What to Do When You Inherit a House
How not to lose money when your parents leave you their home
Recovering boat owners often say a boat is a hole in the water into which you pour money. Much the same could be said for a house you inherit.
When a parent or other relative dies and you take possession of his or her house, it can be easy to think you’ve hit the jackpot. But another casino metaphor might be more appropriate when you go to sell an inherited house: Your goal should be to leave the (closing) table with money in your pocket.
Unfortunately, there are plenty of ways to lose money along the way. To avoid making big mistakes after you inherit a house, here’s advice from longtime real estate professionals Doug Myers, a broker with Semonin Realtors in Louisville and Kes Stadler, a broker with Atlanta Communities Real Estate Brokerage:
1. Dealing With the Stuff in the House
The first, and most emotionally draining, step in selling a house is dealing with the contents.
“People tend to overestimate the value of the furnishings,” says Myers. “The house is usually filled with stuff that has a tremendous sentimental value to only a few.”
Stadler counsels his clients to first remove items with significant sentimental or monetary value. Then, he says, hire a company to conduct an estate sale. Insist that whatever that business can’t sell it then take to a charitable organization, so you won’t have to deal with it.
Before a house is emptied, says Stadler, get a photographer to shoot pictures of the furnished rooms (assuming they show well). That way, when you’re ready to list the house for sale, posting the pictures will help prospective buyers visualize the home with furniture in place.
2. Controlling Ongoing Expenses of the Inherited House
While you’ll want to cancel unnecessary services like internet access, cable TV and telephone, it’s important to keep the electricity, gas and water on. People touring the house will need them. So will pre-sale inspectors.
Be sure to watch for spikes in utility bills, which can happen in vacant houses.
“If you have workers come over and do anything —say, lay carpet — they’re going to fiddle with the thermostat,” Myers says. That’s one of the things he checks on his regular visits to his vacant properties, a service any real estate professional you hire should provide.
Water is a special case. In colder climates, you may want to winterize the house by turning off the main valve in the basement or crawl space. That will prevent frozen pipes. But doing so can also create a problem if an agent or contractor uses a toilet and can’t flush it.
“When you come in two days later and the whole house smells like a cesspool, your buyers are going to instantly walk out,” Stadler says. So, he advises, “if you’re going to winterize the house, you’ve got to make sure you tape the toilet seat lids down and let everybody know it’s been winterized.”
He also recommends cancelling alarm-system monitoring if the house is empty, to prevent false alarms. If you do so, however, it’s doubly important that someone — you, your real estate pro or a neighbor — check the property on a regular basis.
3. Deciding on Repairs and Upgrades
Virtually every house needs some work done before you can plant a for-sale sign in the yard. That can be especially true for one that hasn’t been updated in decades. Deciding what to fix and how much to spend is perhaps the biggest financial challenge sellers of inherited homes face.
Myers recommends a fresh coat of paint and new carpet, as well as simple repairs to things like doors.
To avoid overspending, Myers says, take a look at Remodeling’s 2019 Cost vs. Value report site. It shows how much money sellers are likely to recoup from popular upgrades like a kitchen remodel or a garage door replacement. (Spoiler alert: It’s almost always less than what they’ll spend.)
When redecorating, keep things simple and appealing to all prospects. Stadler recommends “boring builder beige” for walls and carpets. “If you have walls that have any kind of color to them, you’re going to chase off some people,” he says.
How much to spend to fix up the house depends on local conditions. You may need to pay more to entice buyers in a slow housing market; in a hot market, you might not need to do anything at all.
“We have certain areas here where people are buying the homes to tear them down,” Stadler says. “If you put in carpet, wallpaper and this, that and the other, they’re just going to tear it down and you threw away money.”
4. Managing Your Expenses
Since maintaining an inherited house and preparing it for sale can cost you a lot of money (don’t forget the cost of travel, meals and lodging) if you live far away, look for ways you can cut corners.
Instead of spending money for a car hauling china to antique dealers or dropping off clothes at a thrift store, consider holding a yard sale. You'll thank yourself.