Did you know that over three million people pass away in the United States each year? When someone dies it’s common for them to leave any property and savings they have for their loved ones.
At first, glance, inheriting a house can seem like a good thing. However, deciding what to do with it can be a difficult decision. Should you sell it, rent it or live in it? All of these options have their separate pros and cons.
That’s why we made this article. In it, we’ll discuss the benefits and drawbacks of all these options. That way, you can decide whether it’s a better option to hold on to the house or let it go.
Selling an Inherited House
There’s a reason why most people choose to sell the property they inherit. For one thing, they tend to be in locations that are far away from family members.
You might not be able to afford all the taxes, fees, and upkeep that come with it. Or, you might just not like the memories associated with it. Selling your home is also a good option if you have to split it with multiple family members.
It’s much easier to simply divide cash than it is to share property. However, regardless of the reason, there are a lot of options when it comes to selling your inherited house.
If you don’t mind paying their commission, then you can go through a real estate agent. However, keep in mind that this typically takes a long time. For those that want it over quickly consider going with cash for homes service.
This is an especially good option if the home needs a lot of fixing up or there’s a lot of furniture/trash everywhere. Lastly, there’s the FSBO (for sale by owner) option.
This one gives you the most amount of control as well as zero commission fees. That being said, it’s also quite difficult.
And, you will need to work a lot harder during the process which can be stressful if you just lost a family member. Also, Now that we know how to sell an inherited house, let’s dive into the pros and cons of doing so.
Pros
The biggest pro of selling an inherited house is the lump sum you’ll receive. The census found that the median sales price for a single-family home is $449,000.
While it’s not guaranteed that you’ll get this amount, any money you do get can be put toward your current house or a dream project you might have. Another pro is that you wipe your hands clean of the property.
When you sell you no longer need to worry about repairs, upkeep, or property taxes associated with the property.
Cons
Unfortunately, selling an inherited house has some drawbacks too. For one thing, homes tend to appreciate so you’re likely not getting the full amount that you could if you wait.
You also need to pay off any amount of mortgage balance that’s left. If the appraisal value doesn’t cover the mortgage balance, then you likely won’t make any money off of the transaction.
If you sell the house immediately, then you also need to deal with the capital gains tax. So, any profit you make from the sale will be taxed.
Lastly, the process can be stressful and time-consuming depending on what seller you go with.
Renting an Inherited House
There are a lot of pros and cons that come with renting an inherited house. In some cases, it can be a great way to earn a passive income from a house you inherited.
In other cases, it can require you to navigate housing laws, make massive repairs, and potentially lose money month to month. So, how do you know if it’s right for you?
One good rule of thumb is the one percent rule that’s typically associated with real estate investment. This rule states that the house should produce 1% of its purchase price in rent every month.
If it produces less than half that, then it might not be worth your investment. You also need to decide on whether or not you will be an active landlord. If you’re an active landlord, then you don’t need to share any of the profits with anyone.
But, you will also be responsible for repairs, maintenance, and, in the event of bad tenants, evictions.
Alternatively, you can also let a property management company handle the process of finding good tenants for you. However, you will need to split some of the rent profit you make with them.
Pros
The biggest pro that comes with renting is that you get a form of passive income. Instead of a lump sum, you get a renewable source of income that pays off as long as people want to live there.
If and when you do decide to sell the house it will likely also be worth more. That’s because the value of property tends to only go up.
Finally, you can get a lot of tax deductions on any income you make from rentals in the form of depreciation, legal fees, and repairs.
Cons
The biggest con of renting is the commitment. If you’re an independent landlord, then you will need to take care of any problems that arise on the property, whether it’s a broken sink or a bad tenant.
Remember that one out of forty renters ends up being evicted. So, there’s a potential chance you could get caught in this situation.
This can be a lot of stress for some people. Rental management companies take some of this stress away. But, they also cut into any money you’re making.
Living In an Inherited House
Maybe you have a lot of wonderful memories from your childhood house and you’re not ready to get rid of them. Or, maybe the inherited house is just bigger/nicer than your current accommodations.
Regardless of the reason, it’s perfectly acceptable to move into an inherited home. Just remember that you likely won’t be able to move into the house immediately, unless you’re already living there.
Why? Because you’re not allowed to do anything with the property until the probate process is finished. The probate process is when the executors of the will settle any debts that the deceased may have had before passing.
They’ll also sort out any affairs that need settling before distributing the assets. This whole process can take up to a year so get ready for that.
Pros
The biggest pro of living in an inherited house is that you get free living accommodations. You will still need to pay property taxes. And, if the mortgage hasn’t been paid off, then you will need to take that on too.
But, you get a headstart on paying it and if the mortgage has been taken care of, then you need to worry about property taxes. You also get to keep a home that likely has a lot of good memories associated with it.
Cons
The biggest con with living in an inherited house is you’re not making any money off it. Depending on your financial circumstances, this might not be a big deal.
However, if the property tax is expensive, then you will need additional income to pay it. Moving into an old house might not be the highest priority for your family.
Maybe you have a job in another city, or your kids are settled. In these cases, uprooting to move to an inherited house often doesn’t make sense. This is true even when it’s better than your current living accommodations.
The Best Way to Sell Inherited Houses
If you’ve decided that selling an inherited house is the best option for you, then your first instinct might be to go with a real estate agent.
However, it’s important to remember that these professionals will usually take up to a 6% commission on the price of the sale. That’s why we tend to recommend cash-for-homes services instead.
With this option, you get all the proceeds and you don’t need to worry about repairs. However, it’s important to note that not all cash-for-homes services are created equally.
So, how do you find one that you know you can trust? We recommend finding an option that has lots of experience with these types of projects.
For example, Emperor House Buyers LLC has completed over three hundred projects. You should also pick a buyer that understands the current real estate market. That way, they can get the most money out of the deal for you.
Inheriting a House? Contact Emperor House Buyers LLC
We hope this article helped you decide what to do when inheriting a house. If you’ve decided that selling is the best option for your needs, then it’s important to find a property seller that can handle it quickly and easily.
But how do you find one? If you live in the Tampa Bay area, then look no further than Emperor House Buyers LLC. Unlike traditional real estate agents, we take absolutely no commissions.
We can also close in as little as seven days so there’s no waiting for months. So, if you’re ready to get an inherited house out of your life, then contact us today.