property" yields over 10 million results, reflecting the vast array of considerations and challenges. Common questions include: • Do you pay capital gains taxes on inherited property? • What taxes apply when selling an inherited house? • Can you qualify for the $250,000 home sale tax exclusion? Beyond these logistical concerns, selling an inherited home often carries a significant emotional weight. Many properties are tied to cherished memories, and the sale may follow the recent loss of a loved one. This emotional layer adds complexity to what can already be a stressful process.

The Immediate Responsibilities

Inherited homes come with ongoing obligations: property taxes, insurance, utilities, and maintenance must continue. The estate settlement process may also introduce time-sensitive legal considerations. Consequently, a prompt sale often becomes a priority. However, preparing a loved one’s home for the market—sorting through belongings and depersonalizing spaces—can be emotionally taxing.

Potential Financial Challenges

In addition to the emotional burden, inheriting a property can come with unexpected financial hurdles. Necessary updates to attract buyers, unresolved liens, or hidden structural issues (like plumbing or electrical problems) may surface. Disagreements among heirs over the sale price or even whether to sell can further complicate matters.

Emotional Ties and Decision-Making

Sentimentality can delay the decision-making process. Memories of growing up in the home or attachments to personal items may prevent family members from taking necessary steps toward selling. It’s important to acknowledge these feelings while focusing on practical solutions. Support from an empathetic real estate agent and legal professionals, such as a tax attorney or CPA, can provide guidance and emotional support.

Purpose of this Guide

This book aims to offer practical strategies to help you navigate the sale of inherited property with minimal stress. From managing family dynamics to understanding tax implications, each chapter provides actionable insights designed to streamline the process and ensure all stakeholders are satisfied.

Benefits of Selling an Inherited Property

Whether you are the sole heir or share ownership with others, selling the property efficiently offers several advantages: 1. Financial Relief: Inheriting property can mean inheriting debts or unexpected obligations. Selling the home can alleviate these burdens.

2. Simplicity: Converting the property into cash simplifies asset division among multiple heirs. Money is easier to distribute than a physical property. 3. Tax Considerations: Selling shortly after inheritance can minimize capital gains taxes. The property’s value is assessed as of the decedent’s date of death, which can reduce taxable gains if the sale occurs quickly. 4. Avoiding Maintenance Costs: Maintaining a vacant property—especially in a different city or state—can be costly and time-consuming. Selling promptly avoids these ongoing expenses.

Dealing with Family Dynamics

Disputes among heirs are common and often rooted in long- standing family dynamics. Without a clear plan, these disagreements can escalate, leading to costly and time- consuming litigation. To avoid this: • Prioritize Communication: Open, honest discussions can prevent misunderstandings. • Seek Mediation: A neutral third party can help navigate emotionally charged decisions. • Explore Creative Solutions: One heir might buy out the others, or the family could agree to rent the property and share the income. Practical Steps Forward • Consult Professionals: Engage a real estate agent experienced in inherited properties and a qualified attorney or CPA. • Plan Thoughtfully: Approach the process with a structured plan, balancing emotional considerations with

practical needs. • Act with Empathy: Recognize that each family member may process grief differently. Maintaining a cooperative mindset benefits everyone. This first chapter sets the foundation for a structured, thoughtful approach to selling an inherited home. By addressing both the practical and emotional aspects, you can navigate this journey more smoothly and achieve a positive outcome for all involved.

CHAPTER 2 Essential Insights for Selling an Inherited Home Selling an inherited home involves several legal and financial factors that can impact your decisions. Understanding these insights will help you navigate the process smoothly and avoid potential pitfalls.

Understanding Wills and Probate

Wills

A will is a legal document that dictates how a person’s property is distributed after their death. If the deceased left a will, the process of transferring property to the named beneficiaries is typically straightforward. An executor, appointed by the will or the court, oversees this process. Their main responsibility is to ensure the deceased's wishes are carried out, including transferring property titles as specified.

Probate

Probate is the legal process of validating a will and distributing assets. While it may seem intimidating, probate can be straightforward, especially in states offering simplified proceedings known as “common form” probate. This process requires minimal court involvement and is generally faster. In contrast, “solemn form” probate is more formal and involves notifying all potential heirs, which can help prevent future disputes by settling any challenges early.

