How to Sell an Inherited House in Florida: A Complete Guide

Inheriting a home in Florida can be both a gift and a challenge. The question of how to sell an inherited property in Florida often arises, mired in many legal, financial, and emotional considerations. 

This comprehensive guide aims to simplify the process, provide insights, and illuminate possible pitfalls that could be faced when selling an inherited house in Florida. 

We will cover all the steps to consider in this process, from engaging a real estate agent to finalizing the transaction.

Why Sell An Inherited House?

Inheriting a house can be a mixed blessing. While it might represent a windfall of potential equity, it may also bring a series of complications. For some, the inherited property might be a reminder of a lost loved one, making the selling process an emotional ordeal. 

The financial burden of maintaining the property, including taxes, insurance, and upkeep costs, can be overwhelming for others.

Moreover, an inherited house might not be in a desirable location, adding to the difficulty of maintaining or renting it out. It could be far from your residence, making overseeing any required repairs or upkeep difficult. Or, it might be in an area with a weak real estate market, making it hard to sell for a reasonable price.

Selling allows you to convert the property into liquid assets you can use as you see fit, whether reinvesting, paying off your mortgage, or putting it toward retirement savings. Selling the property allows homeowners to unlock the home’s value, turning it into cash that can be used to settle any remaining debts, invest, or simply enjoy.

Hiring an experienced realtor to navigate the selling process can be beneficial in securing the best sale price, allowing homeowners to reap the benefits of the inherited property fully. However, at times, hiring a realtor may not be in your best interest. If the inherited home needs repairs, you may want to consider reaching out to a real estate investment company directly, so you can at least save on commissions and fees. Feel free to reach out to us to get a free offer for your inherited home!

Evaluating the Potential Market Value

Estimating a potential market value is crucial before selling an inherited property. This step allows you to understand the financial implications and set realistic expectations. You can do this by hiring a professional appraiser, checking the property’s assessed value for tax purposes, or asking a real estate agent to provide a comparative market analysis.

It’s also worth considering the condition and age of the home. Older homes may require significant repairs or updates to fetch a reasonable price in the current market, and the cost of these improvements should be factored into your calculations. 

You can enlist the help of a home inspector to identify any potential issues, from structural problems to outdated electrical systems, that might affect the property’s market value.

Considering Mortgage and Debts

You must contact the lender if the inherited property has a mortgage. In many cases, the lender may require the mortgage to be paid off upon the borrower’s death. This situation can complicate the selling process if the mortgage is more than the house is worth. 

Additionally, if the deceased has left behind any debts, the proceeds from the house sale may need to be used to settle these debts.

Remember that other forms of debt may also be tied to the property, such as a home equity line of credit or reverse mortgage. Furthermore, the deceased might have had unpaid medical bills or credit card debt, which creditors may attempt to claim from the estate. You should consult an estate or probate attorney to navigate these complex scenarios.

Dealing with Multiple Inheritors

You must make decisions together if multiple parties have inherited the property. Everyone must agree on selling the property, setting a price, and accepting an offer. Miscommunication or disagreements can prolong the selling process and create conflict. It’s advisable to have clear, open, and respectful communication with all parties involved.

Consider seeking the help of a mediator if disagreements arise that you cannot resolve among yourselves. A professional mediator can facilitate constructive dialogue and help all parties reach a mutually satisfactory agreement. This can be especially useful if the inheritors are geographically scattered or if the relationship among them is strained.

Do I Pay Taxes When I Sell an Inherited House in Florida?

When selling an inherited property, you may wonder what taxes apply and how they might impact your proceeds. While Florida does not have a state inheritance tax, there may be other federal taxes you must be aware of when selling the property.

Capital Gains and Other Taxes

Capital gains refer to the profit made from selling a property or investment. When selling an inherited house in Florida, you must know about potential capital gains taxes. This tax is calculated on the difference between the home’s value at the time of inheritance (known as the “stepped-up” basis) and the selling price.

Note that you can deduct any expenses associated with selling the house, such as agent commissions, closing costs, and any improvements made to prepare the house for sale. These deductions can lower the amount of your capital gains and potentially reduce your tax liability.

Estate Tax Implications

Although Florida does not impose an estate tax, the federal government does levy an estate tax if the total value of the deceased’s estate surpasses a certain threshold. The estate tax doesn’t directly affect the heir selling the house but can impact the overall inheritance if the estate is large enough to be subject to this tax.

