Your parents (or brother, sister, relative, friend) have passed away, and their house needs to be sold. What now? In this guide, we look at selling a deceased estate property for a deceased person(s) and the steps to launch the sale process. The person legally responsible for the sale of property of a deceased person is the executor/executrix. An estate administrator is the person who handles the estate if the deceased has not left a Last Will and Testament. Can an administrator of an estate sell property? Only if the probate court (see below) formally appoints him or her to have authority over estate assets. For this guide, we will say you are the estate executor, and the deceased are your parents.
How to Sell Estate Property
As the Executor, What Do You Do?
As the executor, it’s your job to resolve debts and disperse assets that belonged to your parents. There are other tasks as well, including:
selling real estate (what we’re focusing on in this article)
removing the contents of safety deposit boxes
closing out bank accounts
paying last bills
making sure taxes are satisfied
dealing with investment portfolios
clearing out personal belongings
Selling a house and distributing assets among beneficiaries are the two tasks that people most often associate with the role of executor.
What is Probate and What Does It Have to Do with You?
Probate is the term for a legal, court-supervised process that ensures two things: 1) the proper and fair settlement of an estate’s debts, and 2) the proper and fair distribution of an estate’s assets. As the executor of your parents’ estate, you must cooperate with the probate process,
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unless the estate is exempt from probate because a “transfer on death” deed is in place or the estate is in a living trust (more on that in the next section). Selling real estate that is in probate differs from selling one’s own home because of court-imposed requirements (such as having the property appraised by a licensed appraiser to establish the home’s value on the death date of the deceased).
Your First Step: Find Out the Status of the Estate
Your first important task as an executor is to find out the status of your parents’ estate. Did they file a Last Will and Testament with the probate court? Probate files are public court records, so in most cases, you can retrieve a copy online for free. If you can’t get it for free, you can at least see which estate documents have been filed and confirm who the named executor is. If your parents left a will and it has not been filed with the probate court, file it within 30 days of their date of death. Even if their estate is small, file the will. Not filing can result in unwanted legal surprises down the road. The court will have a say in how and when you sell your parents’ house during the probate period. It can be very helpful to have a probate attorney on board to help you navigate probate legalities and comply with the probate timeline. There are two ways that properties avoid probate, simplifying the home-sale process.
The first way is if the type of deed on the home is a “transfer on death” deed, also called a “beneficiary deed.” This type of deed allows the ownership of the home to transfer to the executor directly and immediately. Not all states acknowledge this kind of deed, and laws governing them also vary from state to state.
If your parents’ house passes to you through their living trust, it does not have to go through probate. The purpose of a living trust is to streamline the process of managing and settling the estate by bypassing probate and providing for the house’s immediate sale.
Step Two: Meet with Beneficiaries
As an executor, you have matters to attend to other than the sale of your parents’ house. However, for this article, we’re just looking at selling a house after death of parents. An early sit-down with beneficiaries will help identify expectations, establish who is doing what, and what the end scenario will look like. Clarifying expectations will help avoid misunderstandings and conflicts later on.
Meet together and decide:
Who will go through the house and dispose of its contents (in keeping with your parents’ wishes as expressed in their will, if they left one)
Who will manage repairs and improvements in preparation for the home sale
Who will pay for repairs and improvements (will the estate pay?)
Who will research realtor candidates and make the final selection (look for an agent with experience with probate real estate sales)
Who will get the property appraised and decide how much it is worth
Who will be the decision-maker in accepting an offer
How proceeds from the sale will be split
About selling deceased estate property taxes (don’t forget about these)
Find out how long do you have to sell a house after someone dies. The probate schedule will inform this timeline. When asking the question, how long does an executor have to sell a house, you can also draw on the knowledge of your probate attorney and realtor. Sample Probate Timeline
Step Three: Be Aware of Taxes on an Estate Home Sale
When you sell your parents’ home and receive proceeds from the sale, the government will count the profits as income and tax you accordingly. These taxes are considered capital gains and estate taxes, and they can be substantial. Consult your accountant or tax professional to find out what your tax liability will be.
Estate Taxes and Inheritance Taxes
Estate taxes are imposed by the federal government on the total value of an estate. They are paid by the estate before any distributions are made to beneficiaries. They mostly affect very wealthy taxpayers. Laws governing estate taxes vary from year to year. Estate taxes are calculated on the “gross estate,” which includes the fair market value of all properties the deceased person owned when they died. Inheritance taxes are levied by state governments on money or property inherited from a deceased person. With this kind of tax, the beneficiary must pay the tax (not the estate). Not all states impose inheritance or estate taxes.
