Selling an Inherited Home: Help Sorting Through the Options

​I​nheriting a home, often from a parent or other relative, can be a boon or a burden, depending on how informed you are and the resources you choose to tap. Either way, it's bound to be fraught with emotions and daunting for most people, especially if caught unaware. The process can be riddled with bureaucracy--having to deal with attorneys, agents, and lenders--and an array of paths to choose from, each with its own set of risks and possible outcomes. Let's briefly sort some of it out.

Options Besides Selling

​Before you and your fellow heirs (if there are any) make the firm decision to sell, you may want to eliminate other options, which include moving into the home yourself or establishing it as a rental property. One of the advantages of living in the home would be the avoidance of having to pay capital gains taxes on it, under the condition that you maintain residence there for at least two years. Another advantage of this option would be to allow a more leisurely sorting of items left behind, which, depending on the collecting habits of the deceased, could potentially be a monumental task. 

Maintaining the home as a rental property offers some advantages as well, including, of course, the rental income itself, and the opportunity to claim repairs and other expenses as deductions for tax purposes. If you are not up to the task, however, of playing the role of landlord, you would want to enlist the services of a property management company, the expense of which may well tilt the balance back toward selling the property. 

​Selling Your Home Through an Agent

​If you want to go the traditional route and list the home with a real estate agent, mentally prepare yourself for a lengthy process. Most inherited homes will require at least minor repairs and updates before listing, while others may have long-deferred maintenance that must be addressed. An inspector would help you to get a handle on how much work is required before selling, and a real estate agent or appraiser can help determine the home's value and a realistic price range. Since many personal possessions acquired over the years likely accompanied the inheritance, these items will have to be evaluated, sorted, and either sold or disposed of appropriately, which can be a huge undertaking, in terms of emotions stirred and time spent. Once the home is priced appropriately and listed, the showings and open houses can begin, during which time you'll want to maintain its appearance throughout, so as not to discourage any potential buyers.

Selling Your Home to an Investor

​Many who have inherited a home reach the decision, for the sake of speed and ease, to sell their home "as is" to a home investor. This can be an attractive option for those who prefer to avoid the hassle and stress of preparing the home for listing. This path can also help minimize the psychological burden of having to pore through every emotionally laden object in the house to decide its fate. If the home requires lots of cleanup, repairs, or updates, those would necessarily be bypassed as well. Also, absent the constraints of lenders, inspections, and contingencies, a home investor can often close on the deal within a matter of days, leaving you to move on with your life.