Intestate Succession

If there is no will, state laws dictate how the property is distributed—a process known as intestate succession. Typically, the surviving spouse and children inherit the estate. Understanding your state’s laws is crucial to ensure you handle the inheritance correctly.

The Risk of Probate and the Importance of an Executor

Without a valid will or an appointed executor, the estate enters probate, a legal process managed by the court. This process can take several months or even years to complete, depending on the complexity of the estate. Not only can probate be lengthy, but it can also be expensive. The costs of administering the estate, including attorney fees and court costs, can add up quickly and reduce the inheritance your family receives. Additionally, probate often means that the estate’s assets—including the inherited home—are frozen until the court processes the will, which can delay the sale. If there’s no clear executor, the court must appoint one, which can further slow down the process. Having a will with a designated executor in place ensures that the estate will avoid the lengthy probate process and that the sale of the inherited home can proceed quickly and efficiently. The executor is responsible for managing all aspects of the sale, including making decisions about repairs, listing the property, and negotiating offers. This is why it’s so crucial to ensure that the will is in place and that an executor has been appointed before proceeding with the sale of the home.

Tax Implications

Inheriting a home comes with tax responsibilities that vary by state. Here are the key types of taxes you should be aware of:

1. Estate Tax

The estate tax is a federal tax imposed on the total value of the deceased’s estate before distribution to heirs. It applies to all property transferred through a will, intestate estate, trust, or life insurance benefits. However, there is a significant exemption threshold. Assets left to a spouse or charity are generally exempt from estate tax.

2. Inheritance Tax

Inheritance tax is distinct from estate tax and is paid by the heirs, based on the value of what they receive. The rate and exemption rules vary by state, so it's crucial to understand your state’s regulations. If the value of the inheritance exceeds the annual exemption threshold, heirs must pay inheritance tax at the federal income tax rate on the amount over the exempted value. Deductions such as mortgage balances or marital deductions for spousal inheritance may reduce the taxable value.

3. Property Tax

When inheriting real estate, the property may be reassessed for tax purposes based on its current market value. Some states offer exemptions for certain heirs, such as spouses or children, which can avoid reassessment. In states where property tax assessments are capped, the initial reassessment may result in significantly higher taxes than what the previous owner paid, although future increases may be limited. For example, in California, heirs who are spouses or children may avoid reassessment altogether.

4. Capital Gains Tax

Capital gains tax may apply when you sell an inherited home. This tax is based on the increase in value from the date of inheritance to the date of sale. However, selling the property shortly after inheriting it generally minimizes capital gains tax because the market value likely won’t have increased significantly. If the property is sold for more than its value at the time of inheritance, you will pay taxes on the gain, but the stepped-up basis (the property’s value at the time of the decedent’s death) helps reduce taxable gains.

5. Reporting the Inheritance and Sale

The executor of the estate must file an estate tax return to report the inherited property. The "cost basis" of the inherited property is usually the market value on the date of the decedent’s death. When selling the property, you must report the sale on your income taxes. The sale amount, minus the cost basis, determines whether there was a gain or loss. This gain or loss must be reported on IRS Schedule D and then carried over to your 1040 tax return form.

Additional Tax Considerations

In addition to federal estate taxes, some states impose their own estate or inheritance taxes. The federal government allows a tax- free transfer of up to $11.2 million for married couples and $5.6 million for individuals, with annual exclusions for gifts (e.g., $16,000 per individual in 2022). Property left to a spouse or charity typically is exempt from taxes.

Updating Ownership Records

To claim legal ownership, the property’s title must be transferred to your name. This process generally requires: • The probated will or a court order. • The death certificate. • An executor’s or administrator’s deed. If the property was jointly owned, it typically transfers directly to the surviving owner. Otherwise, the title must be updated through probate or court proceedings.

Life Estates

A life estate allows someone to live in or use the property for the duration of their life but doesn’t grant full ownership. After their death, ownership transfers to a specified individual or reverts to the original owner’s heirs. Understanding any life estate conditions attached to the property is crucial before selling.

