How to Sell an Inherited House: Manage Relationships & Get the Best Deal

While inheriting a home from a family member or friend is a wonderful gift, it doesn’t come without a few challenges. The inheritor can choose to live there or use it as a source of rental income, but tax implications and legal considerations can come up during the tricky process of selling inherited property. However, a simple and lucrative selling process is within reach with the help of specific steps and expert advice—all that will be left is preparing your home for a quick sale!

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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Prepare for the Probate Process

Those who already own a home or don’t want to move will frequently find that selling an inherited home is the most appealing option. 

In most cases (even with a will in place), the inherited home and its contents must go through the probate process that validates the will before an ownership transfer can be completed. Generally, this can take nine months up to two years to be finalized, which allows you to move in, rent, or sell the house.

Who Owns What? Understanding Inheritance Scenarios

Inheriting a home isn’t always straightforward. Different ownership situations create different selling processes.

When You’re the Only Owner

If you inherited the house all by yourself, consider yourself lucky! You can make all decisions without asking anyone else. No need for family meetings or group texts about what to do with the property.

Maybe you were named as the sole beneficiary in the will. Or perhaps you were already a co-owner with right of survivorship. Either way, you’re now in complete control of what happens next.

When You Share Ownership With Others

Shared inheritance gets tricky fast. When multiple people inherit a house together, everyone has equal say in what happens next.

Imagine three siblings inheriting their childhood home. One might want to keep it for sentimental reasons. Another might need cash right away. The third might want to turn it into a rental property. Now what?

In these cases, you’ll need to have honest conversations about goals. Sometimes it helps to put everything in writing so everyone knows the plan and avoids the need for partition action.

When Family and Money Mix: Managing Inheritance Dynamics

Inheriting property with family members can strain even the closest relationships. Money and grief make a tough combination.

Family Meetings Save Relationships

Don’t skip this step! Set up a family meeting to discuss the inherited house. Let everyone share their thoughts, financial situations, and emotional attachments.

Start by asking what each person wants. Does anyone need their share of the money right away? Does someone want to live in the house? Is anyone willing to buy out the others?

These conversations are hard but necessary. Better to have them early than after someone has already made plans for their share of money that doesn’t exist yet.

The Buyout Option: When Someone Wants to Keep the House

Sometimes one heir wants to keep the house while others want to sell. A buyout might be the perfect solution.

Here’s how it works: The person keeping the house pays the other heirs for their shares. This usually requires:

1. Getting the house appraised to determine fair market value
2. Calculating each person’s share
3. Arranging financing to pay the others

Buyouts keep the property in the family while still giving other heirs their fair share. Just make sure to get the agreement in writing and properly transfer the deed. If there’s a strong degree of trust with the buyer, it may be faster to sell with a quit claim deed.

When You Can’t Agree: Getting Outside Help

Sometimes families just can’t reach an agreement about an inherited house. That’s when outside help becomes necessary.

A mediator can help guide difficult conversations. They’re trained to find solutions when emotions run high. This costs money but is MUCH cheaper than going to court.

If mediation fails, you might need a partition action—a legal process in which the court forces the sale of the property and divides the proceeds. This is expensive and can damage relationships permanently, so it’s truly a last resort.

Remember: No house is worth destroying your family. Sometimes compromising or even taking slightly less than your “fair share” is worth it to preserve relationships that matter.

Understand Capital Gains & Inheritance Taxes

A seller only needs to pay capital gains tax on an inherited property when they sell it, but understanding taxes on gifts and inheritances is vital whether selling the home imminently or not. 

Typically, these homes are only subject to short-term capital gains if sold before a year of ownership; if this is the case, they can be taxed at rates of up to 20%, depending on the seller’s tax bracket. If owned over a year, there may be long-term capital gains, which tend to be less than short-term capital gains tax.

Most individuals who inherit a house won’t be required to pay capital gains taxes. Also called inheritance taxes, only a handful of states have inheritance laws, including:

• Pennsylvania
• New Jersey
• Iowa
• Maryland
• Kentucky
• Nebraska

The good news is that most of these states consider the deceased’s children and spouse exempt from this tax on any assets willed to them.

