Do you need to renovate an old inherited home before selling? The first step to deciding involves speaking with a local real estate broker to lay down the numbers.
Q: Our sister recently passed away leaving the family home that mom left her six years ago. She had no will and left outstanding debts as well as back taxes owed. The house is in bad shape and not in a very good neighborhood.
Should we spend a lot of money to repair the property to get it up to code and then try to sell it? Should we try to sell as-is to a company that buys houses or just walk away? All eight of us have different ideas so we need to know what we can do.
A: On the one side you have the ownership of the home and on the other you have the issue of your sister’s estate and the debts she owed. Let’s start with the home. We’re a bit perplexed as to whether your sister owned the home in her own name or whether she owned the home jointly with other family members.
When you own a property in your own name, title passes to surviving family members by the terms of that person’s will or, if there is no will, as provided by the laws of the state in which the property is located. You wrote that your sister had no will but if she owned the home jointly with you, a friend, or other family members, that person (or all of the people named as joint owners) would become owners of the home. The concept to research is whether she owned the home in joint tenancy with rights of survivorship.
However, if your sister owned the home alone and had no will, title to the home would have to be probated. That means you have to open a case with the probate court, submit paperwork and have the court order that the property transfer to the persons entitled to the home under state law. The persons most likely entitled to the home would be surviving children, siblings, and spouse. (How that happens is generally governed by state law.)
Given that we don’t know who owns the home, it’s hard to determine what you should do. If we assume that you ended up owning the home and have the ability to sell it, then you have to decide what to do. If you’ve ended up with title to the home, we also have to assume that you are not responsible for any of her debts.
If the property has liens attached to it, then those must be settled before you can close on the sale. If there are back taxes owed, you should immediately discuss it with a real estate attorney. If the property has been sold to an investor, then the clock is ticking for you to pay back the outstanding debt plus interest.
In any case, getting some professional advice will be helpful. A good real estate broker should be able to tell you if it’s worth fixing up the home, or if you should sell it in as-is condition.
A couple of months ago, friends of Sam’s were selling their home. The husband thought the home would be torn down. The wife thought that putting some money into it would help get them a better price. The broker they ultimately selected told them to clean out their stuff from the home, paint the walls a light grey, put in a couple of new light fixtures and light switches, fix a couple of issues and then put some staged furniture in the home.
It took about three months for the property to be cleaned out and about $12,000 of work to be completed, but they received an offer close to their listing price within two weeks of listing the property for sale, about 30 percent more than the husband thought the home was worth.
We’re not saying you’ll get a 30 percent premium if you decide to improve the property before you sell, but unless you talk with qualified professionals, you’ll never know.