Conclusion

Selling an inherited home involves legal procedures, tax considerations, and proper title transfers. By understanding these key concepts, you can make informed decisions and ensure a smooth and legally compliant sale. When consulting with a real estate attorney or tax professional, it's important to choose a professional who aligns with your specific needs. There are two types of probate attorneys: transactional attorneys and probate litigators. If you're simply looking to start the probate process without any disputes, a transactional probate attorney, who may also specialize in trusts and estate planning, is ideal. However, if you're facing a challenge to the will, have

concerns about the executor’s actions, or anticipate legal disputes, a probate litigator is the better choice. Ensure the attorney you hire regularly handles probate matters and is knowledgeable about other relevant areas of law, such as real property law, especially if the deceased had significant real estate holdings.

CHAPTER 3 Managing Personal Pr ersonal Property in an Estate

When drafting a will, individuals often focus on major assets such as cash, stocks, real estate, and valuable heirlooms. However, it’s common to overlook provisions for personal property—furniture, automobiles, household effects, and other items accumulated over a lifetime. These items, while seemingly less significant, can become the source of disputes among heirs if not managed thoughtfully. This chapter provides a structured approach to handling personal property distribution, with actionable steps and examples to ensure fairness and minimize conflicts.

Step 1: Identify Items for Family Members to Keep

The first step involves inventorying all personal property and determining which items family members wish to keep. This process can be emotionally challenging but is essential for a smooth division. Here’s how to proceed: • Inventory with Sensitivity: Carefully sort through the items with family members, acknowledging the sentimental value attached to them. • Establish Boundaries: Determine who has the right to claim sentimental items, particularly among siblings. If the will requires equal division, follow those provisions. • Organize Items: Separate items intended for family members from those to be sold, donated, or discarded.

Use labeled boxes or designated areas to avoid confusion.

Example: Dividing an Antique Collection

A deceased parent’s antique firearm collection was appraised to determine its total value. Siblings used a coin flip to decide the order of selection, picking items until each received a share equal to the appraised value. Though the number of items varied, fairness was maintained by focusing on equal monetary value. For disputes that cannot be resolved amicably, consider involving a mediator. A mediator can facilitate negotiations, ensuring all parties feel heard and reach a fair resolution.

Step 2: Sell Valuable Items and Distribute Proceeds Equally

When valuable items or properties are involved, selling them and dividing the proceeds can be an equitable solution. Key considerations include: • Real Estate: If inheriting a home, decide whether to sell it and share the proceeds, rent it out, or buy out other heirs’ interests. Consult real estate professionals for guidance. • Appraisals: Hire professionals to appraise valuable items such as jewelry, antiques, and collectibles. This establishes a fair market value for division or sale. • Estate Sales: Organize an estate sale to clear out items. Advertise through local and online platforms, price items clearly, and ensure compliance with local regulations, such as obtaining necessary permits. Tips for a Successful Estate Sale: • Clearly mark prices and provide directions to the sale. • Consider offering discounts on the final day to clear inventory. • For unsold items, hire an estate liquidation company to 13

handle disposal or further sales. Step 3: Donate Items to Charitable Organizations Donating unwanted items is a generous way to honor the deceased’s legacy and support those in need. Consider donating to: • Orphanages • Veterans’ organizations • Homeless shelters • Disaster relief efforts Tax Benefits: Donations may be eligible for tax deductions. Keep records of donated items, including their fair market value, for tax reporting. Note that the estate may not claim deductions for donations unless explicitly authorized in the will or trust, but heirs can claim deductions for items donated personally.

Step 4: Dispose of Remaining Items

After family members have selected items, and sales and donations are complete, the final step is disposal of remaining items: • Small Quantities: Use regular garbage disposal methods for minor items. • Large Quantities: Hire a professional clean-out or hauling service for larger volumes. This ensures the estate is fully cleared, paving the way for the final settlement of affairs. Conclusion: By following these steps, families can navigate the often- sensitive process of dividing personal property with fairness and respect. Thoughtful planning and clear communication reduce the potential for disputes, honoring the memory of the deceased while ensuring equitable outcomes for all heirs. 14

CHAPTER 4 Navigating the Challenges of Inheriting and Selling a Family Home

Inheriting a family home can be both a blessing and a challenge. While the decision to pass down a property to children is often made with good intentions, it can create complications that must be resolved before the house can be successfully and profitably sold. In many cases, the house is not inherited by just one child but by several, each with a share in the property. This shared ownership can complicate the selling process, especially if the heirs cannot agree on what to do with the home. When multiple heirs are involved, patience and negotiation are key. One sibling may be eager to sell, while another may want to keep the property within the family. Disagreements like these can lead to conflicts that extend beyond the sale itself, straining family relationships. It’s important for all involved to recognize that, while the decision to sell can be emotional, it’s necessary to approach it with a clear, objective mindset to avoid prolonged disputes. Selling an inherited home is not like a typical real estate transaction. In addition to the usual challenges of pricing, marketing, and negotiating, heirs are often grieving the loss of a loved one and dealing with the complexities of the estate. In these emotional times, making practical decisions about the sale of the home can be difficult, and it often takes longer than expected.