Be Aware of Possible Federal Estate Taxes

While there’s no federal inheritance tax, federal estate taxes are mandated for some sellers. With a federal estate tax threshold of $12.92 million, only high-value properties and inherited assets exceeding this amount are required to pay this tax. Depending on the state in which the home is located and its value, estate tax rates range from 18% to 40%.

Pay Off the Existing Mortgage Balance

Many inheritors simply can’t or don’t want to pay a mortgage after inheriting a home. This is a primary reason that selling fast is on the agenda. It gives the inheritor the quick means to pay off any remaining mortgage and then reap the rewards of existing cash equity.

One of the fastest ways to sell is to bypass traditional methods and opt for a cash home buyer who’ll buy it as-is and give you moving options after probate.

Is This House a Diamond or a Disaster? Property Condition Assessment

Before deciding how to sell an inherited house, take a hard look at its condition. What you see will affect your selling strategy and price.

Get a Professional Inspection (Worth Every Penny!)

Most inheritors don’t know what problems might be hiding in the house. Spending $400-$600 on a professional inspection can save you THOUSANDS later.

An inspector will check the roof, foundation, electrical systems, plumbing, and more. They’ll find issues you might miss, like water damage or outdated wiring that doesn’t meet current codes.

After the inspection, you’ll have a clear picture of what you’re dealing with. This helps you decide whether to fix things or sell as-is.

Repair or Sell As-Is?

Once you know the house’s condition, you face a big decision: invest money fixing it up or sell it just as it is?

If the house needs minor cosmetic updates like paint or carpet, you might get that money back (and more) in a higher selling price. But major problems like foundation issues or a bad roof? That’s when many inheritors choose to sell as-is.

Remember: Every month you spend fixing up the house means another month of paying the mortgage, utilities, taxes, and insurance. These carrying costs add up fast!

When “As-Is” Makes the Most Sense

Selling as-is means you don’t fix anything. The buyer understands they’re getting the house with all its problems.

This approach works best when:

• The house needs major repairs you can’t afford
• You live far away and can’t manage renovation projects
• You want to sell quickly with minimal hassle
• Multiple heirs can’t agree on which repairs to make

Many investors specifically look for as-is properties. They’ll pay less than market value, but you’ll save time, stress, and repair costs.

Decide How to Sell An Inherited House

Anyone dedicated to selling an inherited home needs to be aware of the associated costs with ownership, repair expenses, and potential tax repercussions to help determine their best options to sell it before proceeding. There are three primary ways to trade: list with an agent, do a for sale by owner (FSBO), or talk to cash buyers.

Deciding which of these to choose will depend on the inheritor’s priorities. If time isn’t a factor, selling FSBO or with an agent are viable options—just be sure to follow yourfor-sale-by-owner checklist closely if you choose the former. Those seeking a fast and simple sale should look into home cash buyers. Any of these options can allow one to take advantage of a hot market and find buyers willing to pay a good price.

Listing With a Real Estate Agent

A listing agent may be a good way to go if the home is particularly expensive or in a highly sought-after area, as these properties can involve large sums of money. They usually market to buyers through networks like the MLS and can offer guidance concerning any offers received. 

However, paying an agent or broker to handle marketing, photos of the home, and legal documents will cut into the bottom-line profits.

For Sale By Owner Transactions

Owners who decide to sell an inherited property themselves will save money by skipping the fees of a listing agent. This means that the selling party will need to handle all the marketing details and closing procedures. 

In essence, there may be savings on the initial costs, but the home may take longer to sell, and there may be costs associated with making repairs to add to the appeal of potential buyers.

Sell Fast to Cash Buyers

Some companies and local real estate investors will buy houses for cash. Inheritance is one of the most common times to sell a home as-is, as adding the financial commitment of a second home is a deal-breaker for most people. Sellers who want to make a fast sale and still get a fair price for their property should strongly consider selling to a cash buyer. 

Finding a cash home buyer is perfect for distressed inherited properties that new owners would rather not pay for and spend time on potentially costly repairs.

A cash buyer deal is likely less stressful for the seller. Somebenefits of selling your house for cash include:

• There’s no need for staging the home.
• Cleaning before moving or selling is optional.
• No showings or open houses to deal with.
• There is no risk of a buyer’s financing falling through.
• The closing process typically is much faster than other options.
• There may be some contingencies avoided.
• There is typically no professional appraisal performed.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.