Erik Gruenwald - The Impact Group - INHERITED HOME GUIDE

INHERITED HOME GUIDE

Erik Gruenwald - The ald - The Impact Group

Table Of Contents

Dealing with Inherited Homes: Best Practices for Families 2

Concepts to Know When Selling An Inherited Home

Distribution Among Family Members

Downsides to Inheriting

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

Determining the Value of an Inherited Home 22

Four Ways to Sell Your Inherited House

Inherited Home Sales & Taxes

Prepping an Older Home for Sale

10. Small Improvements Can Gain You Thousands 52

11. Small Improvements Can Gain You Thousands 56

12. Using Curb Appeal to Sell Your Inherited Home for More

13. The Importance of Good Pictures

14. The Process of Selling Inherited Homes

CHAPTER 1 Dealing with Inherited Homes: ed Homes: Best Practices f actices for Families

Navigating the Sale of an Inherited Home

Dealing with an inherited property is often complex, involving both financial and emotional challenges. A simple web search on "selling inherited property" yields millions of results, highlighting critical questions such as tax implications, capital gains exclusions, and legal considerations. Beyond these, sentimental attachments and family dynamics add another layer of difficulty to the process.

Key Challenges of Inherited Property Sales

Many heirs face financial burdens related to ongoing property expenses, including taxes, insurance, utilities, and maintenance. Estate settlement issues can further complicate matters, often necessitating a swift sale to avoid accumulating costs. Preparing a loved one's home for the market can be emotionally taxing, requiring heirs to clear out personal belongings and depersonalize the space. Additional complications include potential liens, hidden structural issues, and disagreements among heirs over the sale price or the decision to sell at all. Delays in decision-making, often due to emotional ties, can hinder the sale process and prolong financial strain.

The Benefits of Selling

Regardless of whether you are the sole heir or part of a group, 2

selling an inherited property promptly can save time, reduce stress, and alleviate financial burdens. In some cases, inherited homes come with unforeseen legal or financial obligations. If the mortgage is "underwater" (meaning the debt exceeds the home’s value), heirs may even consider disclaiming the property to avoid foreclosure. For properties without significant financial encumbrances, traditional sales methods can yield the best return. If the home requires substantial repairs or the estate needs to be settled quickly, a short sale or an investor sale may be viable alternatives. Additionally, selling soon after inheritance may reduce capital gains tax exposure, as the home’s market value is often reassessed at the time of the original owner’s passing. If the property is located out of state, the burden of maintaining a vacant home can be overwhelming. In cases involving probate, heirs may need to cover months of upkeep and legal fees. When the costs outweigh the benefits, selling to an investor may be the most practical option.

Managing Family Dynamics

Disputes over inherited property are common, often rooted in sibling rivalries or differing financial interests. Litigation can be costly and time-consuming, making it critical to seek compromise whenever possible. If one heir wishes to keep the home, they may buy out the others through financing or private agreements. Alternatively, heirs may choose to rent the property and split the income, provided there is mutual agreement and a clear management plan. Selling the property and dividing the proceeds can be the simplest resolution. A lawsuit for partition, though a last resort, can force a sale if heirs cannot agree. Mediation is often recommended before pursuing legal action.

Handling Existing Occupants

If a sibling or tenant resides in the inherited home, a clear agreement on occupancy terms is essential. If the will grants residency rights, those must be honored. Otherwise, heirs must decide whether the occupant should vacate or remain under new arrangements. When tenants are involved, landlords' responsibilities must be upheld until a sale is finalized.

Dividing Personal Belongings

The division of assets should follow the will’s instructions or, in the absence of a will, state inheritance laws. Sentimental items can be a major source of contention, requiring careful negotiation. Some families choose to sell estate contents through an auction or estate sale, converting belongings into cash for easier distribution. A professional real estate agent can provide an accurate property valuation, helping heirs determine the best course of action. Whether the decision is to sell, retain, or divide assets, a well- planned approach can ensure a fair and efficient resolution. Selling an inherited home can be challenging, but with the right knowledge, planning, and professional guidance, heirs can navigate the process smoothly and achieve a positive outcome for all involved.

CHAPTER 2 Concepts to Know When Selling An w When Selling An Inherited Home ed Home Legal Considerations When Selling an Inherited Home Selling an inherited home involves several legal and financial considerations. Understanding wills, probate, taxes, and ownership transfers can help you make informed decisions and avoid complications.

Wills and Probate

Most inherited homes are passed down according to the deceased owner's will. A will is a legal document that dictates how a person’s property is distributed upon their death. If a valid will exists, the named executor is responsible for carrying out the deceased's wishes, including overseeing the transfer of ownership. If there is no will, the property will be distributed according to state intestate succession laws. The probate court will appoint an administrator to manage the estate, ensuring assets are allocated per state law. Types of Probate • Common Form Probate: A simplified process in some states that does not require all heirs to be notified. • Solemn Form Probate: A more formal process where all heirs are notified, and any disputes must be resolved before the will is validated. Most estates do not require solemn form probate unless there is

concern that the will may be contested. If a will is not challenged within the legal timeframe, the probate process is generally straightforward.

