What are the most important considerations for inheriting properties?
It’s not like winning the lottery. It is a sensitive matter. This situation can be stressful and can place a heavy burden on the surviving heirs. This is true regardless of whether you inherit a large real-estate empire or a smaller single-family home. What are the key steps heirs must take to ensure that they have the best possible management of what is left?
Start Early: Although no one wants to be seen as money motivated in these situations it is vital to move quickly. Every property that is held on to has its holding costs. If not settled quickly, real estate can quickly lose its value. It’s not just a loss in monetary worth for the individual; it also detracts a lifetime from hard work. Slowing down may actually make it worse.
Get to Know Your Real Situation:Uncertainty can make things worse in these situations. It’s difficult to stay completely free from expectations for long periods. The mind fills in the gaps. Some people seriously underestimate the value an estate and do their own disservice. Others overestimate what they might be entitled to and make costly financial mistakes over time. Find out the true estate status, who is really the owner of the different property pieces, and learn about the timelines and processes involved.
Understand Titles & Debts: For those who are not familiar with real estate ownership and rights, they can be confusing. It’s not as easy as you think. Multiple owners, multiple mortgages, housing association, and other liens can all be involved. A title search can help to identify these items, provide greater clarity, and facilitate a more efficient process.
Understand taxes:Taxes may cause havoc with inheritances, if not properly accounted. If there is a succession, there may be significant estate taxes. Other tax debts will also need to get settled. The recipient may also be subject to higher taxes. Talk to a tax professional and learn about the liabilities and ways to minimize them.
Get a Accurate Property Assessment:Some people may make the mistaken assumption that “the market price of a property equals what someone is willing pay for it.” However, this is just too vague. Online home valuation tools have been shown to be wildly inaccurate. There is also the possibility that real estate agents could just be telling you what they want to hear in order for another listing to be inked. Talk to at least two local property professionals and consult a appraiser for a more accurate estimate of the potential value of any real estate. You don’t want it sitting around for months or years if it’s been overpriced.
Weigh your Selling Options: There are many ways to sell an inheritance property or real estate portfolio. It really depends on each individual situation. For some, there may not be any pressure to sell. However, heirs might have the luxury to list a property with a realtor for many years and not feel the money flowing out. Others may find that they can market their property themselves as an ‘FSBO’. Many people may find it easier to sell their homes fast to experts who are experienced with inherited property. This may be especially true if multiple properties are involved. Experienced professionals may be able cover the costs of selling and offer concierge services to make it easier.
Get help sorting:One the greatest burdens of inheriting a modest single family home is all of its stuff. Many things have been accumulated over the years and need to be sorted. This can take weeks. There may be family heirlooms, real treasures, and many items that aren’t worth anything. Don’t accidentally give away an expensive piece of art or waste items that other people might need. Some professional help is helpful when moving, organizing garage sale, putting items up on eBay, or shipping donations to charities.
Get an Early Start on Your Estate Planning: Now is the best time to start or revisit your estate planning. Do not wait for “the perfect time”. It will never come. These insights will be fresh in you mind and you’ll be able to offer suggestions for making it easier for your spouse, and the next generation, when it comes time. Maybe you should set up a trust, or even make a will. Perhaps you will need to use the inheritance proceeds for your real estate education, or to start investing to build a nest and legacy.