Over the next decade the Baby Boom generation stands to inherit trillions of dollars from their parents and other family members. Not only will this include bank accounts, stocks / bonds but also a family home as well as other investment or business real estate. And in a number of cases, real estate will comprise a large percentage of the overall estate.
Figuring out what to do will impact not only yourselves, but also other family members that are heirs in addition to other beneficiaries in the will. Some may want to keep the property while others may want the cash proceeds upon a sale. These can be difficult decisions that the Personal Representative or Executor will have to face.
Prior to deciding what to do with the property, it would be a good idea to make an inventory of the contents and remove any of the valuables in the property itself including jewelry, cash, firearms, artwork or anything else that can be easily lost or stolen. In some cases, the Personal Representative or Executor may have to distribute certain items to individual heirs or beneficiaries so a proper inventory is needed to avoid any potential for problems in the future.
If the home or property will remain vacant for the time being, it should be fully secured for liability purposes or to prevent theft. If the Personal Representative or Executor is not aware of who has keys to the property, it is highly recommended that the locks be changed. It would also be prudent for someone can check on property on a regular basis.
Any type of real estate property can easily lose value due to lack or maintenance or neglect so it is also recommended that any on-going services like landscaping or pool cleaning be continued for the immediate future. Additionally, it is recommended that any health, life and safety issues be addressed immediately.
What to do when a loved one leaves you a house or other type property
There are a number of different paths you can take with an inherited property. We find that the most frequently used options are as follows:
- Keep the Property in the Family
- Rent the Property
- Sell the Property by Yourself
- Sell the Property “As Is” to a Wholesaler
- Donate the Property to a Non-Profit or Charitable Organization
- List the Property with a Conventional Realtor
- Hire a Probate Real Estate Specialist to Handle the Entire Process
Whether it is a home or other real estate, listed below you will find the benefits and challenges associated with each of the six (6) options in dealing an inherited property.
Keep the Property in the Family
This option is at times the most simple and easiest to accomplish. Therefore, family members can use the property for their own purposes and there is no urgency to decide on a course of action.
The challenge with this option is that there will need to be clearly defined responsibility as to who can use or occupy the property, how will maintenance and repairs be addressed, who will pay for the property’s taxes and insurance and mostly importantly, what will be done in the long term.
What may further complicate matters is if there is a mortgage or other debt on the property. Typically a mortgage or other housing debt requires a monthly payment in order to stay current and avoid late fees & penalties. Therefore, a fair agreement among those in the family would be needed to make sure the payments are made in a timely manner.
If this route is chosen, it is recommended that the property be properly transferred out of the estate and into a person or entity suitable for this purpose. A good real estate or estate planning lawyer will be worth the cost. Additionally, you should have some type of maintenance plan so the value of the property will be maintained. Many times vacant properties are left sitting which leads to deferred maintenance resulting in a lower value for the estate.
Rent the Property
Renting the property is a viable alternative which will provide income to the heirs and beneficiaries. It is highly recommended that unless you have experience being a landlord, the estate hires a professional property management team.
The property management team can solicit and screen prospective tenants, collect rent, handle routine maintenance and deal with the 2:AM calls for a leaking toilet.
The challenge with renting the property is that the tenants typically do not care for the home in the same manner in which owners do. So deferred maintenance as well as wear & tear could have an impact on the property’s value (or require an investment to rectify). Additionally, some heirs and beneficiaries may not want to be part of this strategy and will want to be “bought out” of the property in its entirety.
Sell the Property by Yourself
With all the new online technologies, selling the property “By Owner” is becoming much easier than even five years ago. Depending on the location of the home, the particular price point, the property condition and the local market, it is possible that you can just put the home on the internet along with a “For Sale” sign and get an acceptable offer within less than six months.
Unless someone associated with the estate has experience in selling real estate, this option can be challenging. The Personal Representative or Executor will need to get the home properly prepared and correctly priced based on the market environment. They will also need to be available to coordinate shows to prospective buyers and have the skills to negotiate directly with the buyers or their representatives (attorney or real estate professional).
Once an agreement with respect to price and terms is in place, the Personal Representative or Executor will need coordinate / review the contract paperwork or spend the money to hire an attorney to do so on behalf of the estate.