As attorney John Kopp, who recently sold his late mother-in- law's and mother’s homes, advises, it is often wise to make decisions quickly when it comes to inherited properties. “Selling the property early can prevent ongoing costs, like maintenance and property taxes, from adding up,” he explains. With an empty property, additional expenses such as vacant home insurance may apply, further draining the estate’s finances until the probate process is complete and the executor is formally appointed. Given the complexities of selling an inherited home, it’s advisable for heirs to seek legal counsel, preferably from a lawyer experienced in both real estate and estate law. While finding the right attorney can be stressful and expensive, it’s crucial to avoid costly legal mistakes that could complicate the sale even further. In many cases, inherited homes have been lived in for decades and may require significant updates or repairs. Elderly homeowners sometimes neglect home maintenance, so a house that was once pristine may now be in need of attention. Issues such as outdated plumbing, heating systems, and old carpets can make it difficult to sell the home, especially if major repairs are needed. For example, a leaky underground oil tank could result in a costly repair, which would need to be factored into the sale price. In such situations, a thorough inspection is essential. However, this process can be time-consuming and costly, especially if the heirs live far from the property. Once the necessary repairs are made, the total costs can mount up quickly, potentially impacting the final sale price. Sellers may find themselves in a difficult position, having to price the property higher to recoup repair expenses, which can make the home less attractive to potential buyers. In some instances, the house may be cluttered with a lifetime’s worth of belongings, further complicating the sale process. Heirs

must clear out the home before it can be marketed, which can be an emotional and time-consuming task. This typically involves sorting through personal items, removing valuable heirlooms, and deciding what to do with everything else. Auctions or consignment shops can be used to sell valuable items, but these services often take a percentage of the sale price, usually 25-30%. Donating unsold items to charity is another option, though this may be complicated by distance if the heirs live far from the home. For heirs who are not local, the process of clearing the house and overseeing repairs becomes even more challenging. They may need to rely heavily on a real estate agent to manage the property, supervise ongoing activities, and ensure that everything is in order for a successful sale. When there are multiple heirs, disagreements can arise over the sale price, necessary repairs, and even the type of attorney to hire. With each sibling bringing their own emotional and financial perspectives to the table, it’s easy for tensions to flare. In many cases, the executor of the estate—often one of the heirs—must make the final decisions, which can lead to family disputes, especially if the heirs don’t agree. From a tax perspective, the sale of an inherited home is based on its value on the day the owner passed away. If the property is sold for more than its value at the time of inheritance, the difference is considered taxable gain, divided among the heirs. If the home sells for less than its assessed value, there is no taxable gain to report.

Conclusion

While inheriting a family home can hold significant emotional value, selling it involves a variety of logistical, financial, and legal hurdles. The key to a successful sale is clear communication, a

practical approach, and, when necessary, professional guidance to navigate the process smoothly.

CHAPTER 5 How Selling a House in an Estate Differs from Regular Home Sales Selling a house through an estate, particularly during probate, is a unique process. When a person makes their transition without a will (intestate) or doesn't specify what happens to their property, the state steps in to manage the sale according to its laws. The court is responsible for ensuring the property is marketed and sold at the best possible price, and it requires specific steps, processes, and procedures to be followed. Probate laws differ by state, so it's essential to work with a real estate agent who understands both general probate sales and the laws specific to the state where the sale will take place.

What is a Probate Sale?

A probate sale occurs when an estate is administered by a court following the death of an individual, and the estate's real property (usually a home) is sold to distribute the value among the beneficiaries. The estate’s personal representative (the executor) will determine whether the real estate will be sold. They are not required to hire a real estate agent, though doing so is highly recommended for the best outcome. A probate referee may be involved to determine the real estate’s value. If the deceased had a valid living trust, the estate may bypass the lengthy and costly probate process. This avoids fees, including those for attorneys, court costs, and arbitrators, which can amount to approximately 6% of the estate's value. Although probate can be handled independently, it's a complex 20

process best left to professionals. The county court will provide the required forms, which include notifying the deceased’s creditors.

