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Selling Inherited Property Illinois
Inheriting a property is both a blessing and a burden depending on the circumstances. This is especially true if you are navigating through loss. If you feel the obligation of inheriting property is too much for you, your best option is to sell it.
To sell an inherited property, you should first consider some variables like its market value, outstanding mortgage and debts, the status of the home transfer, and tax implications (including capital gains taxes). Once everything is settled, choose a means to sell the house. It can be through a real estate agent, real estate investor, for sale by owner, or iBuyer.
The things we mentioned above are just the tip of the iceberg. There's a lot to learn before you can successfully sell your inherited home, and to be honest, it can be quite complex.
Luckily for you, we simplified the process in this handy guide. So if you need help selling your Illinois inherited property fast, read and bookmark this page!
Variables to Consider Before Selling an Inherited House Illinois
Selling an inherited house is not as easy as selling a vacant lot or an old home. The process can be pretty confusing and you have to consider a few variables along the way.
To illustrate, here are some aspects you should look into before you decide to sell an inherited house in Illinois.
Value of the Property
Before you go find an agent, you must first research the fair market value of your property. You can do this by comparing it to the other properties in your location or through online tools that are made for estimation.
However, manage your expectations because whatever the estimated amount is, does not necessarily mean that you'll get paid exactly that.
There are still several factors and conditions that directly affect the market value of your inherited property, like the local housing market or the state of the house.
There's a chance that the property you inherited still has an outstanding mortgage. You can confirm this with the mortgage company that facilitates the loan.
Once you find out how much still needs to be paid, that's when you can start calculating how much you'll earn from selling the house.
Aside from the outstanding mortgage, you should also check for debts. Are there any bills that are unsettled? Were all the property taxes paid? Is the property used as a lien, or does it have a clean title?
By answering these questions, you'll figure out if the sales of the house would only go to paying the debts. If this is the case, you may want to postpone selling it and settle everything first.
Number of People Inheriting the Property
Another significant aspect that you should consider is the number of family members inheriting the house. Of course, all of these individuals should agree to sell the property.
It should also be clarified who will take charge of the sales process and other important tasks to be done like discarding belongings inside the house.
Status of Home Transfer
You would only be able to sell inherited property if it is already under your name. To clarify, there are three ways for you to legally own inherited property.
Probate can be a complicated way to inherit a property and often, the inheritors only get a fraction of the property after due to paying off outstanding debts and taxes.
Probate differs state to state but is typically opened when a loved one passes away and has an inheritance that needs to transfer ownership. Probate requires many documents that differ depending on where the loved one owned property.
The probate process takes quite a long time and can be expensive (especially when there is no will). In probate, the court makes sure that all the debtors of your loved one who passed are paid before transferring the property to the inheritor(s).
The best way to inherit property is through a living trust. This is a document that stipulates who will manage the property so the inheritors or family members can benefit after.
For instance, the parents (trustor) delegate someone (trustee) to sell inherited property so the children can divide the sales equally.
Transfer on Death Deed
Also known as a beneficiary deed, this means you had inherited the property through a death deed or a document prepared by the owner of the house prior to passing. If you become a property owner through this document, you have the rights to sell it.
Capital Gains Taxes and Other Tax Implications
Inheriting a house can impact you financially. You and your family members may need to pay inheritance tax right after you are named as the owner, or you can be taxed once you get the money from the sale (capital gains tax).
Laws regarding this differ from state to state, but generally, you will not qualify for home sale tax exclusion if you haven't lived for two years (from the past five years) in the property.
Also, if you do not plan to sell the property right away, you would have to pay taxes for any increase in property value.
To understand your specific tax implications better, you should seek the opinion of a lawyer or an accountant in Illinois. There are so many nuances related to tax laws, especially capital gains tax, taxes on the sale, federal estate tax, property taxes, etc.
One thing is for sure, though, you will not be able to avoid paying taxes on the sale.
Where to Report Sale of Inherited Property
Should you decide to sell your inheritance, the sale process should be reported as taxable income according to IRS. The IRS provides instructions on reporting a sold property and determining the forms you need to use.
What to Do Before the Sale of an Inherited Property Illinois
The preparation in making the sale of your inherited property is as important as the sales process. To guide you, here is a detailed list of what you should do.
Clean and Sort Personal Belongings
If you have Illinois inherited a property because a loved one died, it can be emotionally challenging to sort through their belongings and decide which to keep and throw away. However, you really have to do this at one point.
It's best to ask someone to help you out because you'll be dealing with years of accumulated stuff.
Hold a Yard Sale
Once the cherished possessions inside the house are divided among the heirs, it's time to get rid of the remaining belongings through a yard sale. Remember, no matter how ironic it sounds, the property would be more interesting if it is empty.
