Selling a Home that was Inherited Pros and Cons
Having a real estate property is hard for people nowadays. This is why inheriting real estate is such a huge leverage for some people. Most people who inherit real estate either rent or live in the real estate property they just inherited. This is not a wrong choice. In fact, people without real estate properties should do this. However, the benefits of selling a home that was inherited has tremendous value as well.
Most people would think that inheriting real estate property is just sunshine and rainbows. But what some people don’t know is that there are disadvantages in having inherited homes. Having an inherited home can be a blessing for those who know what they are doing, but a burden for those who don’t.
In this article, we will cover the benefits of selling a home that was inherited instead of living in it or renting the property to other people. But first, we will discuss the options of living in and renting the real estate property
Pros and cons of living not selling a home that was inherited
Real estate inheritance | Photo from Unsplash
The first benefit of inheriting a real estate property is that you can live in it. However, you should take note that it’s not easy. Living in an inherited property comes with maintenance, HOA fees, and other unexpected expenses that come along with being a homeowner.
According to Zillow, homeownership can have hidden costs that are around $9,000 a year. These expenses come from maintenance costs on top of mortgage for the real estate property.
In the city of Pittsburgh, the report states that the average home costs $1,872 in taxes, $3,048 for utilities, $685 for homeowners insurance, $312 for pressure washing, $734 for lawn maintenance, $210 for HVAC maintenance, $1,537 for home cleaning, and around $200 for gutter and carpet cleaning.
Pros and cons of renting out an inherited property
Renting out an inherited property | Photo from Freepik
On the other hand, renting out the real estate can give you passive income. One strategy that property owners do is renting out their inherited home and buying a new property. The rent that comes from the inherited home is what they use to pay their newly acquired real estate property.
The downside in renting out your property is its financial impacts. Before renting out a property, you should make sure that your inherited property is presentable to future tenants. An old inherited real estate property will likely have areas in need of repairs. Of course, those repairs will cost you a load of cash.
And that is not over yet. As a landlord, you should ensure the overall condition of your property. That maintenance also costs money. Sometimes, your tenant might miss their payments or damage your property. While there are laws against these acts, the process can be long and difficult.
You’ll have to pay property taxes on it, just as you would on any other home you own. On the other hand, there is a possibility that you will be able to deduct the costs associated with the upkeep and maintenance of your property from your taxes.
Pros and cons of selling a home that was inherited
Disadvantages of selling a home that was inherited
Selling inherited real estate | Photo from Freepik
Selling a home that was inherited to you has a lot of benefits, but there are downsides as well. One of the disadvantages of selling an inherited house is that you get lesser value from the proceeds after immediately selling the house as soon as you inherit it. This is because most real estate properties appreciate in value as time passes.
Moreover, you won’t be making that much profit if the appreciated value for the inherited real estate property is lesser than the current mortgage balance of the property. And just like renting, you will have to make the house more presentable before selling it. But unlike renting, selling an inherited home does not offer you passive income.
Advantages of selling a home that was inherited
You can earn a lump sum in selling an inherited house
Another benefit of selling your inherited home is it can give you a significant amount of cash on your disposal. If ever you have tuition fees, debt, or mortgage payments, you can use the proceeds from the sale to cover these payments. If you need to pay a large amount of money in an instant, selling an inherited house is the best option.
The only thing you should consider when selling inherited properties is your siblings. Some properties are inherited to multiple people and you have to make a decision as a whole when it comes to inherited property. If your siblings agree on selling the property, each should have a share of the proceeds from the property.
Selling a home that was inherited can help you move on
Grieving from loss | Photo from Freepik
Having inherited real estate can be emotional because you usually inherit real estate once a loved one passes away. Some people have a hard time dealing with the fact that they lost a loved one. However, life must go on and some people should move on no matter how difficult it might be.
Living in the inherited real estate or renting out the property can be a hindrance in moving on. The real estate property holds sentimental memories. If you are still grieving from your loss, you can sell the real estate property. Living in the same house can just trigger memories.
Whatever the reason, selling an inherited home is the best option if it only triggers sad or bitter memories.
As mentioned earlier, there are times where other family members have a say on what happens with an inherited real estate property. If you don’t want to deal with any of the taxes, payments, or work that comes along with having an inherited house, then you can offer to buy them out.
On the other hand, you can buy out the shares of your relatives to the inherited real estate if you want the property alone. By definition, a real estate buyout happens when one person wants to have the inherited home while other beneficiaries want cash instead. So, the beneficiary who wants the property “buys out” the interests of those who don’t.
Inheritance buyouts are subject to capital gains tax. But the good news is that there are some exceptions which can minimize your liability. The buyer of the inheritance is the one that mostly benefits from inheritance buyouts. Buyouts avoid conflicts within siblings, allow one person to take control, and protect the inherited home.
Selling inherited homes free you from responsibility
Freedom for responsibilities | Photo from Freepik
One of the benefits of selling your inherited property is it frees you from any responsibility. Inheriting a home also means that you are also inheriting the taxes, repairs, maintenance, and mortgage payments that come along with it in the long run.
It was said earlier that you need to make a home presentable in order for you to sell it at a decent price. However, there is a way to sell your home for cash in whatever condition. Yes, you don’t have to go through the work of cleaning, repairing, and marketing the house just to get out of its responsibilities.
One of the most stressful parts of acquiring an inherited home is covering for the mortgage payments. Sometimes, mortgage debts can be paid from the estate. However, there are instances when there is a “due on sale” clause on the property where inheritors should pay mortgage balance once they gain ownership of the inherited home.
How do you sell your inherited home?
The best time to sell your inherited home is once everything else is settled. To sell inherited real estate, the estate should go under a legal probate process. Probate is the process of making sure that a descendant’s will is followed.
The probate process varies per state. The constant factor here is that there is an executioner that the inherited real estate goes to the right beneficiaries.
After the probate process, all beneficiaries should agree on selling the real estate or have one person buy out the other beneficiaries’ interest. Inheritance disputes are settled in court.
Once agreed, the seller of the property should settle all of the taxes and mortgage payments before selling the real estate property. The process of selling inherited homes can be difficult. Luckily, there are cash buyers that buy your real estate for you.
We know local attorneys in the Pittsburgh tri-state area that specialize in Pittsburgh Probates if you need any help.
Where to sell your inherited home
Buys Houses, is your best solution in selling an inherited property in the Pittsburgh area. BPH will buy your homes as is without hesitation. Selling a home with an agent will require 6% commission, 2% payment on closing costs, and is subject to multiple inspections and an appraisal.
With BPH, all you need to do is present your home to us and we make a cash offer for your home. You don’t even need to repair and clean your house before selling because we will do it for you! BPH pays for closing costs, cleans your property, so you can sell your home within 45 days or less.
These are the reasons why Buys Houses is a top buyer in Pittsburgh. All the problems that come along with inheriting a home will be gone in no time, thanks to Buys Houses!