From this article, you will learn the important aspects of how to sell an inherited house in “as is” condition.
It dives into the rules and legal requirements to this approach and provides guidance on the best way to navigate it.
With that in mind, let’s look more closely at the ins and outs.
Can I Sell an Inherited House As Is?
The short answer is “yes”. Selling a house in its current condition is a common real estate practice that can be used to liquidate an inherited house.
The subsequent sections detail the legal requirements, process, options, and considerations for selling this way.
What Does It Mean to Sell an Inherited Property As Is?
“As is” means transferring the property to the buyer in the same condition as when you inherited it.
As an example, let’s say you inherited your parents’ house and could not afford to repair it. You would present it to potential buyers with all its wear and tear, no updates or fixes.
This method of selling means that you are providing no assurances about the condition of the house. The buyer will need to accept the property in its current condition.
This type of real estate transaction differs from conventional ones, which may involve repair concessions.
In those instances, the seller agrees to reduce the sale price or credit the buyer at closing to cover repair costs.
By advertising the property “as is” and explicitly stating that in the purchase contract, you are making it clear to buyers that what they see is what they get.
In other words, you shift the responsibility for property repairs to the buyer, who will need to handle any potential problems.
However, the fact that you won’t be making repairs before the sale does not prevent the buyer from getting the house professionally inspected.
Many will do so to help them better understand the property’s current condition and make an informed purchase decision.
Additionally, here is what happens when you sell a house you inherited in more detail.
What Should Be Disclosed when Selling an Inherited House As Is?
Despite selling a deceased parent’s house “as is”, you are legally obligated to disclose any issues you’re aware of.
What’s required depends on your state law, but that list generally includes the following areas:
- Known structural problems: This disclosure includes any significant issues impacting the home’s structural integrity. That encompasses roof leaks, foundation cracks or shifting, and plumbing system defects (including outdated or problem-prone pipes).
- Water or fire damage: Buyers need to know about any history of fire, flooding, or other water intrusion. Being in a flood zone is also often considered a material fact for disclosure.
- Hazardous conditions: Substances that could pose serious health risks typically need to be reported. Examples are lead-based paint, asbestos, radon gas, formaldehyde, and mold.
- Termite damage: Sellers are generally required to divulge any active or past infestations of termites as well as structural damage caused by these pests.
- Mechanical systems: Major systems like electrical and HVAC impact the home’s value and liveability and are typically among disclosure requirements.
- Legal issues: Common legal issues to disclose are title disputes, zoning violations, and pending and ongoing litigation. Disclosure also often includes legal encumbrances that impact the property’s value or use.
Best Way to Sell Your Inherited House As Is
When you inherited a house that needs work and want to sell it, your best option is to work with a company that specializes in purchasing properties in their current condition.
Real estate investors run these companies and advertise a fast sale for cash (as opposed to mortgage-financed transactions), often in situations like inheritance, where the owner wants to sell quickly.
When dealing with professional cash home buyers, a house can be sold while in probate or after it with less hassle than selling to a normal buyer who needs a mortgage to purchase your property.
Who Are Real Estate Investors?
A real estate investor is someone who acquires properties to generate income or make a profit.
While all investors aim to buy property at an attractive enough price to make a profit, they have different ways of making money.
Two common strategies investors use to profit from purchasing “as is” properties are house flipping and rentals.
They flip properties in a couple of ways:
- Some investors make minimal, targeted improvements and quickly resell houses for a higher price, capitalizing on high market demand.
- Others make extensive repairs and renovations, focusing on substantially enhancing the property’s value and appeal to potential buyers. Then, they resell it for a profit.
Other investors use a buy-and-hold strategy. They retain ownership for an extended period and make money by generating regular rental income.
While the rental income provides immediate cash flow, property values also tend to increase over time, leading to additional profit when the investor decides to sell.
Benefits of Selling to a House Buying Company
No Repairs Required
House buying companies look for properties in less-than-perfect shape and are comfortable purchasing them despite outstanding debt or condition-related flaws.
For instance, the property can be outdated, have cosmetic defects, or even be an inherited hoarder house in deteriorated condition.
They don’t ask you to make repairs. So, you can sell heir property without fixing it up before closing.
Fast Sale
Since you don’t spend time on renovations, inherited property can be sold sooner than if you had to do repair work first.
Additionally, there is typically less back-and-forth negotiation with these companies. Plus, they are usually prepared to close deals faster than traditional buyers.
Simple and More Certain Deal
As it’s a cash deal, you don’t have to wait through an official appraisal and inspection required by the buyer’s lender.
You don’t risk wasting time on a buyer whose lender refused to lend them a mortgage after reviewing their application for a week or two.
If you inherited a house with a mortgage, in addition to bad condition, chances are it also has an outstanding debt and may be claimed by the bank during probate.
Investors are pros in buying distressed real estate and can negotiate with the bank to purchase your house for cash to help you avoid the deceased parents home foreclosure.
Closing Costs Covered
These buyers often assume closing costs, so you, as the seller, don’t have to stress about covering those expenses.
No Agent Commission to Pay
Selling directly to a house buying company saves you from paying a realtor commission, as these companies do not require an agent for the transaction.
Keep in mind that an agent is usually required if selling a house under probate, unless the court makes an exception.
However, if you are selling the house once probate is complete, or if you can sell a deceased person’s house without probate, you are the legal owner and can choose to skip hiring a real estate agent and paying a commission.
Drawbacks of Selling to a House Buying Company
The only disadvantage to selling to a “we buy houses” company is that you will likely receive a lower purchase offer than on the open market. There are a couple of reasons for that.
One factor is profit margin. An investor’s goal is to make money off the property. So, they offer less than market value to maximize their return on investment.
They factor in repair and renovation costs as they determine what that offer will be.
However, if you sell your house really cheap, you can avoid paying capital gains tax on inherited property. Since the price you get is below market value (tax basis), you don’t have a taxable gain.
For detailed information on factors involved in capital gains tax, you can read our article on how much tax you pay when you sell an inherited house and the requirements you need to complete when reporting the sale of inherited property.
If selling to an investor doesn’t seem appealing there are two other ways to sell, as discussed in our article on selling a house you inherited.
While these methods may be more financially advantageous, they might not be as convenient.
Where to Find an Ethical House Buying Company?
Find the best companies that buy inherited homes near you to connect with trustworthy, reputable firms via our website.
This directory lists reputable professionals who are well-versed in the legal complexities of probate and inheritance and can expertly guide you through the process.
Or, request a cash offer right away to be connected with up to five reputable investors and compare their offers.
