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Determining the Property Value of an Inherited Home
Dated: May 5 2020
Determining the Property Value of an Inherited Home
Before you can even think about determining the value of your inherited home, you first must know what not to do during the entire process of selling it,
Not Hiring an Agent Because You Feel You Don’t Need One
Don’t do this, you need an agent. Even though there is a 6% commission involved, trying to sell this home on your own, especially if you do not have any real experience, will be a complete nightmare.
A decent real estate agent will help you stick to your selling price once the home has been valued, which will greatly increase your odds for a pain-free sale.
A decent real estate agent will also take some of the stress and high emotions out of the process for you, through interacting directly with all potential buyers while you can focus on other things.
Your real estate agent will eliminate any “buyers” who only have the intention of browsing your property just to look and not to buy. It can be incredibly stressful dealing with people like this, but with an agent, you won’t even have think about it.
They will only bring people who are 100% serious to your attention. A real estate agent will have a lot more experience than you do when it comes to the negotiation process, which will potentially help you to get the most amount of money possible.
Plus, if any issues come up during this process, and they usually do, your agent will handle them for you. This includes both difficulties and paperwork during the real estate transaction.
Some people do sell their own homes without pulling out their hair, but that’s only because they have some experience and probably have help from someone other than an agent.
However, when it comes to inherited properties, it’s better to have an agent and some help on your side, as this process is not the same as selling your own home.
Do NOT Get Emotionally Involved
Clearly, you are selling this home for a reason, so getting emotionally involved is the absolute worst thing you could do. Begin to think of yourself as a businessperson and not the homeowner.
From this point on, until the transaction is signed and completely done, you are a home seller and need to act and do accordingly.
If you begin looking at this transaction completely from a financial perspective, you will distance yourself farther away from any emotional aspect of selling this property you’ve probably had many memories in.
One way to avoid this is to make the home look completely different. Repaint every room, take away all pictures and any memorabilia, and anything else that makes the house feel like a home. This will work to your advantage and make the home feel empty to you, but new and exciting for potential buyers.
Don’t Sell During Winter
Around the holidays especially, home sales take a huge drop. So wait until the spring or even the summer to list the inherited home. Because of the cold weather and social engagements, people will be busy and won’t have time to drive around and look at homes.
Therefore, selling during warmer seasons is the best way to ensure you get what you’re asking for with the sale price, and to ensure you sell the inherited property faster.
Determining the Value of the Inherited Home
There are multiple ways to determine the value of an inherited home when it comes to fairness for home market value for tax purposes.
Speak with a reputable Appraiser
To get the most accurate and fair market value price, go speak with a professional, certified, and reputable appraiser. They will look over the property and determine if there are any complications that need to be resolved, such as issues with plumbing, or any comparable sale prices for homes in the overall general vicinity.
From there, they will give you an estimate as to what the inherited home can be valued to.
Get a Couple of Real Estate Agents
This it typically a free option, where you will need to actually hire an appraiser for a walk through. If you have a couple of real estate agents do a separate walk through, obviously never at the same time, they will give you an estimate that is more true to fair market value.
Typically, a real estate agent will agree to do an appraiser because they believe that this will be a good way to get your listing, and your commission.
Do Your Own Research
You could also do a little ground work yourself by looking through multiple internet listing services.
This will help you see what you’re up against in regards to price comparisons, so you can be sure that one agent is not just wooing you with an expectation that is not realistic.
This will also help you to see what other people are listing their properties for in the area, what their homes have what your inherited home does not, and what your general value should be.
Get in Touch with the Executor
This may not apply to everyone, as sometimes a specific executor has not been named in the will. However, if an executor was, then you can do this. Contact the specified executor of the deceased’s will and ask him or her whether or not he is elected to have an alternate date for determining the cost basis.
Executors might decide to use a specific date of six months after the death of the decedent to value the home. However, if he or she has not decided to go forth with an alternate date, only then will the date of death be used for valuing the inherited.
Using Cost Basis
If the decent passed away in 2015, the cost basis will carry over, which will be used for the original cost basis of the home and used as the value. This could be for the purchase price, or for a step-up cost basis and value.
This basis increase will be applied to the overall inheritance itself, and not just the real estate involved. Therefore, you can use all or none for the real estate, and get the value elsewhere.
Steps to Selling Your Inherited Home
Selling an inherited home from a loved one can be an emotional process, so avoiding obstacles that waste money, add to your frustration and lose time are incredibly important.
Preparing the Home
Once the selling decision has been made and all financial implications have been dealt with your real estate agent, you can begin preparing the home.
You will need to completely depersonalize the home for sale quality, and for peace of mind. Start by cleaning out all if the personal belongings, but ensure that you take your time, considering this will be emotionally challenging and one of the disadvantages of inheriting a home.
You will probable discover things that bring up memories of the past, things you want to keep, and other meaningful items, which is going to be difficult. It’s important to take the time you need for this process.
If there are things you want to sell, after you have divided all of the possessions that you want to take as the heir, hold a yard sale or an estate sale for the rest.
Homes tend to show better on the market when they are staged or completely empty, but make sure it’s completely clean. Bring in a cleaning service if you have to.
Once the home is ready, your next step should be to fund the perfect real estate agent for your situation. They should be knowledgeable and experienced with selling inherited homes. Make sure that you are looking into the right ones before you make any phone calls or meet with them. Do not ask friends or family for a recommendation, unless they have used this real estate agent to help then with selling an inherited home.
Speak with the real estate agent about waiting for the estate to go through the probate process. In short, your inherited home must go through the probate process before you can sell it, but it’s best to ask them about that you should expect during this period.
The majority of states have a process of summary probate, but only for small properties that range in a few thousand dollars in value. Typically, most estates with real estate will exceed this threshold, especially if they have other assets involved with them.
Next, determine who specifically has the legal responsibility in regards to handling this transaction. If the deceased has a will and stated an executor as the one with the responsibility for distributing all of the assets of their estate, including the real estate, then you need to be in touch. If the property is within a trust, however, the trustee has the power.
In the case of siblings having responsibility for this transaction, if the home has been left to them by the last remaining parent, for example, one will usually take authority and responsibility over the other to handle the real estate transaction.
Once all of this is done, get your asking price by comparing similar properties. Depending on the conditions of the market for either buying or selling, you may see offers that are thousands of dollars below your asking price.
Now that you have a real estate agent working with you, negotiations will be incredibly easy, because they will help you through this process and give you guidance on what you should do. You should not expect to receive your asking price, but set the price around what you would generally be happy selling it at especially if offers are below your asking price.
Overall, the process of negotiation will determine the final selling price. Therefore, your real estate agent selection should be someone who will not only advocate for you, but negotiate on your behalf, as well, considering this is incredibly important, and should not be done lightly.
At the same time do not price the inherited property too high, as it will drive potential buyers away. Make the price as realistic as possible, but at a price that is higher than what you are willing to settle on. Even still, do not settle for price that you’re uncomfortable with, and don’t jump at the first offer you get excited over. Always go over each individual offer with your real estate agent before you make your decision.
Don’t Be Surprised If. . .
· Executors keep the state in probate for years, for use of assets.
In this case, speak with your real estate agent about what you can do should this situation occur.
· The will states that the home and all other assets and property is to be divided equally between beneficiaries, which means the overall value must be equally distributed.
· You eventually feel guilty about the possessions you chose not to keep. Don’t worry, this is natural, and you should expect it to happen regardless, but don’t feel obligated to try and get them back, not matter how badly you feel.
For the majority of people, the purchase or sale of a home is their largest single investment. My goal is to guide you successfully and easily through the contractual, investment and emotional decisio....