Probate Sales vs. Regular Home Sales

In the case of real estate specifically mentioned in a will, the executor can sometimes avoid the probate court process by requesting the sale be confirmed under estate laws. This accelerates the process and reduces costs, allowing the home to be sold like any other property. The executor can accept the best offer and move forward with the sale without the full range of requirements needed for a regular real estate transfer. However, heirs may be required to sign a waiver to confirm the action. Because courts are involved in probate, these sales involve different vocabulary, documentation, and contracts compared to regular transactions. A skilled real estate agent familiar with the probate process and legal terms will be invaluable when navigating this sale.

Steps for Probate Transactions

Selling real property through probate requires careful handling and strict adherence to deadlines, documentation, and court oversight. The typical process includes: 1. Appointment of an Administrator or Executor: The deceased's will usually designates an executor to handle asset distribution. If there's no will or the designated executor is unavailable, the court will appoint an administrator. 2. Property Appraisal and Listing Price: The executor sets a listing price, which is often based on an appraisal by a probate referee. The price is also influenced by advice from a real estate agent experienced with probate and trust sales.

3. Marketing the Property: The property is marketed through various channels, such as signage, online listings, open houses, and direct showings. The goal is to attract buyers, although offers are limited by the court. The sale price must be at least 90% of the probate referee’s appraised value. 4. Notice of Proposed Action: A notice detailing the proposed sale terms is sent to all heirs. If no objections are raised within 15 days, the sale proceeds. If an heir objects, the sale must be published in a local newspaper. 5. Court Confirmation: The attorney files for a court date, typically within 30–45 days. Interested parties are notified, and the sale proceeds unless there is an overbid during the court hearing. 6. Ongoing Marketing: The property continues to be marketed until the court hearing, as an overbidder may emerge. The minimum overbid is determined by the following formula:

Formula for Minimum Overbid

Minimum Overbid = 10% of the first $10,000 of the accepted offer + 5% of the balance of the accepted offer.

Example:

- Listing Price: $300,000 - Accepted Offer: $275,000

Calculation: - 10% x $10,000 = $1,000 - 5% x $265,000 (the remaining balance) = $13,250 - $1,000 + $13,250 = $14,250

Therefore, the minimum overbid required would be $289,250. An overbidder must bring a cashier’s check for at least 10% of this amount or $289,250 ($28,935) to be eligible to outbid the original offer.

Conclusion

Probate and trust sales come with specialized processes and unique legal terminology that differ significantly from traditional home sales. If you're buying or selling in this context, it's crucial to work with an experienced real estate agent who is well-versed in these procedures. The agent will guide you through the legalities and ensure all necessary steps are taken to complete the sale successfully.

CHAPTER 6 How to Accurately Determine the Value of Your Inherited Determining the value of an inherited home is a nuanced process that goes far beyond a simple formula. It's not just about crunching numbers—it involves considering multiple factors. Many times, you might see similar homes in the same area sell for very different prices. It's essential to understand that an estimated home value may not align with what you "believe" your inherited property is worth. Recognizing this distinction can help you avoid overpricing, which is one of the most common reasons a home sits unsold on the market for months. By familiarizing yourself with real estate terms like market value, appraisal value, and assessed value, you'll be better equipped to engage in the pricing process and ultimately set the right listing price for your inherited home.

Understanding Key Real Estate Terms

Market Value: The most common definition of market value is the most likely price a property will bring in a competitive, open market under fair conditions. Simply put, it’s an estimated price a home should sell for in its local market, typically based on comparable sales in the same area—such as a specific neighborhood or suburb. Appraisal Value: This refers to the evaluation of a property's worth at a particular time by a professional appraiser. Appraised value plays a crucial role in loan underwriting, as it determines the amount a lender is willing to provide in a mortgage. For 24

example, if the Loan-to-Value (LTV) ratio exceeds 80%, mortgage insurance may be required.

Assessed Value: This value is determined by local or state government agencies for taxation purposes. It often differs from the market or appraised value. In fact, about 60% of U.S. properties are assessed higher than their actual market value, which may not reflect the true selling price of a home.

