Quick Guide to Selling An Inherited Home for The Family Left Behind Inherited Properties

Transcription

1 Quick Guide to Selling An Inherited Home for The Family Left Behind Inherited Properties

2 Your loved one has either passed away. Our condolences to you. We have gone through that process ourselves and know it is a very stressful time for you. Not only do you have to deal with the death of your loved one and the arrangements, but now, if you are reading this guide, we will assume you have a house and all the contents that you need to deal with. the house and we have put together this guide to help you. We have been through this process several times both as the heir to the home as well as the company buying There are several major areas that we want to take a look at: 1. Having the Ability to Sell: This is where you have to look at how the house was titled, was it in trust, does it need to go through probate, how many heirs are thee, when can you sell it. 2. Getting Ready to Sell: This is the time consuming and often emotional process of cleaning out all the contents of the house and making any repairs or updates to make the home most sellable. 3. Options for Selling the Home: There are many ways to go about the process of selling the home and there isn t one right way. The correct way will depend on the house, the financial situation and the heirs needs. 4. Taxes on the Sale: Last is the need to consider taxes that may or may not need to be paid. We will take a practical look at these four factors and give you some examples that we hope you find helpful. If you need assistance through the process or have a question, please feel free to give us a call. We do purchase homes across the Kansas City Metro and have purchased numerous inherited homes. So we have resources for every step of the process.

3 Can You Sell? Probate: legal process that takes place after someone dies. The first step is to determine if you can in fact sell the home you have inherited. There are a bunch of factors here that we will go into over the next few pages: How was the property owned prior. Do you need to transfer ownership to your name. Includes: Does the property need to go through Probate Court. Proving the will is val- Is the Home a part of a large or small estate. id. Are other people entitled to the property. Identifying and inventorying property. Appraising property Paying Debts & Taxes. Distributing the Remainder. There are numerous questions our home sellers have in this situation and we will usually direct you to your attorney or to our title company who can answer all of your questions and help you through the process.

4 1: Revocable Living Trust: As Property is owned by the trust, the trustee not you can easily transfer ownership to family and friends. 2: Joint Tenancy : Several different forms of Joint Tenancy, but the basic premise is that when one joint tenant dies, the property passes to the other owners. 3: Gifts: Giving away property before you die is a gift and simply avoids the whole probate process. 4: Small Estates: Almost every state offers short cuts through probate - or ways to avoid it altogether for small estate, but this will vary state by state. 5: Claiming Property with Affidavits: For small estates, an inheritor can sometimes prepare a short document stating they are entitled to a property under a will or state law. 6: Simplified Court: Quick court procedures for small estates, often can be handled without an attorney. 7: Do Nothing: Not really the correct course of action, but often times we have seen the heirs do nothing, just continue living in the property. 8: Full Probate: For larger estates or estates with a lot of messy bills, heirs and other legal issues. Handled by an attorney. Source: Nolo.com 8 WAYS

5 Rights to Sell - Some Real Examples Small Value Homes: We have purchased numerous homes of very low value where the family member (s) provide the death certificate to the title company and prove that they are the only heirs. The title company does a bit of work and the property has closed with out any probate court issues. All heirs must sign. Parent s Home: One of our parents passed and part of her estate did need to go through probate. The court allowed the sale of the home, with the proceeds of the sale, held in a bank, going through the probate process. A bank account is much easier and cheaper to manage, does not rack up taxes and insurance and is not in danger of burning down. Multiple Heirs: We find this from time to time where there are multiple heirs. It is important to know that for example a brother and sister inherit. They both have a spouse. Not only do the brother and sister have to agree and sign off on the contract and the closing documents, but their spouses do as well. With one property we attempted to purchase, all heirs were in agreement to sell except the grandson who was living in the house rent free. Grandson was tearing up the house, not doing any maintenance or paying any of the expenses and because he was not paying anything he did not want to go anywhere. They could not sell with out him signing off as one of the heirs. One option we would have had was to buy out the interest of all the other heirs in the property and then we could have dealt with the grandson, eventually forcing him to sell. The Messy Estate: A property this past year was in terrible condition, had several thousand in back taxes and other issues. The deceased had no children so his elderly brother had inherited. For some reason their attorney advised them to take the $5,000 house through the entire probate process and had multiple errors on the attorney s part through out the process. The delays cost the heirs attorney fees and increased the cost in taxes. They were basically giving us the house as we were paying $2500 that just covered the back taxes and the closing fees at the title company and a small life insurance policy paid off the multiple judgments against the property as well as the attorneys fees. Lesson we learned here is to consult with a title company before selecting an attorney to make sure you have one well versed in the court processes to save time and money spent in doing things several times.

