What if you got this property handed down to you from a family member, and you have no idea of how to take care of it, or handle everything during the coronavirus crisis.
List of things you need to do right after you inherit a property
Terms you might need to know
Transfer of Property: You can only do a “transfer of property” if you have the correct documents needed to use as proof. Documents needed can be obtained with an experienced lawyer.
Get an experienced lawyer or real estate expert who will help you understand how to properly get the property transferred under your name.
After you have correctly inherited the property, you have to choose what you want to do with it. Do you want to sell it? Do you want to keep it in the family? Do you want to donate it to your favorite charity? There are a lot of things to think about and questions you have to ask yourself about your inherited property. One of the biggest questions you’ll have to answer is can I actually sell at a time like this? Or can I rent it out? As a realtor, I can give you some information about the current state of Northern Virginia’s real estate scene. Although some people are buying and shopping around, a lot of people have put their real estate needs on hold in order to get the highest price for their homes. So, let me go over the pro’s and con’s of every situation possible for you.
Pro’s: Selling an inherited home can provide you a cash infusion with favorable tax advantages. Consult your CPA.
Cons: Because the scene isn’t as competitive for the time being, selling might not be the fastest and best option during this time period.
-If the home isn’t paid off, you will still have to pay the mortgage. And if you’re in a financially unstable situation right now, or scared about the economic output in the future, you might not be able to pay off your inherited properties mortgage while keeping your own.
-It’s a bit difficult to sell a home with so many fears about Covid-19, and a lot of pressure on social distancing. If you need to sell ASAP because you can not afford the mortgage payments or the upcoming property tax payments, selling is not the route you want to go.
-If you don’t live in the same state, or within a reasonable distance of the property, it will be difficult to get everything done that’s needed in order to sell a home with a lack of easy travel being available to you. Jumping on a plane to take a look at everything isn’t the best option right now.
Pro’s: You could make a little income on the side.
Con’s: -All income will be taxed with zero tax breaks.
-Difficult to find renters in the current time period.
-You might not know how to properly rent out your place and take care of your tenants. Jumping into the renting game with more than a third of renters being unable to pay rent is not a good game plan.
-You might not be able to find tenants during this whole situation.
Letting it sit:
Right now might be a stressful time, and a place of uncertainty. Because of this, you might not want to do anything but let it sit, and hope the situation will become much better in 3 months, and you’ll be able to have a free range of options available in front of you. Although that option is understandable, you might still want to know the pro’s and con’s behind this and how this decision could hurt or help you.
Pro’s: -Our reality might change in one to two months and everything will be back to normal, then you’d have a full plate of options on hand.
Cons: -If the house isn’t paid off, you will still have to pay the mortgage. Mortgage Forbearance isn’t the best option right now, because lump sum payments are the only kind accepted at this time. Doing this without being educated, or knowing what you’re signing up for could put you in for a full on foreclosure. If you want to go this route, I’d advise you to reach out and call me. I’d be more than glad to educate you (for free) about the realities and harms of mortgage forbearance.
-If the house is paid off, property taxes will still be due. If you can’t afford to pay the taxes right now, your home will be foreclosed in on something called a tax lien foreclosure.
-Something might happen to the property while you just sit around and wait. Squatters could set up camp in your property, mold might grow, or other issues can form that can’t be dealt with while a lock down is in place.
Cons: All. Credit Damage. Emotional damage. Stress. Paying off bank and lawyers. Don’t let this happen.
A short sale would avoid foreclosure, avoid giving you any additional stress, and give you instant cash as well as provide you advice for how to make the most if not all of your gains tax free. It would also put you into the hands of experienced real estate professionals who have been doing this for many years.
Cons: You might not get the amount of money you wanted or expected if you choose to sell. Just remember, selling is not the easier or more efficient option at this time period.
For Rob: Feel free to throw in more than the 2 or 3 times I’ve written about it. Out of state short sales will be an easy bet.