Inheriting a House With Siblings In Boise
In the realm of real estate, dealing with inherited property alongside siblings can present unique challenges. When faced with the loss of a loved one and the complexities of familial dynamics, tensions can run high. Often, the optimal solution in such scenarios is to sell the inherited property.
When navigating the sale of an inherited property with siblings, several avenues are available: selling to a cash buyer, conducting a sibling buyout, or enlisting the assistance of a real estate agent to find a new owner. While selling to a cash buyer offers speed and convenience, it’s crucial to explore all options thoroughly before reaching a decision.
Given the individual nature of sibling relationships, the best course of action will vary based on each party’s preferences and circumstances. If you’re seeking guidance on managing inherited property with siblings—from sales options to profit distribution, considerations for compelling a sale, and alternative solutions—continue reading for further insights!
Important note: The content of this article is not intended to constitute legal advice.
Things to Do When Selling Inherited Property with Siblings
If all siblings decide to put the house up for sale, there are a couple of things that should be done in order for the sales process to be hassle-free.
Run a Title Check
Before a sale closes, it’s common practice to conduct a title check to find out if there are any liens on the property and who legally owns it. If you’re inheriting a house with your siblings, it’s wise to do a title check to figure out what steps to take next.
The outcome of the title check will decide whether you and your co-owners can split the inherited property as outlined in your parents’ will. If there’s a lien on the property, some of the sale proceeds will need to go towards clearing the debt, resulting in less money being shared among the inheritors.
Divide the Possessions
Many inherited properties are family homes filled with memories of the siblings and parents. So, before selling, all belongings inside should be shared among family members.
Unless stated in the will, each person can keep items that belong to them, such as clothes, beds, CDs, etc. However, shared possessions like books, bicycles, and TVs should be divided equally among families before selling the house.
Manage Utilities and Insurance
When taking over a house with siblings, make sure to pay any outstanding bills for electricity and water. Once these bills are cleared, consider ending any unnecessary services or transferring them to your sibling if they’re taking ownership.
This applies to insurance as well. If you’re purchasing the property, ensure the insurance is in your name or your sibling’s. If selling to a buyer, discuss with the insurance company about next steps during the transition.
Choose the Negotiator Among the Co-Owners
Assuming all siblings are on board to sell the property, they should organize a family meeting to select a representative. This person will act on behalf of all heirs during the property sale.
The role of the representative is challenging, particularly in a conventional sale scenario. They must locate a real estate agent and ensure they effectively prepare the property for sale, market it, and negotiate on behalf of the family.
It’s imperative that all siblings are in agreement and have trust in the chosen representative. Usually, this is the eldest sibling or the appointed personal representative if the property has gone through probate. However, other co-owners may be designated if they possess greater real estate expertise, especially if they have been granted the right of first refusal.
If the inherited house is being sold through a cash buyer, all heirs should also agree on the cash offer.
Settle Property Taxes
Elderly parents can forget to pay property taxes, and when their kids inherit the property, those unpaid taxes get handed down too.
At the close of an estate sale, these taxes usually get taken out of the selling price, with each sibling sharing the burden equally.
If one sibling buys the property, they need to figure out how to settle the owed taxes. The same goes for inheritance tax.
Options When Selling Inherited Property with Siblings
Similar to ordinary homes, selling an inherited property with siblings is possible through a cash buyer or real estate agent. But another great option would be to sell the house to a sibling.
To see what works best for your case, let’s discuss each option in detail.
Sell to a Cash Buyer
In the real estate game, the quickest and easiest way to offload an inherited property owned by several people is to sell it to a cash buyer.
These cash buyers fall into two camps: those who hold onto properties for the long haul and those who buy to flip for profit. They don’t fuss with applying for loans from banks or waiting for approvals. They come with cash in hand for the deal’s close.