Taxes on Inherited Property

Understanding tax obligations is crucial when selling an inherited home. Tax laws vary by state, but the primary taxes that may apply include: • Estate Tax: Applies to large estates exceeding federal or state exemption limits. • Inheritance Tax: Some states tax heirs based on their relationship to the deceased. • Property Tax: Heirs assume responsibility for ongoing property taxes upon inheritance. • Capital Gains Tax: Owed when selling an inherited home for more than its market value at the time of inheritance. The "step-up" rule often reduces capital gains by resetting the property's value to its worth at the time of the previous owner's passing. Executors must file an estate tax return, and sellers must report the sale on their income tax return using IRS Schedule D.

Ownership and Title Transfers

Real estate ownership must be legally transferred before a home can be sold. The executor or probate court will issue a new deed naming the heirs as owners. Required documents may include: • The death certificate • The probated will (if applicable) • An executor’s or administrator’s deed If the property was co-owned, the surviving owner typically assumes full ownership without probate. However, if multiple heirs inherit the home, they must decide on its division or sale. 7

Life Estates and Trusts

A life estate allows a designated individual to live in the home until death, at which point ownership transfers to a named heir. This method can simplify inheritance but may have tax implications. Many property owners now use living trusts instead, which provide more flexibility and avoid probate altogether.

Navigating the Process

Selling an inherited home requires careful planning. Consider consulting with an estate attorney, CPA, or real estate professional to ensure compliance with legal and tax obligations. Understanding these key concepts will help you make informed decisions and achieve the best possible outcome.

CHAPTER 3 Distribution Among Family Members Dividing and Distributing Personal Property in an Inherited Estate When drafting a will, individuals typically focus on major assets such as cash, stocks, jewelry, and heirlooms. However, many everyday items—furniture, automobiles, and household effects—are often left unaccounted for, leaving heirs to determine their distribution. This can lead to emotional challenges and disputes. The following structured approach can help ensure an equitable process:

Sorting and Allocating Personal Items

The first step in estate distribution is carefully sorting through the belongings. This can be an emotionally taxing process, but establishing clear guidelines helps avoid conflicts. • Identify which family members wish to keep sentimental items and establish fair boundaries for selection. • Store personal keepsakes separately from items intended for sale, donation, or disposal to prevent confusion. • Mutual agreements among heirs can help ensure a smooth division without unnecessary disputes. If an estate contains high-value items with an uneven distribution, a professional appraisal can determine their worth. An equitable approach, such as a selection process based on assigned values, can ensure fair division among heirs. In cases of significant disputes, a mediator can facilitate

negotiations. Each heir can submit a prioritized list of desired items, and the mediator can allocate possessions accordingly, adjusting where necessary to ensure fairness.

Selling Assets and Distributing Proceeds

When heirs inherit real estate or valuable assets, they must decide whether to sell, retain, or co-own the property. Options include: • Selling the property and splitting the proceeds equally. • One heir buying out others' shares if they wish to retain ownership. • Retaining the property for rental or investment income, requiring a clear agreement on management responsibilities. Professional guidance from real estate agents, investors, or attorneys can help maximize the property's market value and facilitate a smooth sale. For personal items, estate sales, online marketplaces, and auctions are effective ways to liquidate assets. Hiring a professional appraiser or estate sale company can provide accurate valuations and streamline the selling process.

Donating to Charity

Many families choose to donate unsold or unwanted items to charitable organizations. Common recipients include:

• Orphanages and shelters • Veterans' organizations • Disaster relief programs

Some organizations offer pickup services for larger items, making the donation process more convenient. Additionally, donations may be tax-deductible, providing financial benefits alongside charitable contributions.

Disposing of Remaining Items

After sorting, selling, and donating, the remaining belongings should be discarded. Depending on the volume of materials, disposal options include: • Local garbage collection • Renting a dumpster • Hiring a professional clean-out service Following this structured approach ensures that personal property is distributed fairly, disputes are minimized, and valuable assets are handled efficiently.

CHAPTER 4 Downsides to Inheriting o Inheriting Challenges of Selling an Inherited Home with Multiple Heirs Bequeathing a home to multiple children is a common estate planning decision, but it can create complications when the time comes to sell. With multiple heirs involved, differing opinions on whether to keep or sell the property can lead to disputes and delays.

Navigating Family Dynamics and Decision-Making

Selling an inherited home differs from a standard real estate transaction. Heirs may be mourning while also managing estate responsibilities, making objective decision-making difficult. Common disagreements among siblings or joint heirs include: • Whether to sell the property or retain it within the family. • The pricing and marketing strategy. • The division of proceeds or responsibilities. To avoid unnecessary conflict, patience, negotiation, and legal guidance are crucial. Retaining an estate attorney experienced in real estate transactions can help prevent costly mistakes and streamline the process.