6 We have learned a few things along the way in our past 13 years of buying and selling. First always consult with the title company. More often than not, they can help you through much of the red tape for next to nothing, while the family attorney is going to be charging you $200 an hour. If they can t handle all the issues, they often have an attorney on staff or can refer you to one or two excellent attorneys that are expert in the process and will save you time and money. Second. If you do go with an attorney, don t pay them to draw up contracts or the deed. You can often get basic sale contracts off the internet, from a Realtor or if you are buying from someone like our firm, we can write them for you. By all means have your attorney review them, but don't go to the extra expense of having them draft them. And the title company will only record the deed they draft, so if the attorney does one too, it usually goes in the trash, so save your money. Third, a power of attorney dies with the person. We have many sellers who come to us that have a power of attorney over the deceased. And while that will work fine while your loved one is sick or in the hospital, as soon as they die, it is no longer valid. So if you are going to get a power of attorney, you might consult with the attorney to find out how to get all property in your name before the pass, rather than waiting till after. Timely tips

7 Dealing With Stuff After collecting the 3 or 4 keep sakes that they want, most heirs are faced with a house packed with stuff. What can you do with it? Nothing: Is a very viable option. Leaving everything in place and allowing the person who purchase the home is one way to go. Depending on how you decide to sell it, however, this method can cost you in sales price. This is an excellent option if the home is not in the best of condition or is very dated as the buyer of this type of home is used to dealing with stuff. Garage Sale: More often than not, this is probably the best option as the average persons stuff us very used. Separate out items that might be of value and take to a collector in the case of gold, jewelry, collectibles or antiques. Or if the items are new, like appliances or furniture you might take photos and m market through Craigslist.com for a bit higher sale price. Estate Sale: If the contents of the home might be of more value, you might consider an estate sale. The average Estate Sale company will assess the contents, market them and conduct the sale for a cut of the proceeds, usually somewhere around 1/3. Auction: Works the same as the estate sale. Just accelerates the process into a few hours. Might be a better option for contents with more value. Donate: This is an option that we use in many houses we buy when the seller leaves behind belongings. We have a local contact from a thrift store that will assess the contents and if there is enough items of value to the thrift stores customers, they will come in and clean out the house and take the items back to sell in the thrift store. The items go to good use with deserving people and the thrift store makes a few dollars to stay open, and your house gets cleaned out.

8 1: Clean & Tidy: Spending some time scrubbing the home will help it show its best. The less clutter and dirt, the faster home will sell and for more. 2: Good Repair: Fixing all those little things that we all live with and intend to get to someday is a must. If the doorbell does not work, what else is broken. 3: Updated: Taking time to paint with a neutral updated (not white) color scheme with a professional paint job can also help. 4: Kitchens: When we buy estate houses, one of the main rooms we spend money on is the kitchen. We update from top to bottom. 5: Bathrooms: The 2nd most important update after the kitchen is the bathrooms. Fresh and Modern Spa Like Bathrooms sell houses. 6: Mechanicals: We often see that the homeowner has updated electric, plumbing, furnaces and air on a regular basis, but if not, these are a must. 7: Structure: Next on our list of most updated items are roofs, windows and in some cases the siding. If they are older then 20 years old, we replace. 8: Finishes: Are the light fixtures, doors, door knobs, pulls, outlet covers, vent covers clean and of the right color. 9: Foundation: If the foundation has issues, this can be very costly and scare the buyer. Be sure to get an engineers report and make repairs as needed. 10: Landscaping: Usually the overgrown yard is overlooked, but trimming bushes and trees helps and making repairs to porches and deck will help. 10 For Top $

