Probate Property
Are you trying to decide whether to sell or keep a house you’ve inherited here in Birmingham? Should you rent? Move In? Sell? Some tough decisions will have to be made and chances are you’ve got a lot going on at the moment. We know it can be overwhelming but we’re here to make the home selling process easy and stress free so don’t fret, you got this! I have been through it personally so I understand. That’s how I actually found out about this business! In our latest post, we‘ll go through some things to consider, how to decide whether to keep or sell and how to sell.
What Is Probate?
Probate is the formal court-supervised legal process of carrying out a deceased person’s last wishes by validating their will (if any) and resolving outstanding debts and distributing assets. This is usually done through a will (“testate”) or the person doesn’t have a will, it is called “intestate”. You may hear these legal terms brought up during the process and it’s a good idea to learn them ahead of time.
In order for property to be sold by any beneficiaries (you), you have to have the authority to sign a deed making the conveyance. If there is a will, usually there will be provisions in the document outlining who will be in charge. This is the executor of the estate and they will be responsible for a whole list of things not outlined in this post. You can read more about that what the probate process looks like in Alabama here.
As always it’s best to seek the counsel of a competent local attorney who understands the process. We recommend Waters Sullivan.
Things To Consider
Costs of Holding Onto An Inherited House
Owning a second house can be exciting but the reality can also be daunting. The truth is that you have also inherited a second set of expenses along with the house and if you’re not financially, physically or mentally able to keep up with those expenses it become overwhelming. The bills, the taxes, insurance, the maintenance, and the unexpected repairs can come as a shock. Even if the mortgage is free and clear, annual property taxes will always be due. They will likely rise significantly because tax collectors will reassess the rate at the current market value. You can view your property tax amount on your counties tax assessor website. If you live in Birmingham you can find it here.
As any investor will tell you, the longer you own it, the more it is costing you. Before you make a decision about whether to sell or keep the inherited property, consider all potential outcomes and take the time to learn about the market and the property in question to better help with your decision.
*TIP: Taxes and Insurance may or may not be included in the monthly mortgage depending on the type of loan. Be sure to verify with the mortgage lender to help make your decision.
Perhaps you already have your dream home and have no interest in residing in the property but feel a sentimental attachment. While understandable, sentimentality won’t pay for the reality of the carrying costs associated with an inherited house. This harsh reality often leads to the ultimate decision to sell the property. Most estates will have outstanding debts that need to be paid and depending on how much cash is in the estates bank account, there might not be enough to cover all expenses. The executor could be forced to sell the property to avoid paying late fees or even worse a foreclosure. Whatever you decide to do, don’t delay in caring for the property.
Value Of The Property
What is the fair market value of the house? Is it dated and needs significant rehab? Is it HGTV quality? You can compare this by doing a simple Zillow search and seeing what houses have SOLD for in your area that are in the same condition, have the same bed/baths and sqft.
*TIP: Make sure and only look at houses that have actually sold and not listings still on the market
Outstanding Debts
There is a high chance that the property still has an outstanding mortgage. You can confirm this by calling the mortgage company that is servicing the loan. Once you find out how much is owed and the current fair market value, then you can calculate what you may profit from the sale of the house.
Number of Beneficiaries
Another overlooked bullet point is how many family members are beneficiaries and are you all on the same page of selling? Everyone must be on the same page in order to sell the house unless specifically outlined in a Trust or Will.
Cleaning & Sorting Personal Belongings
When you inherit a property it is usually because a loved one died unexpectedly. In addition to your normal day to day stress, the added stresses of sorting your loved ones belongings can be emotionally draining however it does have to be done at some point. The good thing about selling an inherited property to someone like us at Home Buyers of Alabama is that you don’t have to clean everything. You can take the things that mean the most to you and leave the rest. We’ll take care of it so you don’t have to. You may also choose to have an estate sale after you have packed what means most.
How To Decide Whether To Sell Or Keep Your Inherited Property In Birmingham
Ask Yourself These Questions:
Do you have a use for the property?