The estate executor is responsible for filing an estate tax return, if necessary, that is due within nine months after the decedent’s death. However, an extension may be requested. It’s essential to communicate with the executor to understand any potential estate tax liability and how it might impact the timing of the property sale.

Recapture Taxes

If the inherited property was the deceased’s primary residence, and they claimed the Homestead Exemption on their property taxes, the property’s assessed value would have been limited by the Save Our Homes cap during their ownership.

Upon their death, the property’s assessed value will reset to the current market value, potentially leading to significantly higher property taxes for the inheritor. Understanding this potential liability is crucial when considering selling an inherited property.

The “portability” provision can be useful for surviving spouses in Florida. This provision allows the surviving spouse to carry over any unused portion of the deceased’s Homestead Exemption, potentially reducing the property taxes on their home.

However, in most cases, homeowners selling an inherited house may not have to pay capital gains tax. If the house’s value has not significantly appreciated since you inherited it, or if you’ve used the property as your primary residence for at least two of the last five years, you may qualify for exclusions.

Understanding potential tax implications is essential for informed decision-making. To navigate the complex landscape of taxes and the home selling process, you may want to seek advice from professionals such as a real estate attorney or CPA.

Issues to Consider Before Selling an Inherited House in Florida

Before selling an inherited property in Florida, there are several important steps you should consider taking. Here are some key factors to take into consideration:

Understand the Probate Process

If the property is still going through the probate process, familiarize yourself with the requirements and timeline involved. Consult with an attorney specializing in probate to ensure compliance with Florida laws.

Determine Ownership and Title

Verify your ownership rights and ensure the property’s title is clear. This may involve locating the original will (if there is one), obtaining a certified copy, and working with a probate attorney to transfer the title properly.

Appraisal and Evaluation

Get an appraisal or a professional evaluation of the property’s market value. This will help you set a realistic selling price and negotiate with potential buyers.

Gather Important Documents 

Collect all relevant documents related to the property, including the title, property deeds, survey reports, tax information, and any existing warranties or insurance policies.

Assess the Property’s Condition

Evaluate the property’s condition and identify any necessary repairs or renovations. Consider hiring a home inspector to comprehensively report and document the property’s condition.

Ways to Sell Your Inherited House in Florida

When selling your inherited house in Florida, several avenues are available to homeowners. Each method has its own pros and cons; the best choice depends on your circumstances and preferences. Here’s a short video with some tips and creative ways to sell any home, whether you inherited it or not:

And here are some of the most common ways we see folks selling their inherited property:

1. Real Estate Agent

Selling through a real estate agent is one of the most traditional methods. Agents have extensive knowledge about the real estate market and the selling process, and they can provide invaluable advice when setting the sale price and negotiating with potential buyers.

Choosing a local agent can be particularly advantageous. Local agents have intimate knowledge of the neighbourhood, current market trends, and potential buyers’ preferences. They may also have a network of local professionals, like photographers and home stagers, who can help present your property in the best possible light to attract buyers.

The advantages of this method include having a professional handle the complexities of the sale, helping with paperwork, and using their network and resources to market the property effectively. However, selling through an agent also means paying agent commission fees, typically around 5-6% of the sale price.

2. Real Estate Investor

If you’re looking for a quick sale and are okay selling below market value, then selling to a real estate investor could be a viable option. These buyers, often called cash buyers, can close deals fast, usually within a few weeks. They typically buy the property as-is, meaning you won’t have to worry about making any repairs or updates.

While this can ease the burden and speed up the selling process, doing your due diligence is essential. Research potential investors thoroughly, request proof of funds to ensure they can complete the purchase, and consult a real estate attorney to protect your interests.

The main advantage of this method is the speed of sale, which can be particularly helpful if you’re dealing with a difficult financial situation or want to distribute the estate’s assets quickly. However, the trade-off is that you may get a lower value for your home, as investors need to buy at a price that leaves room for them to make a profit.

3. For Sale by Owner (FSBO)

In a For Sale By Owner (FSBO) scenario, you take on the role of the real estate agent. This means you’ll handle everything: marketing the property, hosting open houses, negotiating with buyers, and handling the paperwork.

The primary benefit of selling the house yourself is saving on agent commissions, potentially adding to your bottom line. However, selling a house is a complex and time-consuming process. 

It requires a deep understanding of real estate transactions and legalities, a strong negotiation skill set, and a significant time commitment. With the necessary expertise, FSBO sellers can sell the property and get the best possible price.