9 Selling As-Is? When we buy in As-Is condition we can make you an all cash offer closing on the date of your choosing with either you cleaning out the house or leaving all the stuff. If you would prefer to receive a monthly income stream, we can let you be the bank and finance us over time. Which ever is better for you. We buy many houses in their as-is condition meaning the heirs came in and took out the items they wanted and then turned the house over to us. They didn t fix or clean anything. But when is this the best option? If the home in question is newer, say less than 5 to 10 years old or if the home has had major updates to the systems like roof, furnace, AC and windows in the past 10 years and updates to kitchens and baths in that same time frame, if making the most money on the home is the goal, then by all means take the time to clean the house, clean or replace carpets, paint or touch up the walls and fix anything that is broken. Then list the home with a Realtor for top dollar. If the home in question is in good condition but not in newish condition then a judgment call needs to be made. Clean house with newer carpet and fresh paint will make the house sell faster sometimes, and other times it might not. I would definitely say if top dollar is the goal, get an offer from an investor buyer like our company as well as consult with several Realtors to see what they could sell if for and how much it would cost. If the home has not been well maintained, has not had an update in 20 years or is in down right bad shape, selling as is will be the best option. We buy many a house where the heirs spent time and money making repairs, but they paid too much for them, didn t get the best workmanship, or spent the money on the wrong things. Then listed with a Realtor and could not sell. For example fresh paint and carpet didn t make sense when the kitchen cabinets were falling off the wall. Call us first.

10 Is house in decent condition and you want to make the most out of the house in the fastest amount of time, these basic tips can help. 1: Clean Out Closets: Closets packed with stuff do not show well and Closets packed with old stuff, can contribute to the old smell in a house. 2: Clean Out Cabinets: Either clean and organized or empty. Again this helps with smell and makes it appear there is more storage space. 3: DeClutter: Time and time again we sell houses listed for sale for months and months and when we look at the photos we see every flat surface, walls included packed with stuff. Pack it up & patch the nail holes. 4: Staging: A few well placed pieces of modern furniture can show buyers how to arrange furniture and create an inviting feel over a vast empty room. However if you have ugly furniture, hire a stager or leave empty. 5: Smell: We mentioned smell. We often see a house that is vacant or recently lived in by an elderly person has an old person smell. Not sure why, but it needs to be addressed. Cleaning Helps, Baking Apple Pies Helps. 6: Shampoo Carpets: If the carpet is still in good condition rather than replacing, get it cleaned. Or if there are good hardwoods underneath, remove the carpet and polish up the floors. Even with a few stains, hardwoods are better. 7: Magic Eraser: If you are not going to paint, invest $3 in a magic eraser at the grocery store and scrub scuff marks off the wall. 7 Low Cost Fixes

11 Let s Talk Pricing The next question you need to consider is just what is the property worth? The value of the property will be directly related to three things: 1. The location of the property, 2. The condition of the property, 3. How fast you need to sell. The first place you might want to consult would be Zillow.com, but don t take the Zestimate as the end all and be all. Dig a little deeper and pull up actual house address in your area that have sold, look at the photos, drive by them and compare them to the property you have to sell. This will help you determine value. Keep in mind that bank owned homes or houses that sold as a distressed sale, will typically always sell for less as they are distressed. Then compare your condition to the homes sold. If the typical homes you are seeing are in average condition or look like a magazine and the house you have for sale needs work, you are going to have to lower price for needed repairs. You may want to get an inspection and make repairs per the inspection, how ever keep in mind if they find a major problem, that you don t have the time or money to fix, that it becomes an item that you must disclose to prospective buyers. Next consider how fast you want to sell. If you have the time to wait out the sale through typical Realtor Channels, you will sell for more. But if you want to sold fast and / or want to sell with all contents, you are often going to have to settle for a lower price. Your best bet is to consult a Realtor for their expert advice.

12 Loans and Liens on the House. We have helped sellers work through many situations that often times required us to work with several attorneys and to wait out the process over several months. Two different transactions took almost 9 months to resolve and during that time, we worked with the home owner to make the process as painless as possible. If there is a mortgages or liens on the home they will need to be paid out of the proceeds on the home. The problem arises when all the mortgages, liens and judgments add up to more than the home is worth. We always take our sellers straight to the title company to see what needs to be paid. Often times if there is life insurance it can help with these costs or other times it takes a bit of work. Mortgage: If there is a mortgage, more often than not it needs to be paid or negotiated down if the loan is too high. Other times we may find a loan that was paid off many years ago and we have to track down the lender for a release or in one instance pay for the attorney to complete a quiet title suit. Several Mortgages: This will work just the same as the first mortgage, we just find that there are several junior mortgages. Judgments: When the deceased incurred bills that they did not pay or if they were sued and lost, they may have judgments filed against them. These also can be negotiated down or if they are older, it may be that they may drop off the books after so many years and they can be waited out. Tax Liens: If the deceased did not pay real estate taxes or state or federal income taxes there may be liens against the property that also must be paid at the sale. If you find that there are loans, judgments and liens it may come to the point that it is just easier to clean up the title by letting the 1st mortgage foreclose and wipe out all the other debts. Or if a family member is just wanting a place to live, they could move in and continue to make payments on the house. Other that Real Estate Taxes that will eventually foreclose on the property for non-payment and the mortgages, the other judgments and liens can sit out their waiting forever if someone wanted to live in the property forever. But again, in this instance, please consult an attorney for advice.