Sell the Property “As Is” to a Wholesaler
There are a number of real estate “wholesaler” companies that will buy homes of all types and in all conditions for cash without the need to go through a loan process. These range from the local “We Buy Houses” to large corporations like Zillow.com, Redfin and OpenDoor. Typically these types of buyers can close quickly after doing an inspection and there is no need to pay a real estate brokerage commission.
The challenge in working with these types of buyers is that their “offer” will typically be lower than the market value of your property since they are purchasing the home as an investment and will need to be built in a “profit”. While this route does have a brokerage commission, some of the larger companies charge fees which negates that savings.
If the estate chooses to go this route, it is highly recommended that they perform an independent valuation in the form of an assessment from a qualified real estate broker or licensed real estate appraiser to fully understand the market value for the property prior to accepting any offer by a wholesaler.
Donate the Property to a Non-Profit or Charitable Organization
Over the past several years, charitable gifts of real estate are becoming more common with published reports indicating that real estate donations accounted for approximately $9 billion in charitable giving. Using this approach can alleviate the burden of selling the property as well as eliminating the carrying costs associated with the property.
There are a number of different options including full & partial gifts (Bargain Sales) of real estate which, when properly structured, can maximize the value of the gift and benefits to the donor. And most importantly, the donation can be made to one or more charitable organizations that your loved one supported.
Click here to learn more about donating real estate to a non-profit or charitable organization.
List the Property with a Conventional “Realtor”
In most markets, the majority of residential homes and commercial properties are sold with a conventional “Realtor”. The typical Realtor will assess the homes condition and provide a market value based on market comparables. Once a price is established, traditional real estate marketing in the form of a yard sign, MLS (multiple listing service) listing and / or open houses if deemed appropriate.
It should be noted that the majority of conventional “Realtors” are used to working with traditional home sellers where properties are typically being lived in. Therefore, they do not have relationships with the necessary vendors to assist in properly preparing the property for sale. Additionally, most conventional Realtors are not fully educated on the “probate” process for real estate and if probate is needed for your property.
Hire a Probate Real Estate Specialist to Handle the Entire Process
A probate real estate specialist, like our team at Quantum Realty Advisors, Inc., has the knowledge and experience to assist the estate through every step in the entire process. Probate real estate specialists are familiar with the probate process, understand the timelines and have worked with the courts, attorneys and personal representatives / executors and know what it takes to sell inherited properties in a timely manner for maximum value.
Not only has our team helped individuals and families but also have assisted a number of attorneys, professional guardians and advisors when there clients had a need for our services.
The team at Quantum assists in a number of specific areas, some of which are shown below:
- Initial property inspection and physical condition evaluation.
- Coordination of moving, donation or estate sale services of the furnishings as well as other household items within the property.
- Address any immediate property preservation needs including health, life and safety issues.
- Precision property valuation and market analysis; “as is” vs “as repaired” analysis.
- Coordinate on-going property maintenance and repairs.
- Extensive marketing including on-line and social media campaigns.
- High resolution photography including drone & video where applicable.
- Aggressive offer negotiations to achieve the best possible value. We strive to get top dollar for our clients based on the property’s condition as well as the estates timeline.
- Vendor management including advancement of fees and costs.
- Rental management services if applicable.
- Extensive referral network of:
- Real Estate Appraisal
- Probate and Estate Administration Attorneys
- Title Companies
- Repair & Maintenance Vendors
- Estate Sale Services
- Art & Jewelry Valuation Services
- Moving and Storage Companies
- Cleaning and Debris Removal Services
There are more than 150 individual steps in a real estate transaction and you don’t have to worry about a single one as we will handle all the details on your behalf. Quantum is a “turn key” solution to all your inherited property and probate real estate needs.
Ready to Get Started?
If you are ready to get started, now is the time to call Quantum Realty Advisors, Inc. for a free, 30-minute consultation to discuss your immediate needs and how we can help to address them. We can be reached day or night at (561) 584-8555 or via email at info@quantumcos.com.
On behalf of our clients and strategic partners, we have successfully sell over hundreds of residential and commercial properties in most major markets nationwide. Our team has an extensive network of highly experienced partner brokers who can assist with all the local requirements, and we will personally be there for you every step of the way.