Capital Gains Tax
Capital gains taxes are levied on the difference between what a house was bought for and what it sold for (providing there was a gain and not a loss). A house that was owned for longer than a year is assessed long-term capital gains tax at rates that correspond with the beneficiary’s tax bracket. Profits on a home owned for less than a year are taxed as regular income. Capital gains tax can be reduced through a tax break called a “step up in basis.” This sets the value of an inherited house at the time of the deceased’s death rather than on the date he or she bought it.
Selling your parents’ house after death is more complicated than selling your parents’ house before death, and you need to find a real estate agent who has handled the sale of inherited houses before. Do your research and find an experienced realtor. If there is more than one beneficiary, include them in the realtor vetting and selection process. A realtor will advise you on the important financials of your parents’ home that you need to find in order to proceed with the sale. Financials include:
Details on an existing mortgage
Who is the lender that owns the mortgage?
How the mortgage has been paid (auto-draft, check, etc.)
Other important documents include:
Mortgage payment records
Reverse mortgage statements
Property tax records
Homeowners association records
Step Five: Get the House Ready to Sell
If the house is in probate, remember to consult your probate attorney to ensure you don’t miss any important dates on the probate timeline for selling the house. Also, confirm that you have court approval for selling it. In some states, probate courts require executors to inventory all property before anything is given to heirs.
Empty the House
The first task is to consult the will (if there is one) to see which items your parents bequeathed to specific individuals. Those items can be distributed. Next, important household furnishings and meaningful possessions should be divided up among heirs. This may not be a simple process and could require the services of a mediator.
Once all meaningful possessions have been distributed, the rest of the house contents can be sold or given away. You may wish to handle the sale of items yourself or hire an estate sale company.
Make Important Repairs and Improvements
When the house is empty (or during the decluttering process), have repairs and improvements made. Your realtor will advise you on the priority projects to get done. Another option is not to make any repairs or improvements and simply sell the house as-is. It may net less, but you will also have fewer upfront costs in getting it ready to sell. If dealing with repairs and improvements is more than you want to handle, consider selling the house in its existing condition to an investor. Again, do your research and find an investor who knows what they’re doing when buying inherited houses, especially ones in probate. Read more on this in the next section.
List the House for Sale
Confirm with the probate court that you have permission to put the house on the market. Consult with your realtor on the listing price, make a decision in cooperation with the other beneficiaries, and put the house on the market.
Regarding Selling to an Investor
Selling an inherited home can be a painful emotional experience, especially when layered on grief over the loss of loved ones. Taking the traditional route to a home sale (selling through a realtor) can feel overwhelming. Some heirs decide to shortcut the process and sell the inherited home directly to an investor. It doesn’t avoid the task of distributing/selling/donating the house contents, but it does avoid the chores of doing repairs and improvements, negotiating offers, and waiting for a deal to finalize. Houston Capital Home Buyers (HCHB) is an investor based in Sugar Land, Texas. We buy houses as-is. This means no repairs or improvements are necessary for selling the house. We return offers within 24 hours of receiving the request.
What are the benefits of selling your inherited home to HCHB?
You pay no fees (vs. the typical 6% paid to a realtor)
You pay no closing costs (vs. the usual 2% paid by the seller)
No inspections and no financing contingencies
No appraisal needed (we make cash offers)
No wait for a sale (our cash offer is immediate)
You choose the closing date; we can close in as few as seven days
We pay for all repairs (that’s right—you don’t have to fix anything)
Who is HCHB?
HCHB has been in business for over 12 years. We’re an industry veteran with an unblemished reputation and over $41 million in homes purchased. We’ve helped 420 families avoid the stress and hassle of home-selling. They called us, accepted our offer, and walked away with a check on the date they chose to close. We are a veteran- and U.S.-military-owned company. Our commitment to serving our country with integrity, honor, and respect extends to our customers. Be assured that as you cope with the loss of loved ones and the stress of managing their estate, you will only experience courtesy and kindness from our staff. If the home is in the greater Houston area, we’ll even help you move its contents. Houston Capital Home Buyers purchase inherited homes anywhere in the country. We are an accredited member of the Better Business Bureau and have an A+ rating.
How does it work?
Contact us and describe your property and situation.
We’ll visit your property to assess its value in order to make you the highest offer possible.
We’ll make you a generous cash offer and guarantee to close whenever you want.
What about probate?
The staff at HCHB understands the probate process regarding inherited homes. We work with your probate timeline to accomplish the house sale when it needs to happen.
Wrapping It All Up
When you’re selling deceased estate property, you may have to take into account probate requirements and special considerations relating to beneficiaries. You may want to hire a probate attorney to help. If selling the inherited home through a realtor feels overwhelming, reach out to an investor such as Houston Capital Home Buyers for a quick and easy sale.
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