Financial Considerations and Ongoing Expenses

Maintaining an inherited property comes with financial obligations. Taxes, insurance, utilities, and upkeep costs can accumulate quickly, especially if the home remains vacant. As attorney John Kopp advises, “Making a quick decision on an estate property early is always better than later because of the

carrying charges you have.” Prolonged delays can lead to increased expenses, reducing the ultimate value of the inheritance.

Home Repairs and Market Readiness

Many inherited homes require significant repairs or updates before they can be sold at market value. Common issues include: • Outdated heating, plumbing, or electrical systems. • Deferred maintenance and structural concerns. • Necessary cosmetic updates for staging and market appeal. Home inspections can uncover unexpected repair needs, potentially affecting the sale price. If major repairs are required, heirs must decide whether to invest in renovations or sell the property as-is. Overpricing to recoup repair costs can hinder the sale, so a realistic pricing strategy is essential.

Handling Personal Belongings

Inherited homes are often filled with decades of belongings, requiring a systematic approach to clearing out items: 1. Retrieve sentimental or valuable items – Family members should remove heirlooms, important documents, and other keepsakes. 2. Sell valuable possessions – Auction services or consignment shops can handle high-value items, typically charging a 25-30% commission. 3. Donate unwanted items – Charitable organizations accept furniture, clothing, and household goods, often offering tax deductions. 4. Dispose of remaining items – Junk removal services can haul away any unsellable or non-donatable items.

This process can be particularly challenging for heirs who live far from the property and may need to rely on local estate services or real estate agents for assistance.

Legal and Tax Implications

If multiple heirs inherit a home, an executor is responsible for making final decisions. Disputes can arise when the executor is also a sibling, leading to potential family tensions. From a tax perspective, the home's value on the date of the original owner’s passing serves as the cost basis. If the home is sold for more than this value, capital gains tax may apply, divided among the heirs. If sold below market value, there is no taxable gain.

Final Considerations

Selling an inherited home with multiple heirs requires coordination, compromise, and professional guidance. By addressing financial responsibilities, legal obligations, and market preparation, families can navigate the process effectively and preserve relationships in the process.

CHAPTER 5 How Selling a House in an Estate Differs from Regular Home Sales egular Home Sales Selling a House in Probate When a person dies without a will (intestate) or without designating property heirs, their estate—including real estate—goes through probate court. The court oversees the sale, ensuring it is marketed and sold at the best possible price while adhering to state-specific probate laws. A knowledgeable real estate agent with probate experience is essential for navigating this process.

What is a Probate Sale

A probate sale is a court-regulated process where an executor or administrator sells a deceased person's property to distribute proceeds among beneficiaries. If no will exists, a court- appointed administrator manages the sale. The process typically involves property valuation by a probate referee and, in some cases, avoids probate altogether if a valid living trust exists. Key Considerations: • Probate sales incur legal fees, court costs, and arbitration expenses (often around 6% of the estate value). • Executors may bypass court confirmation if permitted by estate laws, expediting the sale. • Specialized legal and real estate professionals are recommended for handling complex probate transactions.

Probate Sale Process 1. Appointment of an Administrator or Executor • If named in a will, the executor handles asset distribution. • If no executor is designated, the court appoints an administrator. 2. Property Valuation & Listing • The Independent Administration of Estates Act (IAEA) allows pricing based on an appraisal by a probate referee. • An experienced probate real estate agent helps determine market value and lists the property. 3. Marketing & Buyer Engagement • The property is marketed through multiple channels (listings, advertisements, open houses, and direct showings). • Buyers often seek probate properties at a discount, but offers must align with estate interests and court regulations. 4. Notice of Proposed Action • A notice outlining the sale terms is sent to all heirs. • Heirs have 15 days to raise objections; if none arise, the sale proceeds without a court hearing. • If objections occur, a public sale notice is published. 5. Court Confirmation Hearing • The estate attorney files for a hearing, typically scheduled within 30–45 days. • All interested parties receive hearing details. 6. Overbidding Process • The property remains on the market even after an initial offer is accepted to encourage competitive bidding. • At the confirmation hearing, other buyers may overbid. • The minimum overbid formula: 10% of the first $10,000 t $10,000 + 5% of the remaining accepted offer.

• Overbidders must provide a cashier’s check for at least 10% of the overbid amount. Why Work with a Probate Specialist? Probate sales involve complex contracts, legal disclosures, and unique terminology. A real estate agent with probate expertise ensures: • Clear communication between all parties.

• Compliance with court and legal requirements. • Efficient handling of specialized contracts and disclosures.

Successfully navigating a probate sale requires knowledge, patience, and legal expertise. Partnering with an experienced attorney and real estate agent can help heirs and executors maximize estate value while minimizing delays and complications.