If you find that selling the stuff on your own can be overwhelming, seek the help of an estate sale specialist. Once all the stuff is cleared, you can start repairing or upgrading the house to sell at a much higher price.
Wait for the Property to Go Through Probate Process
As established earlier, your inherited property would go through probate if your loved one did not leave a legal will. You would have to pack some patience because this process takes time.
To make everything smoother, talk to a probate attorney or estate planner.
Determine Who Can Handle the Real Estate Transaction
If your loved one left a legal will and designated someone to be responsible for distributing assets, choosing an executor is unnecessary. This is somehow similar to when the property has a trustee.
However, in instances where the siblings inherited a property and the parent did not state who should manage the sales and other transactions, the siblings should meet and appoint someone to have the ultimate authority of ownership.
Hire a Mediator
Disagreements in deciding whether to sell the property or not often arise when a lot of individuals inherit a single property. These disagreements could even lead to huge fights.
To avoid this, hire a mediator or an attorney. They can help sort through family disagreements so you can arrive at a decision on whether to sell the house.
Choose How to Sell the Inherited Property
Following all the recommendations above, you will now be ready to sell your property. Your next step would be to choose a way to sell it. You can either hire a real estate agent to sell an inherited home, sell it on your own, sell to a real estate investor, or an iBuyer.
We've covered all of this in the next section so stay glued to this article.
4 Ways to Sell an Inherited House Illinois
1. Real Estate Agent
If you want to get the best price out of your inherited home, sell it with the help of a real estate agent. They'll serve as your personal representative and help you set the sale price, list and market your house, and negotiate offers.
Here are the pros of selling through a realtor:
- Realtors can set a price that can attract buyers but at the same time help you gain more income from the sale. They can help you refrain from overpricing and undervaluing your inherited property.
- They can make your property stand out through strategic marketing.
- They know how to work on the financial and emotional issues of interested buyers.
2. Real Estate Investor
Real estate investors can be found through home buying companies that give you a cash offer for your home in a matter of days in Illinois.
Here are the pros of selling to a real estate investor:
- They buy houses as-is, so you don't have to worry about repairs and the sale process.
- You can sell while out-of-state because you don't have to prepare or clean the house.
- Once the investor has seen your house and it passed the assessment, they can give you the cash payment at closing (as fast as 7 days).
- There is minimal paperwork since you will work directly with the investor.
3. For Sale by Owner
If you have a lot of time, you can also sell your inherited home all by yourself. This means you won't seek the help of realtors.
Here are the pros of personally handling the sale of your property:
- It can help you net more money because you don't have to pay the agent for commissions. (Note: This is possible if you are really an expert in the industry.)
- You'll get a better price compared to selling to a property investor.
iBuyers are similar to real estate investors, but they typically charge a fee. iBuyers operate only in large real estate markets (major cities).
Here are the pros of selling to an iBuyer:
- You'll get a cash offer in less than 48 hours.
- You don't have to go to any office because the real estate transaction is primarily made online.
- You'll have control over the sale's timeline.
- You don't have to repair anything or make improvements to the property. They'll deduct it from the money you'll receive.
Tips on Pricing an Inherited Property and Negotiating Offers Illinois
Deciding to sell your inherited property without the help of a real estate agent means pricing it yourself. This seems fun because you'll have control over the price, but it's actually not.
Pricing your Illinois inherited property would depend on a lot of factors like outstanding mortgage and debts, existing bills, the housing market in your area, etc.
Here are some tips to help you set a price and negotiate offers for your inherited property:
Don't expect your inherited property to be sold based on your listing price. Chances are, the offers would be thousands of dollars below your asking price because of the market conditions.
Moreover, the negotiation process for your inherited home would dictate the final price. If you want someone to negotiate for you, hire a real estate agent.
Avoid a Very High Listing Price
Properties that are listed at a very high price scare buyers away. What you should do is choose a price that is "slightly" higher than what you want to settle with.
If the listing price of your inheritance is realistic, more buyers would be attracted and they would probably start a bid. Bidding wars favor you as the seller because you'll be able to get away with a higher sale price.
Don't Sell the Property for a Very Cheap Price
When you inherit a property with a lot of precious memories, it is normal to want to sell it at the maximum price. However, it is natural for buyers to aim for the lowest possible price.
To make the sale, some inheritors adjust their listing price so the buyers can afford it, but often they settle for less than the house is worth. Avoid this at all costs.
The final price of the inherited house should be between the minimum and the maximum asking price. It should be based on a fair market value.
Think Before Making Concessions
Buyers who are experts in haggling would submit an offer for your inheritance that is way below your selling price and then demand you to help them with the closing costs or repairs. Before you agree to these concessions, talk with a real estate professional.