13 Ways to Sell - Some Real Examples So you are ready to sell. You have cleaned it out and have it ready to be sold. You do have options and do not let anyone tell you different. But again, the faster you want to sell, the fewer options you will have. Ask the Neighbors: Really and truly you should do this. Possibly go door to door for several houses up and down the street. You would be surprised how many houses get listed by a realtor or purchased by us and then get sold to the guy across the street. Estate Sale: People who buy houses watch estate sales and they are always checking to see if the house will be sold. So if you are having and estate or a garage sale, have a sign and flyers to hand out to potential buyers. You might also find that neighbor buyer this way too. For Sale By Owner: You may want to take this approach for a few weeks. Usually not more than a few weeks. But if you take the time to clean out the house and clean it up, the put a sign in the yard that the home is for sale. Take a bunch of photos and market it on Craigslist.com as well as Zillow.com and a few other sites and you may just find a buyer and save yourself the commission. Note that if you have it priced right or a bit below market value, less the Realtor Commission, that you might get lucky. With Realtor: Nine times out of ten, selling with a Realtor will put more money in your pocket. How ever finding a Realtor who will want to take a listing if the house is in rough shape or if it is a lower value home might be a tough proposition. And if the home is well maintained, yet in need of cosmetic updates, you may be looking at several months to find a buyer plus another 30 to 45 days for them to inspect the property, ask for repairs, get appraisals and get their loan approved. To Investor with no Money: There are investors out there who really don t have a lot of money and who will offer you more for the property, if you will give them 45 to 60 days to close. They then turn around and go out to find someone to buy the house from them. If they can t find a buyer, they can t buy from you and the contract flips on day 59. Investors on Terms: We like to buy this way with the right sellers. So say you don t really want a lump sum up front, but would like to have the purchase price divided up into several payments or over 20 years. You get to act as our bank, saving us interest costs and allowing us to pay a bit more. Investors with Cash: We also like to purchase in this fashion as we can close in about 2 weeks or less or on your time. You get all your cash up front and we get full access to the house, immediately. However, as we have said before, to get the fast closing, the price will be lower than any of the other ways of selling we have listed. But for many people this is the best option as they can get the property out of their hands and out of their hair and get on with their lives. So you need to decide the best option for you.

14 What about Taxes? Because every situation is different, we can t give you a blanket answer. We went to Google and started searching and got a lot of different responses. We highly recommend you take the time to do a little research and be sure to consult a CPA and or a Tax attorney about your particular situation and circumstance. We also advise clients who may have a family member that is moving into a care facility to start planning now to lessen taxes later as there are steps that can be taken to make the sale of the home or disposition of other assets much easier and lessen the taxes that may or may not need to be paid. Costly Taxes

15 Unexpected Insurance: note that the insurance that was on the house when it was occupied, will usually become invalid after 30 days of vacancy. The policy is written to cover an owner occupied home and once it has been unoccupied for so many days, the insurance company will not pay a claim if it comes up. So please consult the insurance policy and get the property occupied or purchase a vacant policy on the home until you are able to get it sold. Utilities: all to often here in Kansas City we find properties that the family has turned the furnace down or off to save on gas yet they fail to shut off the water and drain the lines. We get a hard freeze and all the pipes burst costing $1000s in damage. So if you are dealing with your inherited property in the winter months, keep the furnace turned on or have the home professionally winterized to protect from damaged water pipes as well as heating pipes if you have a steam or hot water heating system. Mowing: Also keep in mind that the yard must be maintained. That means you have to mow the yard on a regular basis in the summer and clear the sidewalks of snow in the winter. If you don t many cities will issue a fine for failure to keep up the yard. Vandalism: Sad, but true in this day and age. A vacant house attracts people that can do it harm: the neighbor kids breaking in and having a party and damaging all kinds of things. A homeless person breaking in to keep warm and setting things on fire, just to create more heat and burning the house down. And the ever industrious copper thieves that break in and steal all copper in the pipes, the heating and cooling systems as well as the electrical wiring. We have seen them several times in houses we have purchased.

16 We Buy Houses CA$H OR TERMS! Inherited Properties