EXAMPLE: A property is listed at $200,000.

The accepted offer is $175,000.

The minimum overbid is calculated as follows:

Accepted offer = $175,000

+.10 x $10,000 = $1,000

+ .05 x $165,000 = $8,250

Minimum overbid = $184,250

x .10 = $18,425 required amount of cashier’s check

If there is more than one over-bidder, the highest bid takes the property. Giving a cashier’s check to the Executor/Administrator

opens escrow, which will close approximately 30 to 45 days from the court hearing.

CHAPTER 6 Determining the Value of an Inherited Home ed Home

Determining the Value of an Inherited Home

Valuing an inherited home is not an exact science. Many factors influence a property's worth, and similar homes can sell for very different prices. Overpricing is a common mistake that can lead to extended market times and financial losses. Understanding key real estate terms—market value, appraisal value, and assessed value—is essential: • Market Value: The most probable price a property will sell for in an open, competitive market. • Appraisal Value: A professional appraiser’s evaluation of a property’s worth at a given time, often used in loan underwriting. • Assessed Value: The government’s valuation for tax purposes, which may differ significantly from market or appraisal value. How to Determine Your Inherited Home’s Worth Knowing the distinction between value, worth, and price is crucial. Several methods can help establish an inherited property’s market value: 1. Online Home Valuation Tools Online resources provide a rough estimate based on comparable sales data. While convenient, these tools lack precision, as they do not account for property-specific details, location nuances, or market trends. 22

2. Professional Appraisal A real estate appraisal provides an objective valuation based on: • Property type (e.g., single-story, multi-level, factory- built) • Structural materials and design • Improvements made • Comparable home sales • Neighborhood and zoning • Property age and size • General condition and depreciation A professional appraisal typically costs between $600 and $900 but provides a reliable estimate for pricing and mortgage lending purposes.

3. Current Market Analysis by a Real Estate Professional

Real estate agents offer free market analyses using recent sales data, current listings, and professional insights. This method provides a more accurate estimate than online tools and helps in setting a competitive listing price.

Condition and Market Trends Matter

While location is fixed, property upgrades and maintenance significantly impact value. A well-maintained home with modern updates can command a higher price. Market trends—such as buyer demand and local economic conditions—also influence pricing.

Get a Professional Opinion

For a precise valuation and effective marketing strategy, consulting a qualified real estate professional is recommended. If you would like a Current Market Analysis, refer to the last page 23

of this book for details on how to request a free home valuation.

CHAPTER 7 Four Ways to Sell o Sell Your Inherited House ed House

With many inherited house situations, the objective is a swift and efficient sale; speed may take precedence over maximizing the sale price. Additionally, a home vacated by a recently deceased elderly person may not have been updated or even properly maintained in 10 or 20 years. Further, the inheritors may not possess, or want to spend, the funds involved in getting the home prepped for an absolute top-dollar sale. Strategize carefully to pursue your objective (are you out for top dollar, a quick sale, a substantial or minimal investment), then decide the manner of sale you think will suit your goal best. The methods that are selected in this short list are the best and most reliable, but every technique has its pros and cons.

AUCTION

If you are looking for a quick sale, selling a house at auction may be the natural choice. Selling a house at auction can be the quickest method, and can also be very profitable. An auction is a great tool for quick sell with the least amount of hassle. There are many reasons why homeowners choose to sell their properties at auction over other house sale methods: • Homeowners looking to secure a quick sale are likely to try selling their house at auction to eliminate house sale fall-throughs at the eleventh hour, which are common on the traditional open market.

• Individuals who have inherited an unusual or rundown property who would struggle to sell on the open market may sell through auction. Auction houses attract many buyers looking for their next project, so chances of achieving a successful sale increase. • Multiple buyers in one room can create a “bidding war” and rapidly drive up the sale price.

STEPS INVOLVED IN AUCTIONING A HOUSE

• Select an auction firm. There may be several in your area. Research each carefully to decide who you’d like to have auction your property. Study their brochures, online presence and reputation (i.e., look for online references or reviews), and websites. Ask how their auctions are advertised to buyers to assess who you feel would do the best job attracting potential buyers for your property. • Obtain property appraisals. Request appraisals from a few different auctioneers. Do this while you are researching auction houses. Each auction house should provide what they deem to be a good reserve price and details of what fees are payable. • Instruct your chosen auction firm. Once you have chosen your preferred auctioneer, you will need to officially instruct the company to sell your property and sign any relevant contracts (this is similar to instructing an estate agent to sell a house). At this point, you will be expected to pay admin and marketing fees. • Consult your real estate attorney. You will need to engage a lawyer to assemble the legal documents for the property you are selling. This should generally include copies of