When family members, especially those not on the best terms, need a fast sale, cash buyers are a godsend. Some can seal the deal in just a week, and they even foot the bill for closing costs. Plus, the paperwork is minimal, so there’s less sibling squabbling.
Another perk of selling to a cash buyer when inheriting a home with siblings is that they take properties as they are. Since inherited homes often need sprucing up, this saves on repair costs and avoids splitting up tasks among family members. It just makes sense to go for a cash offer.
Cash Buyer Selling Process
To sell to a cash buyer, it’s easy. Just reach out to them through their website or call them to ask for a cash offer. Usually, they’ll want to see your property before making an offer.
Once you and your siblings agree on an offer, they’ll send you a contract to sign online.
Then, the sale will close, and the payment will be split according to the will or written agreement with your siblings.
Keep in mind, if there’s a mortgage on the house, it’ll be taken out of the cash offer during the closing, along with any other real estate fees like liens.
Sibling Buyout: Selling Inherited Property to a Sibling
Another method to sell a property when siblings inherit it is through a sibling buyout. This works well if one sibling already sees the property as their main home.
To keep living in the inherited house, that family member can pay for half of its market value.
Usually, inherited houses are split equally among the heirs, so it’s simple to figure out how much the buying sibling should pay. However, to make sure the current market value is known, the house needs to undergo a property valuation or third-party appraisal.
Once the interested party pays off the rest of the house value, the deed can be transferred to his/her name.
Although this is tagged as one of the easiest options, sibling buyout can also cause stress if:
- The sibling who wants to buy the property doesn’t have enough funds to pay the other family members.
- One sibling has spent more on the repairs of the property or on the care of the parents who passed.
- One sibling has been making property tax payments for years.
If the siblings do not agree to adjust the required home payment based on the issues mentioned above, more issues can arise and the siblings may find themselves in court.
Sell to a New Owner With a Real Estate Agent
If the brothers and sisters agree and are patient to get the most money from selling the property, it’s worth considering selling it in the traditional way with a real estate agent’s help.
In the traditional sale of an inherited property, the process is similar to selling any other house. A real estate agent is hired to sell the property and should do a Comparative Market Analysis (CMA) to find a fair asking price. All heirs should agree on this price.
Once the asking price is set, the house should be fixed up and improved to make it more attractive inside and out. Then, it should be listed, staged, and marketed as advised by the real estate agent.
When potential buyers make offers, the real estate agent and a designated negotiator among the co-owners should consider which offer is the best and negotiate for a higher selling price.
Before the sale is finalized, the siblings should get professional advice on paying taxes on capital gains, inheritance, and real estate.
How to Divide the Sales of an Inherited Property?
In most cases, the sales of a recently inherited property are divided equally among the heirs. However, before it is divided, any unpaid mortgage, taxes, and loans connected to the property should be paid off.
Moreover, to ensure that the sales are divided according to the will, the executor should be actively involved and a family attorney should be present if possible.
Can You Force a Sale of Inherited Property With Siblings?
Yes. You can force the sale of an inherited property with siblings through a partition lawsuit. This legal action asks the court to end the joint ownership of an inherited property so that a forced sale of the home can happen.
Usually, a partition lawsuit is necessary when siblings can’t agree on how to split inherited property during probate. Because they have different interests, a judge needs a mediator or “referee” to resolve any conflicts among them.
The legal process of requesting a partition suit is long and complex. The sibling who wants a forced sale can file for full ownership or control of the property. Only if the court grants this request will the home sale move forward.
Keep in mind that for a partition lawsuit to be accepted, the court often requires several hearings, testimonies, and evidence. Additionally, if one sibling seeks partition, they should hire a lawyer from a reputable firm, an accountant, and a mediator, which can cost thousands of dollars depending on how long the case lasts.
Alternatives to Selling Inherited Property With Siblings
Depending on the circumstances, you may choose to divide inherited property with siblings instead of selling it. Here’s how you can manage an inherited home without a home sale.