Despite the potential savings on agent commissions, FSBO can be challenging if you deal with multiple inheritors. In such situations, coordinating efforts, making decisions, and managing the process falls entirely on the inheritors, which can strain relationships and lead to disputes. Consider this option carefully if there’s potential for conflict among the inheritors.

4. Online Real Estate Marketplace

The real estate industry has evolved significantly with the advent of technology. Now, homeowners can list their properties on online real estate marketplaces, reaching a broad audience of potential buyers. 

These platforms can provide exposure, analytical tools, and support to help you price and market your property. However, while this method may offer more control and potentially lower fees, managing the process still requires time and effort.

Listing on these platforms can require meticulous staging, high-quality photos, and a compelling property description to make your listing stand out from thousands of others. You’ll also need to promptly respond to inquiries, schedule and host showings, and handle negotiations and paperwork. If you’re uncomfortable with these tasks or dealing with a complex estate situation, there might be better methods than this one, like an auction.

5. Auction

Selling an inherited house at an auction can be an effective way to sell the property quickly. In an auction, the highest bidder wins, potentially resulting in a higher selling price, especially if the property is in high demand or has unique features. But there’s a risk that the property could sell for less than its market value if the auction fails to attract high bids.

An auction might also not be the best choice if the house is in a less desirable location or requires major repairs. Potential buyers at auctions are typically looking for deals, and they might be deterred by a property requiring additional investment after the purchase. 

On the other hand, if the property is unique or has highly desirable features, an auction could drive up the price due to competitive bidding.

If you are thinking of selling your inherited home, give us a call or fill out the form below. We’ll be happy to guide you through the process and you can get an idea if selling to us might be a good option for you or not.

What Should I Expect During the Sale?

Selling an inherited property in Florida involves several steps, from initial preparation to finalizing the sale. Below, we outline what to expect at each stage, so you can confidently navigate the process.

Initial Preparation

After you make up your decision to sell the property, your first step should involve preparing the house for sale. This may include:

• Evaluating the House’s Condition: You’ll need to assess what repairs or updates are necessary to make the property more appealing to potential buyers.
• Identifying Required Disclosures: Florida law requires sellers to disclose any known defects that could materially affect the property’s value. Consult with a real estate attorney or knowledgeable agent to ensure you know what needs to be disclosed to potential buyers.
• Hiring a Professional Stager: A stager can help you arrange the home to highlight its best features and maximize its appeal.
• Getting a Home Inspection: Although not required, a pre-sale home inspection can help you anticipate issues that might arise during the buyer’s inspection.

Pricing the House

Next, you’ll need to determine a competitive listing price for your home. This will usually involve:

• Completing a Comparative Market Analysis (CMA): This analysis, typically performed by a real estate agent or broker, compares your home to similar properties in the recently sold area.
• Understanding the Local Market: Beyond the CMA, consider the state of the local market, including the demand for homes like yours, the time of year, and the general economic climate. These factors can impact the price you can realistically set.
• Considering an Appraisal: Hiring a professional appraiser can be beneficial if you want a more precise valuation.

Marketing the Property

You must list and market the property once the home is ready and the price is set. This could involve:

• Creating an MLS Listing: Most buyers and realtors use the Multiple Listing Service (MLS) to find properties. Ensure your home is listed here to maximize exposure.
• Leveraging Social Media: Remember to underestimate the power of social media to reach a wider audience. Posting your listing on platforms like Facebook or Instagram can attract potential buyers, especially if the property has unique or attractive features.
• Using Online Platforms: Websites like Zillow and Trulia can help you reach a wider audience of potential buyers.
• Hosting Open Houses: Open houses allow interested buyers to view the property in person. Ensure the house is clean, decluttered, and well-presented for these events.

Negotiating and Closing the Sale

Finally, you must negotiate and close the sale once you’ve attracted potential buyers. This stage includes:

• Reviewing Offers: You may receive several offers, especially in a hot market. Review each offer carefully and negotiate terms as needed.
• Understanding Contract Contingencies: Offers can come with contingencies, such as a satisfactory home inspection, mortgage approval, or selling the buyer’s current home. Be aware of these contingencies and how they could impact the sale process.
• Dealing with Remaining Personal Property: If personal items are left in the house after the sale, you must arrange for their removal. Consider donating them to a local charity or arranging a pick-up service to dispose of them responsibly.
• Accepting an Offer: Once you’ve settled on an offer, you’ll need to formally accept it and move into the closing process.
• Closing the Sale: During closing, you’ll finalize all paperwork, typically with the help of a title company or real estate attorney. The house will then officially transfer to the new owner.

