Before Ashley Carlsonās father died of cancer in 2016, her only experience navigating the real estate world was finding a place to rent in San Francisco. As executor of his will, Carlson had to clean out and sell his Modesto, Calif., home and a cabin in the mountains in Dorrington ā both a couple of hours from where she lives.
Much of the work fell on Carlson, then 28, since the other beneficiary was her older sister, who lives in New York City.
āSheās a little bit more emotionally driven, so I think it was better that I was handling this side of things,ā said Carlson, an account director at a public relations agency.
After finding a real estate agent with estate sale experience, Carlson got up to speed on probate, learned about local building codes and repairs that needed to be made, and even told her fatherās friend, who had been staying in the cabin, heād have to move.
āThere were a ton of things that were brand new for me, and it was all very, very overwhelming,ā Carlson recalled.
Fortunately, the house and cabin sold a few months after they were listed.
Dealing with the death of a parent is challenging, but selling their home can be fraught with land mines, particularly if theyĀ die without a will. Family members consumed by grief may be unable to makeĀ decisions, leaving homes that may have already languished fall further into disrepair. Siblings may harbor emotional attachments and have unrealistic expectations about what the property should sell for.
The task can be a difficult and long process ā or relatively quick and painless. Much depends on the heirsā ability to ask for help and hiring a professional who knows the local housing market. Experts say the sooner the process begins, the easier it will be. Parents can take steps while theyāre alive to help ward off contentious complications.
āItās always a good idea to discuss these matters while loved ones are still with us,ā observed John Graff, a real estate broker with Ashby & Graff Real Estate in Los Angeles. āThe conversation may be difficult and awkward, but it is worth it to have the upfront knowledge so that youāre not scrambling while grieving.ā
Plan ahead
Make sure they have a will. Many parents die without one. A 2017 Caring.com survey found that only 42 percent of U.S. adults had estate-planning documents, such as a will or a living trust.
āWhen someone dies without a will, itās a real burden on the family members, and, depending on the state the property is located in, the process to dispose of the home can be quite long,ā said Chuck Vosburgh, a Realtor with NextHome Gulf to Bay in St. Petersburg, Fla.
Be prepared to shell out money. Before a home is sold, costs associated with maintaining the property still must be paid to prevent unintended consequences, such as frozen pipes or fines from local jurisdictions for failing to do routine landscaping.
Keep heirs out. The executor should have locks changed as soon as possible. āIt can be very difficult and emotionally draining to remove someone from the propertyā if theyāre not willing to go, Vosburgh noted.
Get a reality check about price. Have a real estate agent run a competitive market analysis, and consider an appraisal from a licensed appraiser. To avoid appearances of impropriety, donāt hire a friend or family member, especially if there are multiple heirs, Vosburgh said. āPeople can get suspicious, and death brings out the worst in people.ā
Designate a contact person. The executor should keep all heirs informed. Someone who feels left out may think thereās something hinky with the transaction.
Sell as is or fix up?
The biggest deterrent to selling a parentās house is usually the emotional attachment of the children. Often, āevery little trinket or picture has a memory,ā said Michael Zschunke, a Realtor with Berkshire Hathaway HomeServices Arizona Properties in Scottsdale. He added that as difficult as it may be, itās ābest to clean the home out quickly and prepare the house for sale. The longer the process, the more difficult it becomes.ā
Experts say this isnāt a good time for major renovations. Cosmetic fixes can pay off, but more substantial improvements generally do not. Remove furniture and belongings and show the property vacant or staged. Carpets should be cleaned and painting done, as needed. Hire professional cleaners and clean up the yard.
When Debra Basilisās mother passed away in March 2018, she had to sell her 2,000-square-foot condominium in the Belvedere in Arlington, Va., where her mother lived for nearly 35 years on the 14th floor with unobstructed views of Washington. Her real estate agent, Jeremy Browne of TTR Sothebyās International Realty, helped Basilis weigh the pros and cons of renovating, but she didnāt want the headache of a big project.
āI was in mourning, so it was not a good time to take on something like that,ā recalled Basilis, a chief acquisition engineer for a McLean, Va.-based nonprofit company that runs federally funded research centers.
Basilis was nervous about showing the unit, which had only minor updates since it was built in the mid-1980s. She planned to paint and re-carpet, but Browne showed the condo to a couple who bought it before it even hit the market.