Holding onto it for sentimental reasons is fine if that’s what you want to do, but don’t feel as if you are obligated to keep the house. Only keep the property if you have a good use for it. There is no sense in holding onto a property that will just end up sitting there only to further burden you and your family. Vacant houses are often targets for squatters, vandalism and copper and HVAC theft. Birmingham also has plenty of bad weather and tornadoes. The longer you wait, the greater the chances of something happening to negatively impact the homes value.
Are there other owners?
If there are other owners of the property, you will all need to sit down and come to a consensus. While the executor of the estate will be tasked with actually doing the leg work of selling, all heirs need to be in agreement. If any heirs don’t agree there can be a contested estate which can get messy and I have seen first hand how it has caused problems within a family. Work together to decide if the home should be kept or sold. If there is an odd man out, consider buying them out as not to cause further disagreement. Remember, it is just a house, and the person who passed it down to you would never want to see their gift become an argument among family. When working with a reputable cash buyer like Home Buyers of Alabama, the sale can happen quickly and effortlessly. You won’t have to worry about listing the property with a Realtor, having showings, negotiating on price and then AGAIN after inspections and having to pay closing costs or commissions. We truly strive to make it a stress-free transaction for you!
If you decide you want to sell, how much can you spend upfront?
If the home has not yet been cleared out, that should happen first and foremost. A traditional property listing will come with some upfront costs. You’ll likely need to make a few repairs to the house and have it professionally cleaned. It’s tricky making repairs to a house you’ve never owned and often times you do not even want to open that can of worms. You have no way of knowing what you’re going to be getting into. You don’t want to find yourself down a rabbit hole, spending thousands and thousands on a house you want to sell anyway which you may not even recoup when selling. Depending on how you decide to sell, you could face not only repair costs but costs for marketing too.
3 Ways To Sell Your Inherited Birmingham House
List It With A Realtor – High Effort
Listing your inherited property in Birmingham will require you to get the property ready for the MLS. This option requires the 2nd most effort on your part and will also deliver the best price for your inherited Birmingham house. Many Realtors won’t take listings that are in disrepair or will be delivered with contents still inside so a good thorough cleaning and getting rid of any left over junk is paramount if you want to get offers and go this route. Take a look at what other homes are selling for, and how your property stacks up. Be realistic with your prices, and don’t spend too much over-improving unless you really know what you’re doing. When you list an inherited home, you may feel frustrated to suddenly have to spend money selling a house that isn’t yours.
For Sale By Owner – High Effort
Selling the house using a FSBO listing will save you on the commission, but you will still need to clean out personal belongings, give the home a thorough cleaning, make any repairs, marketing, and other selling costs and will cost you time. Have you ever tried to sell anything on Facebook only to have multiple people tell you they’re interested or they’re on their way only to have them stand you up and flake out on you at the last minute? Imagine that with a house worth thousands of dollars. In most cases, selling on your own to a regular buyer off the street who is not pre-qualified with a lender will take longer and ultimately put less in your pocket.
Sell To An Investor – Low Effort
When you sell your inherited property to a cash buyer like Home Buyers of Alabama, you will not need to spend a dime out of pocket. We’ll take it completely AS-IS, contents and all. You won’t have to worry about repairs, commissions or the stress of what happens next. By selling the property directly, you will be able to quickly receive your money and move on to the next chapter without spending months making repairs and waiting for the property to sell. You owe it to yourself and your family to seek out the best option for YOU and truthfully, a quick cash offer may not even be the best option for you. Wouldn’t you rather have all of the facts before making such a big decision though? It’s completely free and you’re under no obligation to accept. Just fill out the form below and we’ll be in touch shortly to talk about your options.
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Author:
Trey Crusey is an experienced investor and licensed Realtor in the state of Alabama. As owner of Home Buyers of Alabama and Birmingham Rental Co., Trey's goal is to make the home selling experience as stress free as possible and to be an all inclusive resource for anyone that has a property they need to sell whether in pristine condition or needs major work.