If you’ve inherited a property and you’re thinking about selling it, you probably have more options than you realize. This blog explains 3 financial options you can pursue when selling an inherited property in Northern Virginia.
When a loved one passes and leaves you with a property, it might be a sentimental gesture to keep it. But in fact keeping an inherited property often isn’t the best choice. You may have to balance your fond memories of the property with today’s realities. There are more bills, expenses, upkeep, and stress. It can be time-consuming, costly, and a real hassle.
If you’ve inherited a property, you’re probably thinking about listing with a real estate agent. However, you might be surprised to learn that you have other options. In fact, did you know you have 3 financial options you can pursue when selling an inherited property in Fairfax?
First, Let’s Talk About Selling Through An Agent…
There’s nothing wrong with selling through a real estate agent. But realize that an agent may ask you to fix up the inherited property first. That’s both expensive and time-consuming, Then there are closing costs and the agent’s commission. And, this method can take months. During that time, you have to pay the taxes, insurance, maintenance, and more. Wouldn’t you just like to sell it?
Full disclosure: I have a Virginia real estate license, though I focus on helping sellers as a property buyer. While I’d be glad to help you as an agent, most “retail” buyers expect to buy properties in fresh, glowing condition. It’s not just stainless steel appliances and granite counter tops. Houses built 30-70 or more years ago had smaller-sized rooms. They typically had small kitchens, a small enclosed dining room, and small bedrooms, including the master bedroom. Their electrical system was fine when it was built, but absolutely needs to be upgraded today.
If that describes your inherited home, very few buyers will be interested. Your alternative: Spend $20,000-$70,000 to fix the property up, just to sell it. The people I’ve helped with inherited houses just don’t have the money. Nor do they have the time to spend supervising contractors.
What are your other options?
Second, Let’s Look At Other Financial Options You Can Pursue When Selling an Inherited Property
Option #1. Refinance
One option, somewhat similar to selling, is to refinance the property and use that money for other things. Although you’ll still own the house, some people consider this financial option if they are selling if they need the money for other purposes.
You can still use the house, or rent it out, and you’ll need to pay back the loan to the bank. It will add to your monthly costs and–if you rent it out–it may mean you’ll have little or no positive cash flow. Still, it’s among the financial options you can pursue when selling an inherited property if you need some fast cash.
Option #2. Rent To Own (Lease-Option)
Another possibility: Sell the house over the long-term to a tenant-buyer. Typically, these renters can’t get a conventional mortgage–often due to credit issues–but want to own a house. They agree to pay you rent. Over time (maybe 4-6 years) hopefully they’ll be able to buy the house (either by paying you an extra amount above their rent that will go toward the purchase of the property, or by waiting until their credit is cleaned up.) The problem with lease-options is that fairly few–it’s estimated around 25%–actually result in the property’s purchase. Plus, you still own the property and may have to do some fix-up before offering it as a lease-option.
You also could simply rent the house out and become a landlord. Rent it out now, and sell it later. (But if you wait a few years, maybe the market will be slow. Interest rates may be higher. If so, you’ll have wished you’d sold earlier.) That’s the second of three financial options you can pursue when selling an inherited property.
Option #3. Sell Fast For Cash
The final option (saving the best for last) is selling your inherited property in as-is condition, quickly, for all cash. Instead of selling through an agent (and hoping they can find a buyer, which can take months), you can work with a professional house-buying company (like us at Solutions 3D LLC), They’ll often buy your house as-is for cash, usually in as little as a week or two. It’s fast, simple, and doesn’t require any work. Usually (and this is the way we work), not only do you pay no commission, but you pay no closing costs, no fix-up or maintenance charges, or anything else.
So, what’s the catch? It’s this: The all-cash offer you’ll receive probably will be lower than what an agent will suggest listing the house for. Each house and each situation is different. But here’s an actual example of a recent house we bought. It was a solid house–one with “good bones,” as they say. Once it was nicely fixed up, it would sell for about $525,000. Unfortunately, the house needed about $80,000 worth of work. It needed a new, much larger kitchen. It needed a larger master bedroom and a full-sized bath (it had a tiny half-bath.) It needed the rooms in the basement completely redone.
A real estate agent probably would have suggested listing it for around $375,000. (Remember: I’m an agent; that’s about what I would have suggested.) But it would have been a tough sell, considering all the work that needed to be done. Instead, we bought it, all cash in as-is condition, for $305,000.
Why did the sellers make that decision? Even a modest house clean-up (paint and carpet) would have cost +$20,000. The real estate commission, though negotiable, might have run around $23,000. There was no guarantee the house would sell and, if it did, it would probably take months. Meanwhile, there was insurance, taxes, utilities, and maintenance to pay. The sellers (the son and daughter of the late owner) wanted to sell quickly without any hassle. They turned to us. We bought their house. And they were very happy.
There you have it! 3 financial options you can pursue when selling an inherited property in Fairfax!