the property’s title deeds, any special conditions of sale, title search, lease (if applicable), and other relevant documents. The documents are then available to potential buyers to inspect up to the day of the property auction. • Set your reserve price. You need to set a reserve price in advance of the auction. This price can be discussed with your real estate agent and the auctioneer. The reserve price you set is the minimum amount you will accept for the sale of your property. Not setting a reserve price is a major mistake that can result in a catastrophic sale price. • Auction firm markets the property. Once the auction firm has been instructed, it will begin marketing your property. You should be clear about the different types of advertising and any associated costs well prior to this point. • Day of the property auction. You may be present when the auction takes place, but this is not required and the auction firm will provide you with an update of the sale’s outcome once it is complete. According to Quick Move Now, one of the largest cash house buyers, a tactic auctioneers commonly employ is to commence with a bid lower than the reserve price, allowing potential buyers to start a bidding war. As well as bidders who are physically present, the auctioneer can also take commission bids from buyers unable to attend. In these instances, the auctioneer will bid on behalf of the absentee up to their maximum bid. If your property receives a bid above the reserve price, the sale will then become legally binding. If the reserve price has been met and the hammer goes down, the house’s sale is now legally binding. In addition to marketing and listing fees the seller has already paid, the auctioneer will 28

typically take a commission of 2.5% of the sale price. Winning bidders must provide proof that they have cash funds available, or a mortgage in place at the point of auction. If the sale is successful, the purchaser will have to pay a 10% deposit on the day with the remaining 90% payable within 28 days of the auction. Timing varies, but generally, the time taken from auction to completion is approximately 28 days. You’ll also need to factor in marketing time in the lead up to the auction. You’ll need enough time to generate interest in the property to maximize your chances of achieving a fair price. All in all, you are probably looking at 2-3 months from the point of deciding to sell at auction to completion.

PROS

• If buyers let emotions take over, the bidding war can be fueled by their emotional investment and drive the price higher than it should realistically go. Competition and ego often encourage emotions. Nobody wants to lose so everyone keeps bidding. People get caught up in the auction and end up paying more than the actual value of the property. • The house is sold ‘as-is’ so no fixes and repairs are expected to be done by the seller. You can also leave anything that you don’t need, anything that you can’t be bothered with, and it will be sold with the house. Other than repairs, you also won’t have to worry about city inspections; that’s the buyer’s problem. • There are hardly any contingencies and the deposit is often high. The buyer will not have a way out of the contract and he will have to deposit at least 10% of the

contract price or $2,500 immediately after the auction. • If the property isn’t closed on in 30 days or less, the buyer forfeits the deposit, which will ensure that only serious buyers apply for the auction.

CONS

• The biggest downside of an auction is that it is unpredictable. The outcome is uncertain, and you can be left with much less than you were hoping for. This can be mitigated by setting a reserve price, but remains a problem. • You must hire a skilled professional, and skills come with a price tag. • There is no guarantee that you will successfully sell a property at auction. In fact, only 75% of property auction listings achieve a successful sale. • Regardless of whether your property sells or not, you must cover the costs of the auction. • This can be similar to selling to an investor as only a few people that have a lot of cash can buy at auctions, ruling out most buyers from ever having a chance to bring you an offer. Many buyers want a home in a specific area and will pay for a home that needs TLC, to do this you must list with a local real estate broker.

SELL TO AN INVES O AN INVESTOR

“We Buy Houses,” or “We Buy Ugly Houses”—you see the signs on telephone poles at intersections. Real estate investing is a huge business. There are many top-notch real estate investors in almost every city. They are always “on the lookout” for a new purchase, and you should be able to find one rather easily. 30

However, beware of scamming. There are many scams, which means that you need to find the right investor to avoid getting swindled. According to the Federal Bureau of Investigation, reported cases of mortgage fraud have skyrocketed in line with the rise in home prices in many U.S. markets. One of the most prevalent scams is home appraisers over- inflating home values to secure larger loans. In one example relevant to the inheritor of a house in need of updating and repairs, the buyer uses a fake identity or another person’s name and credit history to obtain a fraudulent loan. This person commits identity theft and mortgage fraud to swindle the seller and lender. The “buyer” offers a much higher price than the home is worth, locks in a loan for the over-valued price, and then pockets the difference. In a worse situation, the swindler convinces the seller to finance some of the cost of the mortgage. The seller ends up handing cash to the “buyer,” who has no intention of purchasing their home. Real estate investors buy properties to make cash, and you should always keep that in mind when you are selling to an investor. Begin by researching who you do business with. When the right investor is hired, typically the investor or one of his agents will come and check out your house. They are going to ask you questions about the house and give a quick appraisal. Sometimes this process can be done over the phone, without having to meet. They often buy houses that need to be sold as quickly as possible. The houses are then repaired, restored, and sold for far more money than they were bought for. That is why most investors try hard to get the lowest price possible when purchasing a house.

Selling a house to an investor should not be your first choice.

