I inherited a property! What do I do now? This is a common question.
Advice or Step 1: Understanding Your Situation
- After someone you love has passed away, selling their house can be very difficult. When I meet with families during this time, they often have memories of the home. I ask a lot of questions so that I understand what is important to the client. Every situation is different. It is important to talk with trusted professionals early on so you can make an informed decision on the best steps for your situation. I recommend talking to an accountant and an attorney. I have clients that I helped several months ago that spent months going through the personal property and getting the home ready to sell then they contacted me. Once we got together, I saw that the title was held in the parents who were deceased, so probate was needed. This is something that could have started months ago and took additional time before we were able to list the home for sale.
Advice or Step 2: Immediate Steps to Take
- Sort through the personal paperwork and other items in the home. Don’t assume that all of the important documents are in one area. You normally find important documents in an office or safe but don’t assume that is the only place. Sometimes they are in multiple areas. I have a client recently that the kids had gone through the personal paperwork and thought they had everything. We had an estate sale company come out and we were looking through the kitchen. We found checkbooks, credit cards and a key to a safe deposit box in the kitchen drawer. I don’t mean like a junk drawer either. It seriously was the third drawer down in the row by the stove! No one thought to look there!
- Search for estate plan documents like a trust or a will. Gather any life insurance documents, bank statements, retirement accounts information. Documents relating to the house such as the mortgage. Make sure you are talking to an attorney before you contact the lender, bank or insurance company. If you contact the bank before consulting an attorney, you risk the bank freezing the account, which could cause problems with any direct deposits or automatic payments for the house.
- One thing you don’t need is the deed to the home. I have clients all the time bring me a copy of the documents from the title company from when the home was purchased. The deed is public record, and we will pull the information from the Clark County Recorder’s office.
Advice or Step 3: Legal and Financial Considerations
- If the title of the home is held in a trust, then we can list the home right away. I will just need a copy of the “Certificate of Trust”. This is usually a tab within the trust that is around 2 – 4 pages and shows who the successor trustee is. The title company will need an original death certificate. Finally, one thing that most people don’t know is that you will need either a bank account or investment account that is in the Trust name. The title company will only wire the proceeds into an account in the trust name. It is a pretty simple process if the home is held in a trust.
- If the title is not in a trust, then probate will likely be needed. Many people assume that if there is a Will that Probate is not necessary. Even if there is a will, probate will be required to appoint the executor or personal representative who will administer the estate. I will need this so that I have something showing who has the legal authority to sign the listing paperwork. Probate court approval may also be needed for the sale once we receive an offer.
- You will want to continue payments for the mortgage payments and other expenses for the home. Determine if there is a Reverse Mortgage on the property. With a reverse mortgage loan, there aren’t monthly mortgage payments, however Interest and fees are added to the loan balance each month and every month the balance goes up. In this situation, time is of the essence because the estate liabilities increase every month! If there are not funds available from the estate to pay for these expenses, then sometimes an heir to the estate or the Administrator will pay for some of these items. Keeps receipts and invoices as the estate usually can reimburse these costs.
- You will need to keep the power, water and gas on for the home. The Buyer will need those utilities to complete a home inspection and our standard Purchase Agreement has language in it that the utilities will be on at the home through close of escrow. Of course, everything is negotiable, and you could sell the home AS IS and not have the utilities on. Just keep in mind that you will likely limit the demand to an investor or a buyer who is willing to take the risk of not being able to fully inspect the property. This will likely impact value and you will need to price the home accordingly.
- Another Very important item in Nevada is the Homeowner’s Association. In Nevada, the HOA is a primary lien on title, and they can foreclose on the home. I see homes where the HOA foreclosed on the property and there was no mortgage. I have clients right now that before they contacted me, they had let the water was shut off at the home and the landscaping had died. The HOA was fining them weekly for the violations. They had no idea. The key to dealing with the HOA is communication. You want to make sure you are getting the notifications and staying in touch and keeping the HOA dues current.
Advice or Step 4: To Sell, Rent or Keep?
- I have clients that ask me about Selling vs Renting. If you are considering renting, my advice is to look at your long-term goals. Do you want to own an investment property? If so, then I recommend getting information on what the rental income and expenses will be to see if this property makes sense as a good rental property. This should be something you plan for a longer term, at least 3 to 5 years. Otherwise, it may not be worth it to rent the home for just a year before selling as there is a risk with tenants of loss rental income, eviction costs and possibly property damage.
- Now it is different if you are considering renting now and move into it personally down the road. Every situation is different. There could be tax or legal consequences as well so make sure you are gathering information to make an informed decision.
Advice or Step 5: Preparing the Property to Sell
- Many times, the estate will need help selling or donating the personal property in the home. The administrator of the estate may live out of state and need help with handling the furniture, clothes and other personal items. I recommend including the refrigerator with the sale of the property since it usually matches with the other appliances in the kitchen. For other items, there are several estate sale companies or online auction companies that can be a good option to sell a house full of items or purchase items that they will resale online.
- Sometimes it can be worth it to do some work on the property. If repairs are needed to the roof or other items, the buyer will assume worst case scenario. It could be worth having repairs completed. If I don’t recommend doing full updating or remodeling as these are time consuming and expensive. However, I do recommend painting or replacing the carpet, if worn. These two items can be done quickly and make a big difference in selling them quickly and for more money. I have inexpensive painters and flooring people so I can obtain bids for the estate to consider. I also have terrific cleaners. This is a must. You want a full move-out cleaning with the cabinets cleaned inside and out, windows cleaned, etc.
- If there is a vehicle you may need to have arrangements made to have it towed or stored until probate is finalized and the title can be transferred. I have clients who live in Tennessee and wanted the car. We helped to have the car transported to them earlier this week. I was meeting with the transportation truck at 10 pm to get the vehicle for my clients. There is a lot involved!
- Probate sales are more complicated than the typical real estate sale. It is important that you use an agent who has experience with these types of transactions and specializes in probate sales. This type of sale requires significant soft skills like understanding what is important to the clients and helping through the process. As a Certified Probate Specialist, I have the experience, knowledge and tools to help clients get their home ready to go on the market.
Advice or Step 6: Navigating the Las Vegas Real Estate Market
- Selling probate property requires additional time frames. An accepted offer may require court approval. This can add additional time and offers will need to be made as contingent upon Probate Court approval. This could limit some buyer demand.
- The good news is that you will be selling a home in a Sellers’ market. In Las Vegas, we currently have low inventory. A 6-month supply of inventory or less is considered a Seller’s market. We have around a 3-month supply. That means that if no new homes came on the market, all the homes would be sold in 3 months. I advise my clients to focus on the things that we can control like conditions (making sure the home shows well), marketing (hire an agent like me that has a detailed marketing plan) and finally price.
- Having handled these types of transaction over the years, I understand the importance of providing Sellers of probate properties information and help with all everything related to getting the home sold.
- Compared to working with other types of clients, inherited property sale requires additional skills and tools. However, I find this market incredibly rewarding to be able to truly help my clients during this difficult time by making things as easy as possible. If you find yourself facing the prospect of selling an inherited home, know that you don’t have to navigate this journey alone.
- I hope this information helps you with your inherited home!