Don't Be Hasty
We understand that selling your inherited property fast may be your main goal, but don't jump on the first offer unless it is exactly your full asking price. Think of the long term effects of selling your inherited property for cheap.
The initial offer of most buyers is thousands below your listing price. Wait for a buyer that is willing to negotiate for a fair price.
Research on Negotiation Tactics
If you aren't aware of the strategies of potential buyers, they'll be able to convince you to agree with their offers and concessions. Learning about buyer strategies would help you recognize if you're being low-balled.
You should also research negotiation strategies as the seller so you know when to make counter-offers, compromise, or walk away from the transaction.
What to Expect While Selling Inherited Property Illinois
The process of selling an inherited property is multi-step. It can span from weeks to months, depending on several factors. But generally, you should expect a few things to happen within that span of time in Illinois.
Open Houses or Showings
Open houses and showings are essential when working with a real estate agent, so buyers take an interest in your home. This means that during the duration of time where you are marketing the house and opening it for tours, you should do your best to maintain it and ensure that it is in tip-top condition. If you want to avoid people in your inherited house, a cash buyer may be a better option.
Even though you have listed your inherited property for sale, you still have to pay for its utility bills like electric, water, cable, and trash removal. If the house has an outstanding mortgage, you still have to pay for it on time, too, since you are the new owner.
Efforts to keep the property in great condition also demand some expenses that can affect your income.
For all these fees, including the mortgage, ask the help of your fellow inheritor to lighten the financial burden. After all, the ownership of the property is divided among you.
When selling with a realtor, before the inherited house is sold, a professional home inspector will visit your inherited home to look for potential problems like cracked foundations, leaking roofs, rotting structures, leaking or broken pipes, etc.
You may opt for a pre-listing inspection so you can make repairs before it becomes visible to the market.
This is highly recommended as opposed to letting the buyer hire an inspector and discover that the house needs a lot of repairs. This may put them off, or they'll try to buy your inherited property for a much lower price.
If multiple people are named as owners of the property, expect some disagreements regarding ownership and financial responsibilities in tending to the inheritance.
Personal conflicts can lengthen the whole sale process, especially when there are other assets involved. Some heirs may want to sell the home and get rid of all the possessions of the deceased, while others would like to keep them.
There may also be issues regarding some legal nuances and tax implications that could further drag the sale.
Challenges You May Encounter in Selling an Inherited Property Illinois
You should really pop a bottle of champagne after the closing day because the whole transaction of selling an inherited property won't be an easy ride. Your patience will be tested a couple of times before the house gets sold.
Here's a list of challenges you may encounter while selling Illinois inherited property:
Estate Being Kept in Probate
Even though you are excited to rid yourself of the property, this would not be possible if it is being kept in probate and there are issues regarding ownership. It can take years before the court can decide how to go about the property.
Nevertheless, this can be good if the executor or a family member needs to use the house in the meantime because the legal transfer won't take place while the house is under the probate process.
Equal Distribution of Estate Value and Assets
If the personal will does not state how the value of the house would be divided among the heirs, disagreements may arise.
For instance, if five siblings inherited a home and one of them took care of the parents until their death, that sibling may ask for a higher percentage and this could lead to conflicts.
Inheriting a property from a family member who passed especially if it is your parent can be emotionally draining. When it's time to sort through their personal belongings and decide which to keep and discard, you'll find yourself riddled with grief.
This task can even be more challenging because of the guilt that you haven't held on to their possessions and property.
Inherited Property is Underwater
Inheriting a property from a family member can turn into a nightmare if it is "underwater." In real estate, this means that the worth of the property is less than the mortgage or loan taken for it.
It is also possible that the property is under lien; hence, legal issues when selling it right away.
Too Many Repairs
As mentioned earlier, a professional house inspector would check the house to determine what needs to be repaired. If the previous owner failed to maintain the house for whatever reason, you would have to shoulder the cost of repairs and this can easily amount to thousands of dollars.
If you want to avoid paying severe repair costs right away, request a cash offer from a reputable We Buy Houses company. Cash buyers purchase homes as-is, meaning the seller doesn't need to touch a paintbrush.
Final Thoughts: Selling An Inherited House Illinois
Selling an inherited house can be overwhelming, with all the processes you must go through before the actual Illinois sale.
We hope that through reading this guide, you don't feel that lost anymore and are now more enthusiastic to begin the journey of selling your property.
If you need help selling inherited property, connect with us at Sell My House Fast! We can connect you with a local cash buyer in the town your inherited property is located. Reach us at (844) 207-0788 to get a quick cash offer or fill out the form below!