What's Your Inherited Home Really Worth?

When selling an inherited property, especially if you're unfamiliar with the market, it’s important to understand the difference between value, worth, and price. Knowing these distinctions allows you to navigate the selling process with greater confidence. Here are the most common ways a home's value is derived:

Online Home Valuation Tools

The easiest and most accessible way to begin estimating the value of your inherited home is through online tools. These free services pull data from a vast database of recent comparable home sales in your area. While these tools provide a quick, preliminary estimate, keep in mind that their accuracy can vary. Algorithms often use average sale prices of similar homes in the neighborhood, but they don’t account for nuances like location or local market trends. Use this as a ballpark figure rather than an exact value.

Professional Appraisal

Unlike online tools, a professional appraisal offers a more detailed and reliable estimate of your home's value. An appraisal involves a thorough inspection of the property by a licensed appraiser who will consider multiple factors:

• Type and design of the dwelling (e.g., single-story, multi- level) • The materials used and overall quality of construction • Improvements made to the property • Comparable sales in the area • Neighborhood factors and zoning laws Appraisers use this information to determine what a willing buyer would pay a willing seller in a fair, open market. The appraisal fee typically ranges from $300 to $500, and it’s an essential tool for both sellers and buyers in determining a fair sale price. • Age and condition of the property • Property size and any depreciation

Current Market Appraisal by a Real Estate Professional

Another valuable tool in determining your home's value is a Current Market Analysis (CMA) performed by a real estate agent. Unlike online estimates, a CMA is based on actual, real- time data about homes that have recently sold in your area, as well as current listings. Your agent will analyze the prices of homes similar to yours, including those that are currently for sale—your competition. In addition to providing insight into comparable properties, a seasoned real estate professional can offer guidance on pricing strategies and how to position your home in the current market. This analysis is typically free and can give you a much clearer understanding of how to price your inherited home competitively.

The Condition of the Property

While factors like location and square footage are important, condition plays a significant role in determining a home’s value. 26

Well-maintained homes with updated features generally command higher prices than those that require extensive repairs or updates. Even in a hot market, a home in poor condition may not achieve its maximum value without improvements. Whether you’re dealing with cosmetic fixes or major structural issues, the condition of the property will influence how potential buyers perceive its value. If needed, consider consulting with a contractor or real estate agent to assess the necessary repairs or upgrades that could increase the sale price.

Leveraging Expert Help to Price Your Inherited Home

Pricing an inherited home requires a mix of knowledge, strategy, and experience. By working with a qualified real estate professional—one who is familiar with both your local market and inherited property sales—you can ensure that your home is priced to sell. This professional will have access to up-to-date sales data, a clear understanding of market conditions, and the expertise to guide you through the pricing process. I’d be happy to assist you with a free Current Market Analysis for your property. For more information, feel free to refer to the last page of this book on how to request your home’s valuation! By understanding these factors and working with experienced professionals, you can better determine the accurate value of your inherited property, avoid costly mistakes, and make well- informed decisions when it's time to sell.

CHAPTER 7 Four Strategies f egies for Selling Your Inherited Home ed Home When you inherit a property, the main goal is often to sell quickly and efficiently, with speed sometimes taking precedence over maximizing the sale price. Additionally, homes left by a deceased relative may not have been updated or maintained in years, and the heirs may not want to invest the money or time required for repairs and improvements. To make the right decision for your specific situation, it's important to strategize carefully based on your goals, whether you're aiming for a top-dollar sale, a quick transaction, or minimal investment. Below are four methods for selling an inherited home, each with its own set of advantages and challenges.

1. Auction

If a fast sale is a priority, an auction can be an excellent choice. Auctions can be swift and profitable, making them an ideal option for those seeking to sell with minimal hassle. Properties that might be difficult to sell on the traditional market—such as older homes in need of repairs or unusual properties—often do well at auction. Additionally, the competitive atmosphere of an auction can drive up the sale price, particularly when multiple buyers are bidding. Steps to Selling at Auction • Select an Auction Firm: Research local auction houses and choose one with a strong reputation. Consider their 28