āHe said let them see it the way it is,ā Basilis recalled. āHe knew what they wanted and they ended up buying, so I never even had to list it.ā
If the property requires extensive repairs, it may be better to sell as is or consider one of the quick-sale companies that promise fast and easy transactions with no repairs or cleanup. But donāt presume a big payout.
āYou can usually expect to receive about 60 to 70 percent of market value,ā Zschunke said.
Tax consequences must be considered. Estate, inheritance and income taxes can impact the bottom line, depending on where the property is, where the inheritor lives and how much money is being inherited, said Graff. Typically thereās a benefit to selling an inherited property soon after receiving rights to it because when a property is inherited after a death, the property value is āstepped upā to fair market value at the time of the ownerās death.
āThis means you can sell a property bought in 1970 but not pay the taxes on the value gained over those years,ā Graff said.
Lessons learned
How children handle the sale of a parentās home is often key to whether they end up staying a family or never speaking to each other again.
āEvery parentās worst nightmare is their kids fighting over their stuff,ā observed Patrick Simasko, an elder law attorney at Simasko Law in Mount Clemens, Mich.
Jennifer Okhovat, a Realtor with Compass in Los Angeles, suffered through a drama-filled deal a few years ago when two siblings ā a woman in her late 60s and her brother in his 70s ā inherited their parentās West Hollywood Tudor. The house sat empty for five years before they decided to list it.
One was ready to sell and move on, while the other kept saying, āThis was our parentsā home,ā and would come up with exaggerated prices. Neither wanted to buy each otherās share, either, she added.
After months of discussions, the siblings gave Okhovat the go-ahead to list for $1.2 million. Okhovat said she brought more than a dozen offers, but for every offer, at least one of the two siblings found a reason not to sell it. Even when the offers were above asking price, all cash and non-contingent, the siblings were never in agreement. The property eventually was sold a year later by a listing agent with another brokerage after one of the siblings passed away, Okhovat said.
āI think a lot of it was timing,ā Okhovat said.
Her advice? āDo your best to remove the emotion and really try to focus on it as a business transaction. Think of it as selling any other type of property that you might own.ā
Carlson said one regret was that she was in such a āgo modeā dealing with her fatherās real estate that she failed to anticipate the wave of emotion that would hit when it was over.
āOnce everything closed and the final checks were disbursed, it was kind of this moment of, āOh my God, I havenāt even processed anything that has just happened over the last year and a half,āāā Carlson said.
āYou obviously have to let some of the emotions in. But I wish in hindsight that I had allowed that to happen a little bit more, so that when everything was finally closed, it wasnāt such a feeling of, āWell what do I do with my time now?āāā
When a parent dies without a will, the assets of the parent pass to his or her heirs at law, according to Cristina Pelaez, a real estate attorney with the law firm Rasco Klock in Miami. Who inherits the assets, including any property, if an heir dies before the parent depends upon intestacy statutes, which vary by state.
āThis can be very costly and time-consuming for the heirs and will require court [probate] proceedings,ā Pelaez wrote in an email, adding that probate can take more than a year.
When a parent dies with a will, the will must still be submitted to a probate court to officially declare who inherits the property. Things can get tricky if family members contest the will. But revocable trusts, also known as āliving trusts,ā can be set up to help avoid probate. Meanwhile, some states allow a ātransfer-on-deathā deed to avoid probate, Pelaez said.
Considering the various options requires āfrank and open conversations with family during a parentās lifetimeā to ensure a well-thought-out legacy for their families, Pelaez said.
Another way some parents try to head off probate is by signing a āquitclaim deedā before their death that makes the house jointly owned by themselves and their children. The problem is after the parents dies, āthe fireworksā often start, Simasko said.
What parents often donāt realize is once they put their children on the home as owners, all of the children and maybe even their spouses, depending what state you live in, have to sign off to sell. āThat can be a good thing if you have good kids and theyāre all on the same page and everybody wants to sell the house,ā Simasko said.
But if one sibling has been living in the basement or another just doesnāt want to sell, they donāt have to sign the deed unless siblings take them to court to force the sale. In Michigan, this typically happens when parents want the cabin on the lake to stay in the family and put the children on the deed. The same could apply to a beach house or ski retreat elsewhere.
Simasko said a better option is for parents to create a revocable trust. This can include directing a sale, allowing a child to continue living in the home for a certain period of time, or āinstructing one child who loves the home or cottage so muchā to buy it from the trust. Trusts are typically easier to administer after parents pass away and can go a long way to keeping children from fighting, Simasko said.