Selling Inherited Property in Minnesota
Over the next several decades, members of the Greatest Generation will be leaving their kids, the Baby Boomers, and their grandkids more than $25 trillion and some of that will be wrapped up in real estate. If you are among the heirs you’ll have four choices as to what to do with the home.
- Live in it
- Rent it out
- Sell it
- Let the bank have it
Last year when Kerry Harker and her sister inherited their childhood home in Apple Valley they entertained all three options. Going through their mom’s paperwork they found a pre-foreclosure notice, however and, after several conversations with the lender’s attorney they decided to sell the home.
Nothing, they say now, could have prepared them for just how challenging the whole process was.
Financial Aspects Of Selling An Inherited House
Harker and her sister faced mountains of junk in their parents’ house. Dad was a hoarder and 50 years of accumulated odds and ends had to be disposed of. Among his collection was a previously sunken, salvaged boat that sat in the driveway. The carport was crammed with plumbing odds and ends, including about 15 toilets, basins, fittings and more. Removal of everything would cost a small fortune, so they decided to sell the house contingent on the buyer taking responsibility for all of the items left on the Apple Valley property.
Of course, this is an extreme case, but you may still need to hire professionals to help remove items from the home, clean it and (if you choose to do so), perform cosmetic updates. There may also be liens to pay off. Do you have the finances to take care of these problems? If not, you will need a creative real estate agent to come up with ways to deal with them.
While family members are still reeling from the loss of a parent they’re faced with cleaning out the home. If it was also their childhood home, the pain is even deeper. From sorting through Mom or Dad’s mementos to cleaning the house to get it ready for the market, expect this to be an emotional time for all involved.
Walking out the door for the last time may just be one of the most heartbreaking things you will do in your lifetime. Expect it.
Take It A Step At A Time
The first step to selling your parent’s home is to gather all of the paperwork you can find having to do with his or her ownership. This includes loan papers, deeds, the will and any communication from the lender.
These papers will give you a good idea of where your mom or dad stood with their mortgage (whether or not they were in default), who to contact if there are questions about the mortgage and how title was held. The latter is important, and here’s why.
In Minnesota, the home goes to the surviving party if title is held as joint tenancy with rights of survivorship and no probate is required. If, on the other hand, title is held as tenants in common, each party can sell, lease or will their share to their heirs and it must be probated.
So, What Is Probate?
“Probate is the legal process of settling your estate in court after you die,” according to Minnesota Attorney General, Lori Swanson. The process begins when an application is filed with the probate court and one of the first tasks is the choice of a personal representative for the estate.
This person will be tasked with gathering the deceased’s assets, making an inventory of them and their market values, paying the deceased’s debts and dividing what’s left to the heirs. The personal representative can be anyone – from someone the deceased designates in the will to someone the family designates and, if they don’t choose anyone, the court will appoint a personal representative (typically a local probate attorney).
It is important to seek professional advice immediately after gathering your parents’ paperwork. You’ll need an accountant to let you know the tax implications of selling the home, a lawyer if there are liens or other clouds on the property’s title and a real estate agent to determine the home’s current market value. Finally, you may need to have the home professionally inspected and to consult with contractors to gather prices of any repairs that will need to be made before the home is put on the market.
In the end, if there is no equity to share with the heirs, you may decide to allow the bank to take the home in foreclosure. This is accomplished by discontinuing payments on the loan and the hiring of an attorney to help you file disclaimer paperwork with the court, which will state that you are not accepting the home. The lender will eventually foreclose and take the house.
Work With The Other Heirs
From the list price of the home to how little you will accept when you get offers, all of the heirs need to be in agreement, so talk about these issues before listing the home:
- How much work is each person willing to do to get the house ready for the market?
- How much money can each one contribute to the cost of getting the home ready for the market?
- How much lower than the list price is everyone willing to accept?
When all parties understand the process and each other’s desires and expectations, they will be less emotional when it comes to evaluating offers from buyers and wrapping up the sale of the family home.
If you find yourself in the situation where you have to sell a house you inherited, the Kris Lindahl team has the expertise to make the process as painfree as possible, just contact us.