Inheriting a house with siblings can be stressful. It's challenging to get everyone to agree. If all siblings end up deciding on a home sale, we offer cash for inherited properties. Just fill out the form below!
Inheriting a House With Siblings
In this imperfect world where siblings don't usually see eye to eye, inheriting a house with siblings can be extra challenging. Add that to the fact that all siblings recently lost a loved one, the tension could be unusually high. The best course of action in this situation may be to sell the inherited property.
When selling an inherited property with a sibling, there are a few options you may consider: selling to a cash buyer, sibling buyout, and selling to a new owner through the help of a real estate agent. Among these options, selling to a cash buyer is the fastest and most convenient option, but all options should be explored before making a decision.
Each sibling relationship is unique, so the choice will depend on what works best for all parties. If you are interested to learn more about inheriting a house with siblings from selling options to dividing the proceeds, forcing a sale, and options that don't involve selling, read on!
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
A title check is usually done before a sale closes to determine if there are liens against the property and to identify its legal owners. When inheriting a house with siblings, it is best to run a title check, so you know how to proceed with the sale.
The result of the title check will determine if you and your co-owners can divide inherited property according to the will of your parents. If the property has a lien attached to it, a portion of the proceeds of the sale will go to paying the debt and less money will be divided into its inheritors.
Divide the Possessions
Most inherited properties are family homes, which means it holds too many memories of the siblings and their parents. Thus, before putting it for sale, all the possessions found in it should be divided among the family members.
Unless the will dictates otherwise, each item that belongs to a particular family member can be theirs to keep. For instance, clothes, beds, CDs, etc. But for possessions that are being used by everyone, like books, bicycles, television, and others, they can be divided equally among the family members before the house is put on sale.
Manage Utilities and Insurance
Unpaid utilities like electricity and water should be settled when inheriting a house with siblings. After the bills are settled, you may want to cancel unnecessary utilities or transfer them to your sibling's name if they are buying the property.
This is also the same for insurance. It should be transferred to you or your sibling's name if you are buying the house. But if you are selling it to an interested buyer, you would have to communicate with the insurance company for the best course of action in the interim.
Choose the Negotiator Among the Co-Owners
Assuming that all of the siblings have agreed to sell the property, they should schedule a family meeting and pick a negotiator. This family member would represent all the other heirs during the home sale process.
The task of a negotiator is not easy, especially when the siblings choose the traditional sale. This person would have to find an agent and make sure they are managing to stage the house for sale, market, and negotiate.
It is imperative that all the siblings agree and believe in their chosen negotiator. In most cases, this is the eldest sibling or personal representative if the house went through probate. But, other co-owners can be appointed if they are more knowledgeable about real estate, especially if they were also given 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 often lose track of paying property taxes, so when their children inherit the property, the unpaid taxes are also passed on.
At the close of an estate sale, these taxes will be deducted from the selling price typically in equal amounts amongst siblings.
If in case one sibling buys the property, it should be negotiated how the accrued taxes will be paid. This is also true 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
Ultimately, selling an inherited house with multiple owners to a cash buyer is the fastest and most hassle-free way to get rid of a property.
Cash buyers are either buy-and-hold investors or flippers. They don't need to apply for a mortgage loan from third party lenders and wait for it to be approved for the real estate sale to succeed. They can pay you with cash during the closing.
Family members who aren't really on good terms and are looking for a fast sales transaction would benefit from selling to a cash buyer. Some cash buyers close in as fast as seven days and they also cover closing costs. The paperwork is also minimal, so there would be less interaction among the siblings.
Another great thing about selling to a cash buyer when inheriting a house with siblings is that they buy properties as-is. Since the inherited home is a family home, it probably needs upgraded. To avoid paying for repairs and dividing the tasks among the siblings, it makes sense to get a cash offer.
Cash Buyer Selling Process
To sell to a cash buyer, the process is pretty simple. You just have to contact them through a form on their website or by phone and request a cash offer. In most cases, they would ask to visit your property so they can give you an accurate offer.
Once you and your siblings agree with an offer, they'll send you a contract electronically that needs to be reviewed and signed.
After which, the sale would proceed to close and the payment will be divided according to the will or your written agreement with your siblings.
Note that if the house has an existing mortgage, it should be subtracted from the cash offer during the closing, including any other real estate fees such as liens.
Sibling Buyout: Selling Inherited Property to a Sibling
Another way to sell a property when siblings inherit it is through a sibling buyout. This is ideal if one sibling already considers the property as a primary residence.
In order to continue living in the inherited home, that family member can finance half of the home's market value.
Most inherited homes are divided equally by their inheritors, so it would be easy to identify how much should be paid by the sibling who wants to buy the property. However, to ensure that the current market value of the property is identified, the house should go through 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 for the repairs of the property or for the care of the parents who passed.
- One sibling has been making the 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 siblings are on the same page and are willing to wait in an attempt to receive top dollar from the home sale, selling the house traditionally through the help of a real estate agent is worth researching.