advertising reach and online presence to gauge how well they can attract potential buyers. • Obtain Property Appraisals: Request appraisals from a few auctioneers to determine a reasonable reserve price and understand their fees. • Instruct Your Auctioneer: Once you’ve selected your auction firm, officially instruct them to sell your property and sign necessary contracts. • Consult a Real Estate Attorney: Ensure that all legal documentation for the property is in order, such as title deeds and special conditions of sale. • Set Your Reserve Price: Determine the minimum amount you will accept for the property. This is crucial to avoid selling for less than expected. • Auction Firm Markets the Property: The auction house will handle advertising, which may include online listings, brochures, and mailouts to prospective buyers. • Auction Day: On the day of the auction, you may not need to be present, but the auctioneer will inform you of the sale’s outcome. Pros: • Bidding Wars: A competitive auction can drive up the price as bidders compete emotionally. • Sold As-Is: No repairs or inspections are required from the seller. • Minimal Contingencies: Buyers must put down a large deposit, reducing the risk of a failed sale. Cons: • Unpredictability: The final sale price can be unpredictable, and there’s a risk of underselling. • Costs: Auctioneers charge commissions and marketing

fees, and there’s no guarantee of a sale. • Auction Failure: Not all properties sell at auction, and if it doesn’t sell, you still incur auction-related costs.

2. Sell to an Investor

Selling directly to a real estate investor is another quick and easy option, particularly for inherited properties that may need significant repairs or updates. Investors typically buy homes "as- is" and are prepared to handle any necessary renovations before reselling. This can be an appealing solution if you want a fast, hassle-free sale. However, caution is needed as there are scams in this space. Fraudulent investors might offer inflated prices, secure loans for these overvalued amounts, and then pocket the difference, leaving you without a legitimate sale. Pros: • Quick Sale: Investors often make offers quickly, and closings can occur within days. • No Repairs Needed: The house is purchased in its current condition, with no need for you to invest in repairs. • Less Paperwork: With fewer contingencies and quicker closings, the sale is often simpler than traditional methods. Cons: • Lower Sale Price: Investors aim to buy properties at a discount to maximize their profit, which usually means a lower price than the property’s true market value. • Potential Scams: Be wary of fraudulent investors who may try to deceive you with inflated offers.

1. For Sale by Owner (FSBO)

Selling the home yourself, also known as For Sale by Owner (FSBO), eliminates the need for an agent and saves on commission fees. While this might seem appealing, selling a home without professional help is one of the riskiest options on this list. FSBO sales require you to handle everything yourself, from pricing to marketing to negotiation. If you lack real estate experience, this can quickly become overwhelming. Pros: • No Commission Fees: Selling without an agent means you keep more of the proceeds. • Full Control: You control the price, marketing, and negotiations, which may be appealing to those who prefer to handle things themselves. Cons: • Lack of Professional Guidance: Without an agent, you miss out on expert advice, which can lead to mistakes in pricing, marketing, and negotiating. • Time-Consuming: Managing a sale yourself can take a lot of time and effort, especially if you're unfamiliar with the process. • Higher Risk of Unsold Property: FSBO properties often take longer to sell and may attract fewer potential buyers, especially if not marketed effectively.

4. Traditional Sale with a Realtor

For those who are not in a rush and want to maximize their sale price, listing the property through a real estate agent is often the best option. A skilled realtor will guide you through the process, handle negotiations, and ensure the property is marketed to the right buyers. 31

Pros: • Potential for Higher Sale Price: A realtor's expertise in pricing and marketing can help you achieve a higher sale price. • Professional Help: Agents handle all aspects of the sale, from listing to negotiations to closing. • More Buyers: With an agent, your home will be marketed to a broader audience, increasing your chances of finding the right buyer. Cons: • Commission Fees: You’ll need to pay a commission (typically 5-6% of the sale price. Commission fee is negotiable). • Longer Time to Close: Traditional sales can take time, and if your goal is a quick sale, this may not be the best option.

Conclusion

Each selling method has its own advantages and drawbacks, and the right choice depends on your priorities—whether it's speed, maximizing sale price, or minimizing effort. Carefully assess your goals and the condition of the property before deciding which option works best for your inherited home.

CHAPTER 8 Inherited Home Sales & Taxes

Selling an inherited home involves navigating specific tax rules and understanding their implications. From capital gains to estate and inheritance taxes, this chapter will help clarify the tax responsibilities and benefits associated with selling an inherited property.