It is only a primary choice if you are in a hurry to sell the house. Sometimes you can get an offer on the house within a couple of days, and you can close the deal within a week. It will almost always be quick and painless. Additionally, you won’t get unexpected fees and commissions.

PROS

• A big perk of selling a property to a real estate investor is that they will buy the house “as is.” If the house is bought in “as-is” condition, you won’t have to do any repairs by yourself. This is particularly attractive in an inherited

home situation where it has been decades since substantial updating, remodeling, or repairs and maintenance have been done.

• The investor is much more likely to buy a house that needs major repairs than the average buyer. The usual buyer wants to move into the house and begin living in it as soon as possible. The investor wants to give it a makeover and sell it for a profit. There are times the investor won’t even have to see the house because he intends on flipping it, so the deal can be made very efficiently. • Another benefit to selling to an investor is a more dependable and quicker closing. This is counter-balanced by the fact that the deal can fall apart if the buyer suddenly runs out of money. When the buyer backs out of the agreement, the seller can be left with nothing except for the house that he already wanted to get rid of. Many months can be wasted while you have maintained insurance, taxes, and mortgage. A cash closing will prevent this from happening. By selling the house “as-is”,

you will be able to leave all the unwanted stuff in the house. Everything you don’t want in your new home can be left in the old one, and the investor will buy the whole package.

CONS

• The one con is what you are going to receive for your house. Investors profit from reselling the property. For them to succeed in this, they will always try to buy the house for the lowest price possible. You can almost be certain that an investor’s offer will be less than the actual value of the house. There is almost no chance you’ll get full value for your home in this situation. • It’s not suggested to sell to an investor unless you are in a dire situation. • Many investors, if not most, will wholesale the property and sell it to another investor for $10,000-$90,000 more than they are paying you. Hiring a local professional real estate agent will make you more money 99 times out of 100, even with any additional fees and commissions. Those investors that keep the property often flip it for a quick profit, an agent will market the home to all buyers, and when there is competition the offers are higher, even from investors.

FOR SALE BY OWNER

There is a reason that one of the best sources for “pulling leads” for real estate agents and brokers is FSBO (For Sale by Owner) listings. After a home seller has attempted the enormous and complicated task of selling a home, they are fertile ground for hiring a real estate agent. 33

The most unreliable and riskiest house-selling on this short list is For Sale by Owner, meaning that you sell your inherited property by yourself without the help of real estate agents, lawyers, or other professionals. This means that you won’t be hiring a licensed real estate agent, which, in most cases, proves to be a mistake. People want to save money on commission and fees, so they take this step into the unknown. Such an action is tantamount to representing yourself in court on a complex business case. Professionals in a field exist for a reason and a purpose. If they were useless, people would stop hiring them. However, if you decide to sell yourself, there are certain preparations that need to be made. First, try to focus on web marketing. The best way to attract as many potential buyers as possible is through the Internet and social media. You will have to appeal to a great number of people so that many offers are made. You should also repair everything in your home and put everything in order so that the online photos attract potential customers. Making sure the price is right will ensure that you don’t lose money. This means that you will have to do research and hire an appraiser. To make sure you don’t get hustled, you will probably have to hire a lawyer, too. Hiring all these people will make you wonder if this is really a way to save money.

PROS

• No commission. • Full control of the process (this is both a pro and a con).

You get to pick the price, the appointment times, and when/how/if you negotiate with a buyer. If a real estate agent is selling your home, there are going to be people walking through at any time throughout the day, so the home must be kept in showing condition constantly. • You know your home, so you can point out all its amenities in their best light. • There are a lot of channels for you to list your home. You can put a sign on your lawn with attractive flyers, put an ad on Craig’s List, and list it in local papers and on websites like ForSaleByOwner.com, HomesByOwner.com, Zillow.com, and Owners.com.

CONS

• The home may sell for a lot less than it is worth. Statistics show that the average FSBO home sells for as much as 15% less than homes sold through traditional real estate agent channels. • Your house sale will have less visibility. While there are lots of venues for you to promote your home, only real estate agents can list homes on the Multiple Listing Service (MLS), which is one of the biggest online tools real estate agents use. Real estate agents have more experience in promoting your home through ads, signs, and other methods. • Preparing the legal forms, disclosures, and other paperwork is your responsibility, and if you’re unfamiliar with the guidelines and requirements, you take the risk of financial and legal liability. • You will have to educate yourself on the home-selling

process, the current market climate, advertising methods, and on how to work with potential buyers. • It might be harder to weed out unqualified and uninterested buyers without prior experience. People who may not be able to get the proper financing will seek out homes that are FSBO because they know most private sellers are inexperienced. You’ll also get just curious folks who aren’t serious about buying but like to look around. These types of inquiries will waste your time and can distract you from serious buyers.