In selling an inherited property traditionally, the process is pretty much the same in ordinary houses. A real estate agent is commissioned to sell the property and should conduct a CMA to identify a realistic asking price. Note that this fair price should be agreed upon by all the heirs.
When the asking price is set, the house should be repaired and improved to enhance the home's interior and curb appeal. After which, the house should be listed, staged, and marketed in the means suggested by the realtor.
When retail buyers put in an offer, the real estate agent, along with the appointed negotiator among the co-owners, should weigh which offer is best. They should negotiate to land a higher sales price.
Before closing, the siblings should seek professional advice on paying capital gains tax, inheritance tax, and real estate fees.
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 suit requests the court to terminate the co-ownership of an inherited property so a forced home sale can proceed.
Typically, a partition suit is needed when the siblings disagree on dividing inherited property under probate. They have varying interests, so the judge requires a mediator or "referee" in order to mitigate any conflicts among them.
The legal process of requesting a partition suit is long and complex. The sibling who requested a forced sale can sue for full ownership or custody of the property. If this is granted by the court, that's only when the home sale will proceed.
Note that for a partition suit to be approved, the court usually requires multiple hearings, testimonies, evidence, etc. Moreover, if one sibling wishes for partition, he/she should also hire an attorney from a reputable law firm, an accountant, and a referee who can cost thousands of dollars depending on how long the case gets.
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 means you and your co-owner have equal ownership of the property. A sibling's share cannot be passed down to his/her heirs. In the event that one of the siblings dies, their share in the property will be passed on to the remaining siblings.
Tenancy in Common
Unlike joint tenancy, tenancy in common allows unequal sibling's share in co-ownership. But this doesn't mean that the family member with the highest share can claim sole ownership of the property.
Moreover, if one of the siblings inheriting the property passes away, that sibling's share would be passed on to their heir/s and not their surviving co-owner.
Keep the Inherited House as a Rental
Keeping the recently inherited property as a rental is the most common option if you and your co-owner don't want a sale.
Most siblings rent their inherited home when the rental cash flow in the community is booming, they don't need a large sum of money immediately, and they live in a hot neighborhood where high property appreciation is expected. Of course, siblings who opt for this option have a good relationship.
When choosing to rent out the inherited property, the siblings should talk about who will serve as the landlord and how the rental income would be divided.
Remember that it isn't easy handling tenants and to avoid miscommunication, they should only address their concerns to one landlord. The landlord is responsible for any administrative tasks, upkeep, repairs, maintenance, and the overall management of the property.
Moreover, each sibling should agree to the division of rental income. The one who serves as landlord typically gets the higher percentage since they'll do all the work.
In terms of setting the rent amount, most siblings prefer the 1% rule. This means that the rental should generate a minimum of 1% of the inherited property's purchase price monthly. This is to cover the costs of property management and vacancies.
Turn the Property into a Vacation Home
If the heirs are on the fence about what to do about the property, turning it into a vacation home is another great option. This can foster great relationships among the siblings and their kids as well.
However, if the heirs are not on great terms, issues with scheduling visits to the vacation home, dealing with property changes, it's maintenance, and many others can bring about much stress to all parties.
If you are thinking of turning inherited property into a vacation home, you may want to consider the following:
Hire a Property Manager
Hiring a property manager makes sense if the siblings don't live near their inherited property. Usually, the property manager of a vacation home lives on or near the premises to ensure that it is maintained and secured. The expenses and needs of the property manager are divided among the co-owners.
Property managers can also manage the visiting schedule to the vacation home. They'll note when a sibling wants to stay there and how long so that when another sibling decides to go on vacation with their respective family, their schedule won't collide with the other.
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
Creating a governance board (similar to a condo board) is essential if the stakes in the vacation property are expanding. If the original heirs have multiple children each, potential disagreements on what to do with the property can arise.
Through the help of a governance board, an estate plan can be created and any decision that should be made about the vacation home would be streamlined.
Renovate to Create a Living Space for Two
Siblings who are on good terms and are super close to each other may want to turn the inherited property into a living space for two people through a private arrangement.
Although uncommon, sharing ownership and creating a living space for two is possible. The only challenge to this would be how to split the utilities, property taxes, etc.
Final Thoughts: Inheriting a House with Siblings
Inheriting a house is a blessing if you have a good relationship with the other heirs, especially if they are your siblings. If not, the inheritance and its sale can bring about major stress to everyone involved.
If you want to quickly get rid of an inherited property with siblings, consider selling to a cash buyer. They follow a simple process and close fast. They also cover closing costs so you and your siblings don't have to point fingers at who should pay for the home sale fees.
When you're ready to sell your inherited house with siblings, reach out to us at Sell My House Fast. We'll make you a fair cash offer so you and the other heirs can start anew.
Fill out our form below or call us at (844) 207-0788 to sell your inherited property without the hassles.