Common Questoins About Taxes on Inherited Property

Many people are unsure about the tax implications of selling an inherited home. Some believe the proceeds are entirely tax- exempt, while others think they’ll owe capital gains tax on the sale amount exceeding the original purchase price. Additionally, many wonder whether the $250,000/$500,000 Home Sale Tax Exclusion applies to inherited property sales. Let’s explore these issues in detail.

Capital Gains and Inherited Properties

The IRS allows homeowners to exclude up to $250,000 of capital gains from income (or $500,000 for married couples filing jointly) when selling their primary residence. However, to qualify, the seller must have used the home as their primary residence for at least two of the last five years. This requirement often disqualifies inherited homes unless the inheritor moves into the property for two years before selling. However, the stepped-up basis rule benefits inheritors.

Understanding "Stepped-Up Basis • What is Basis? In real estate, the “basis” refers to the property’s value for tax purposes. When a home is sold, the taxable gain is the difference between the sale price and the property’s basis. A higher basis reduces the taxable gain. • How Does It Apply to Inherited Property? For inherited properties, the basis is adjusted to the property’s fair market value (FMV) at the time of the original owner’s death. This adjustment is known as the "stepped-up basis." If the deceased originally bought a home for $100,000, and its value at their death was $300,000, the stepped-up basis is $300,000. If the inheritor sells the home for $300,000, there are no capital gains taxes. However, if the property is sold later for $450,000, the taxable gain is $150,000 (the difference between the sale price and the stepped-up basis). Example:

Other Tax Responsibilities

Inherited homes may come with additional tax obligations:

Property Taxes • Heirs are responsible for property taxes from the moment the home is inherited. • In many states, property values are reassessed at the current market value upon inheritance. This reassessment could result in significantly higher property taxes compared to what the original owner paid. • Some states, like California, offer exemptions for

immediate family members, preventing reassessment. Estate and Inheritance Taxes • Estate Taxes: These are levied on the total value of the deceased’s estate before distribution to heirs. The federal government imposes estate taxes on estates exceeding $2 million, while some states also have their own estate taxes. • Inheritance Taxes: These are assessed on the portion of the estate an individual inherits. Rates vary depending on the state and the relationship between the deceased and the inheritor. Currently, 11 states impose inheritance taxes, including Pennsylvania, Maryland, and New Jersey. Key Distinction: • Estate taxes are calculated on the total estate before distribution. • Inheritance taxes apply to the individual’s share after distribution.

Financial and Legal Consideration

Receiving a home as an inheritance can be rewarding but may also involve challenges: 1. Probate Process: If you’re not the surviving spouse, it can take weeks or months for the executor of the estate to transfer ownership to you. 2. Preparation for Sale: To maximize the home’s value, consider necessary repairs or upgrades. These costs may affect your profit margin when selling. 3. Long-Term Implications: If you hold onto the property, future appreciation could increase capital gains taxes. Consult a tax advisor for strategies to minimize tax liability. 36

Summary

Selling an inherited home can be complex due to various tax rules. The stepped-up basis is a significant advantage, reducing potential capital gains taxes. However, property taxes, estate taxes, and inheritance taxes can still apply. Understanding these factors and consulting professionals can ensure a smoother process and minimize financial surprises.

CHAPTER 9 Preparing an Older Home for Sale Selling an inherited home, especially one that is now vacant, requires extra attention to detail. By addressing these key areas, you can enhance the property’s appeal, reduce potential buyer hesitations, and increase the likelihood of a successful sale. One benefit of selling an unoccupied and mostly empty home is that it allows potential buyers to envision their own lives in the space. Without distractions like furniture or personal items, they can imagine how their belongings might fit and begin picturing themselves living there. However, it’s essential to ensure the home feels inviting and cared for rather than neglected.

Clean Until It Sparkles

This may seem obvious, but cleanliness is crucial. A clean home signals to buyers that it has been well-maintained, giving them confidence in its condition. Go beyond a quick tidy-up: floors, walls, baseboards, and corners must be spotless. Since moving out often reveals hidden messes, such as dust under furniture or marks on walls, a thorough cleaning session is essential. Pay special attention to: • Eliminating odors (pet, food, or musty smells). • Scrubbing and deodorizing problem areas using natural cleaners like vinegar and baking soda. • Ventilating regularly by opening windows or using air fresheners. Remember, fresh and clean smells often seal the deal. Consider hiring a professional cleaning service if needed to achieve a 38

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