HIRING AN AGENT

The most common way of selling a property is to hire a real estate agent. This might also be the least risky, most reliable way to sell your inherited house at the best price. In today’s realty market, the selling and purchasing of a residential property involves more than 100 people with different skills and expertise who participate in the transaction from start to finish. Whether it is for a home inspection or a title search, it takes more than 20 steps to finalize the sale of your home. As a seller, it can seem overwhelming to try to anticipate and coordinate every step necessary to ready your home to show, list, market, and sell. An experienced real estate professional who is knowledgeable in all phases of real estate can make the process much easier. You do not need to have real estate expertise if you engage a real estate professional who does. No matter how long you have lived in your home, a real estate professional in the local area will know considerably more about the sale price history and market trends than you do. Since a real estate agent is paid a commission of your selling price, it is in his

or her best interest to price your property effectively. They want to earn the highest commission possible, but they also want to guarantee the sale within a reasonable amount of time. Real estate agents network with other professionals, many of whom provide services that you will need if you want to buy or sell a home. They can advise on service providers’ reputations and provide references who have worked with providers in the past. Agents either possess intimate knowledge about your area or have the contacts and resources to find the necessary information. They can identify comparable sales, in addition to pointing you in the direction of sources where you can find more data on schools, crime, or other demographics to provide potential buyers. For example, you may know that a home down the street was on the market for $350,000, but an agent will know it had upgrades and sold at $285,000 after 65 days on the market and after twice falling out of escrow. A real estate agent will also have market condition data, which will affect your selling process. Many factors determine how you will proceed. Data such as the average per-square-foot cost of comparable homes, median and average sales prices, average days on the market, and ratios of list-to-sold prices will have a huge bearing on what you ultimately decide to do. Attempting to sell your home without an agent requires a major effort, the commitment of substantial resources, and countless hours of understanding and organizing all the work. A professional agent’s career depends on their ethics and ability to build relationships with their clients and the community they serve. Agents who are looking to make easy money rarely go

to the effort of establishing a solid marketing plan or work at strategic pricing. There are many ways of finding a good broker. Personal recommendations from friends and colleagues are often helpful. If someone outside the real estate business with nothing to gain is bringing up a broker, you can be pretty sure you are on to a winner. The best brokers—the top 10%—do 80% of all the business. Do not get stuck with a lemon. You want someone with enthusiasm and drive, someone who will give you the attention you need and steer you through the whole messy process with courtesy and professionalism. Take the time to interview real estate agents in your area. Here are some traits to look for when hiring an agent. Are they: • Current? Is the agent up-to-date with the latest housing trends so he/she can serve you effectively? • Connected? Does the agent have the necessary contacts to assist in every phase of selling your home? A network of connections includes home inspectors, quality service people, other brokers, and county officials. • Knowledgeable? Is the agent familiar with the current market and able to price your home strategically? Do they know what is unique about your neighborhood to distinguish your home from the competition? Do they know what to highlight in your area to attract buyers? • Organized? An agent must pay close attention to your specific needs, communicate well, and be quick to follow leads. • Personable? An agent who is sincerely interested in helping you will go the extra mile with a smile. They must be able to sell themselves to you as well as sell your home

to a buyer. • Passionate? Some agents treat their job like a hobby or just a way to earn extra income. Find an agent who is passionate about what they do and loves their job. • Tenacious? Successful agents possess a strong work ethic. They are efficient and take advantage of time-saving tools that help sell your home. • Honest? Professional real estate agents build their reputation on high standards and good business practices. • Self-motivated? Real estate agents are commission-only businesspeople. Successful agents work hard because what benefits their clients benefits them. • Creative? Sometimes it takes creativity to properly showcase a home, develop engaging content, and negotiate a sale. An agent flexible enough to quickly address any marketing need is an asset to you. • Tech-savvy? Agents well-versed in the latest technology for marketing homes should have a website, social media setup, user-friendly home search options, and quality presentations online with high-resolution images of homes, as well as videos and slide shows. Some real estate agencies even have smartphone applications. A professional real estate agent wears many hats. They must be proficient in marketing, negotiating, consultation, legalities, property taxes, and, most of all, gaining the trust of their clients. An agent who will meet your specific needs is certainly worth the commission he/she will earn. Having an agent represent you in your home sale benefits you. Agents negotiate from a different vantage. Unlike most buyers

and sellers, they can remove themselves from the emotional aspects of the transaction. Agents are more proficient in negotiating because conducting negotiations is a regular part of their professional work and practice has honed their skills. It’s part of the real estate agent job description and training. Good agents are not simply go-between messengers delivering buyer’s offers to sellers and carrying counter offers back and forth. They are professionals who are trained to advise their clients on their options and the consequences of their choices and then present their clients’ case in the best light while holding client information confidential from competing interests. The real estate agent can be a buffer between seller and buyer, keeping the transaction professional and “at arm’s length.” This is important in the negotiation phase when emotions are liable to be at their highest. The real estate agent can further assist by filtering all those phone calls that lead to nowhere from bargain hunters and real estate window shoppers. Having a real estate agent when the home is being shown is a distinct advantage for a number of reasons. The agent will field the scheduling calls, arranging them for the seller’s convenience to the best of their ability. The agent is also the one to physically show the home, saving the seller that time investment. The agent fields the follow-up questions. In short, having an agent will lessen the seller’s time and energy investment, while encouraging serious buyers to immediately write an offer. Handling real estate transaction paperwork is also a big boon to the seller. One-page deposit receipts were prevalent 40 years ago. Today’s purchase agreements run 10 pages or more. That does not include the federal- and state-mandated disclosures, nor disclosures dictated by local custom. Most real estate files average a thickness of between one and three inches of paper. A single mistake or omission could land you in court or cost you after the

fact.

