What are Your Options When You Inherit Your Parents’ House?
Posted on 2016-12-06 | Back to blogAdviceSelling a House
Inheriting your parents’ house has the potential to be a curse as well as a blessing. In addition to the emotional hardship of losing a loved one, you’re suddenly faced with a financial burden you may not be prepared for.
Ultimately, there are three paths you can take: move into the home yourself, rent it out, or sell it. While most experts agree that selling is the best option, there are pros and cons to each path. Here’s some advice for all three scenarios:
1. Moving Into Your Parents’ Home
This option largely depends on your current living situation. If you’re able to move, and the inherited home has the features you want, this may be your best bet. Plus, in the likely event that the house has appreciated in value since it was purchased, you’ll have instant equity if you ever decide to sell.
Moving in also gives you the option of assuming the mortgage. Even if you’ve inherited a house that’s paid in full, you’ll still have to contend with property taxes and maintenance costs. It’s possible that these additional costs could total more than your budget allows.
Do your research beforehand to ensure that the home doesn’t end up being something you can’t afford.
If the home has sentimental value and the location and timing are a fit, moving in may be your best option after inheriting your parents’ house.
2. Renting Out Your Parents’ House
Renting out the home provides a nice “in-between” option. It allows you to keep the home without having to move in while still providing the opportunity to sell or move in down the line.
Again, do your research with the bank to determine if there is a mortgage on the home and how you can take it over. It’s possible the required monthly payments are higher than the market rental rate, which would make finding a tenant next to impossible.
Even if the mortgage isn’t a problem, the biggest drawback to renting out a home is assuming the role of landlord. Many people aren’t prepared for the commitment required and legal liabilities involved. Others struggle just to collect rent on time.
Plus, troublesome tenants abound, and leasing the home to the wrong people could mean signing up for a world of hurt.
One way to ease this burden is to hire a property management company to handle the day-to-day rental issues, but this could cost anywhere from 10 to 30% of the total rent.
If you aren’t quite ready to sell but not able to move into the home, renting it out is an excellent option assuming you’re prepared to take on the responsibilities of a landlord.
3. Selling Your Parents’ House
Selling the home is the most common course of action after someone inherits their parents’ house.
To get an idea of what you can sell for, take inventory of the property’s condition, and then look at recent comparable sales in the same neighborhood.
Be sure to factor in any realtor commissions (typically 6% of the selling price) when determining the amount you’ll walk away with.
It may also be worthwhile to hire a home inspector to look at the property as this is the exact step potential buyers will take when the house is on the market. Hiring a home inspector can be expensive, but it will spare you from any unpleasant surprises down the line.
If the home is in good condition, and the market is fair, you can count on the home selling in less than six months.
If the house is in poor condition, you’ll have a hard time finding a buyer on the open market, as move-in ready homes are most in demand.
Luckily, in that case, there is another option you can look into.
Selling Your Parent’s Home to an Investor
Investors will typically buy homes in any condition at an agreed upon price.
The benefits of working with an investor are that they can close quickly and pay cash instead of requiring a mortgage loan from a bank.
This means no inspection, no commission fees, and no drawn out closing process. It’s a great option for people looking to sell a house fast without having to deal with repairs, showings, or any of the other hassles involved with a traditional sale.
The key here is finding a reputable investor to work with. One who will take the time to walk you through the entire process without pressuring you to sign a contract right away.
We Buy Ugly Houses has worked with a number of sellers after they inherited a property. We work exclusively with individuals and can close in 30 days.
If you’ve recently inherited your parents’ house and want more information on selling to an investor, please call us at 866-200-6475 today.