Share Ownership of the Home Through a Formal Agreement
If one or more siblings wish to keep the family home, they can share ownership through written agreements. Co-ownership has two possible structures.
Joint Tenancy
Joint tenancy signifies equal ownership between you and your co-owner. If a sibling passes away, their portion of the property goes to the other siblings, not their heirs.
Tenancy in Common
Unlike joint ownership, where all parties have equal shares, tenancy in common permits unequal distribution among siblings who co-own a property. However, this doesn’t imply that the sibling with the largest share can assert exclusive ownership.
Additionally, if one of the siblings who inherit the property dies, their portion will be transferred to their heirs, not their co-owner who survives.
Keep the Inherited House as a Rental
Keeping the recently inherited property as a rental is the top choice if you and your co-owner don’t want to sell.
Many siblings decide to rent out their inherited home when rental demand is high, they don’t need a lump sum of money right away, and they live in a sought-after area where property values are expected to rise. Of course, siblings who go for this option have a strong bond.
When opting to rent out the inherited property, the siblings should discuss who will act as the landlord and how the rental income will be split.
It’s important to note that managing tenants isn’t simple and to prevent misunderstandings, they should communicate solely with one landlord. The landlord handles administrative tasks, maintenance, repairs, and overall property management.
Additionally, each sibling should agree on how to divide the rental income. The one taking on the landlord role usually receives a higher share since they’re doing most of the work.
As for determining the rent, most siblings follow the 1% rule. This means the rent should be at least 1% of the inherited property’s purchase price per month to cover management costs and potential vacancies.
Turn the Property into a Vacation Home
If the inheritors are unsure about what to do with the property, converting it into a vacation home is another excellent choice. This can help strengthen bonds among family members and their children.
However, if the inheritors aren’t getting along, problems like arranging visits to the vacation home, managing property alterations, maintenance, and more can cause significant stress for everyone involved.
If you’re considering transforming inherited property into a vacation home, here are some things to think about:
Hire a Property Manager
Hiring a property manager is a smart move if the siblings are distant from their inherited property. Usually, the property manager of a vacation home resides nearby to guarantee its upkeep and safety. The costs and requirements of the property manager are shared among the co-owners.
Property managers can also handle the booking arrangements for the vacation home. They’ll keep track of when a sibling plans to use it and for how long, ensuring that another sibling’s vacation plans don’t overlap.
Make an Expense Account
While not required, creating a general expense account for the vacation home ensures that each sibling chips in for recurring costs such as utility bills, repairs, and maintenance, payment for the property manager, property taxes, mortgage payments, improvements, etc.
Create a Governance Board
Establishing a homeowners’ association (like a condo board) is crucial as ownership of the vacation property grows. When heirs have many children, conflicts may arise over property management.
With a homeowners’ association, an estate strategy can be developed, ensuring smooth decision-making for the vacation home.
Renovate to Create a Living Space for Two
Brothers or sisters with a strong bond may decide to transform their inherited property into a shared living space for two. While not typical, co-owning and setting up a dual residence is feasible. The main hurdle would be figuring out how to divide expenses like utilities and property taxes.
Final Thoughts:
Inheriting a House with Siblings in Boise
Inheriting a house can be a blessing if you have a good relationship with the other inheritors, especially if they are your family. However, if not, dealing with the inheritance and its sale can cause significant stress for everyone involved.
If you’re looking to quickly dispose of an inherited house with family members, consider selling to a cash buyer. They follow a simple process and close fast. Additionally, they typically cover closing costs, sparing you and your family from disputes over who should bear the expenses associated with selling the house.
When you’re prepared to sell your inherited house with family members, get in touch with us at Sell My House Fast in Boise. We’ll provide you with a fair cash offer so you and your co-heirs can move forward.
Complete our form below or give us a call at (208)-563-7399 to sell your inherited property hassle-free in Boise.
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Author: Saini
My name is Saini, and I founded the Sell My House Fast in Boise team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.