Speaking of after the fact, even a smooth closing without complications can come back to haunt you. For example, tax authorities that collect property tax assessments, document stamps, or transfer tax can fall months behind and mix up invoices, resulting in a snag. These may be hard to handle without knowledge of the system. A good real estate agent will deal with these issues. Questions often arise that were overlooked in the excitement of closing. A proficient agent will be there to assist.

CHAPTER 8 Inherited Home Sales & Taxes

Tax Implications of Selling an Inherited Home

Selling an inherited home may involve tax obligations, as specific tax rules apply to inherited properties. There is often confusion regarding whether the proceeds from the sale of an inherited property are tax-exempt or if capital gains tax applies based on the original purchase price. This document clarifies key tax considerations when selling an inherited home.

Capital Gains and Inherited Property

Homeowners may qualify for a tax exclusion of up to $250,000 of gain ($500,000 for married couples filing jointly) when selling their primary residence. To qualify, the home must have been the seller’s primary residence for at least two of the five years preceding the sale. Since most inheritors do not meet this requirement, they are generally not eligible for this exclusion. However, the "stepped-up basis" rule can significantly reduce taxable gains on inherited property.

Understanding the Stepped-Up Basis

The tax basis of an inherited home is determined by its fair market value (FMV) at the time of the previous owner's death, not the original purchase price. This adjustment, known as a "step-up" in basis, can reduce capital gains taxes when the property is sold. For example, if a home originally purchased for $100,000 is worth $300,000 at the time of inheritance, the new basis is $300,000. If the property is sold immediately for $300,000, no 42

capital gains tax is due. However, if the property is later sold for $450,000, capital gains tax applies only to the $150,000 difference between the sale price and the stepped-up basis.

Property Taxes on Inherited Homes

Inheriting a home may also lead to increased property taxes. Many states reassess inherited real estate at its current market value, potentially resulting in higher annual property tax bills. Some states offer exemptions; for instance, in California, a reassessment may be avoided if the heir is the spouse or child of the deceased.

Estate and Inheritance Taxes

Estate and inheritance taxes may also apply, depending on the value of the inherited property and the state in which it is located: • Federal Estate Tax: The federal estate tax applies to estates exceeding $13.61 million for individuals and $27.22 million for married couples in 2024. Estates below these thresholds are exempt from federal estate tax. • State Estate and Inheritance Taxes: Some states impose estate taxes, while others levy inheritance taxes. Maryland, for example, has both. Washington State imposes an estate tax on estates valued over $2.193 million as of 2024. Eleven states—including Kentucky, Nebraska, and Pennsylvania—still collect inheritance taxes. An estate tax is calculated on the total estate value before distribution to heirs, while an inheritance tax is levied on the portion received by an individual. Understanding state-specific tax laws is crucial for determining potential tax liabilities when inheriting and selling real estate.

Conclusion

Selling an inherited home involves various tax considerations, including capital gains, property taxes, and possible estate or inheritance taxes. Beneficiaries should assess their specific tax obligations and consult a tax professional to ensure compliance with federal and state laws. Proper planning can help mitigate tax liabilities and maximize financial benefits when selling inherited property.

CHAPTER 9 Prepping an Older Home for Sale Selling an Inherited Vacant Home: Best Practices for a Successful Sale Selling an inherited home that is now vacant requires careful attention to detail to maximize the chances of securing a buyer. It is important to present the property in the best possible light, eliminating any concerns potential buyers may have about purchasing an unoccupied home.

Advantages of Selling a Vacant Home

One benefit of selling a vacant home is that it allows buyers to visualize their own furnishings and lifestyle within the space. Without personal belongings or clutter, buyers can more easily imagine how they would use each room. Additionally, if the former owner had a unique or outdated style, clearing the home can enhance its appeal by providing a neutral, move-in-ready atmosphere. That said, a vacant home should not feel abandoned. Instead, it should convey a sense of warmth and readiness for its next occupants. There are several steps sellers can take to ensure the home remains inviting and marketable.

Cleaning and Odor Removal

A home on the market should be spotless. Many sellers mistakenly assume that a quick vacuuming is sufficient, but a truly market-ready home should be deep-cleaned to a level that makes it feel brand new.

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