Post-sale Responsibilities

After the sale has been completed, there are still a few responsibilities. If the deceased’s will is being probated, the executor or administrator of the estate will need to report the sale to the probate court.

Moreover, it’s also necessary to report the sale to the IRS, especially if there are capital gains. In addition, you may need to finalize utilities and address changes.

Investment Opportunities

Once you have sold your inherited property, you’ll have a significant amount of capital. The proceeds from the sale could also influence your estate plan. Consider speaking with a financial advisor to explore investment opportunities. We as an real estate investors are always looking for partners on our deals, so feel free to reach out to us and see if there’s potential for us to work together!

Consider consulting with an estate planning attorney to understand the potential impact and make any necessary adjustments to your plan. This can help grow the wealth you’ve acquired from the sale, ensuring you continue to benefit from your inheritance.

Remember, every sale is different, and your experience may vary depending on the specifics of your situation. But understanding these steps can help you better navigate selling an inherited house in Florida.

Challenges to Selling an Inherited Property in Florida

Selling an inherited property is often complex, presenting unique challenges you might not encounter in a traditional home sale. Below, we outline some issues you may face when selling an inherited house in Florida.

Navigating the Probate Process

In Florida, most inherited properties must go through probate to legally transfer the property from the deceased to the heir(s). This can be time-consuming and costly. 

If the deceased was not a Florida resident but owned real estate, the property might have to undergo an ancillary probate process. This can be even more complex and time-consuming than the regular probate process.

Hiring an experienced probate attorney can ease this process, but it’s crucial to factor in the time and expense involved in probate when planning your sale.

Dealing with Multiple Inheritors

Coordinating the sale can become complicated if the property has been left to multiple heirs. All parties must agree on major decisions, including whether to sell, the listing price, and which offer to accept. This could lead to disputes and, thus, delay the selling process. If not all heirs are in agreement to sell, it is not the end of the world! You can legally force the other heirs to sell by going through a partition lawsuit. Investors like us can also buy a partial interest in the property and handle the rest of the legal process.

Clearing Out Personal Belongings

Inherited homes often come filled with the previous owner’s personal belongings. Deciding what to do with these items can be emotionally and physically draining. 

Some items may hold sentimental value for the family. It can be helpful to involve all inheritors in the decision-making process and consider ways to distribute such items fairly. Consider hiring professional estate sales companies to manage this process.

Handling Outstanding Debts or Liens

If the deceased homeowner had outstanding debts or liens on the property, these typically need to be settled before the sale can proceed. You must identify any such issues early to prevent unexpected delays or expenses.

Some liens might take time to be apparent. You should conduct a title search early to identify hidden liens, such as those for unpaid taxes or homeowners’ association fees.

Updating or Repairing the Property

Inherited properties are often older and may require updates or repairs to appeal to modern buyers. Determining which updates are worth the investment can be challenging, and carrying out the work can add to the time it takes to prepare the house for sale.

Attention to potential structural issues, such as the roof, foundation, and electrical and plumbing systems. These significant repairs can significantly impact the property’s value and attractiveness to buyers.

Emotional Difficulties

Finally, selling a loved one’s home can be emotionally challenging. It’s important to give yourself time to process these emotions and to seek support as needed.

Don’t hesitate to seek support from mental health professionals if the process becomes overwhelming. Counsellors or therapists familiar with grief and loss can provide valuable strategies for coping with the emotional challenges of selling an inherited house.

Each of these challenges can add complexity to the selling process. However, with careful planning and the right help, you can navigate these issues and successfully sell your inherited house in Florida.

Lack of Real Estate Knowledge

Selling a house can be a complex process that involves several steps, including setting a competitive price, marketing the property, negotiating with buyers, and closing the sale. These steps may be challenging if you lack experience in real estate transactions. Engaging real estate agents and attorneys can help navigate the process more smoothly.

Professionals in the real estate industry often have extensive networks that can be useful in the selling process. For example, they may know potential buyers or investors interested in properties like yours, which could expedite the sale.

Market Conditions

Market conditions can significantly affect your property’s selling process and price. In a seller’s market, where demand exceeds supply, you can sell the house quickly and for a higher price. 

However, in a buyer’s market, where supply exceeds demand, selling may take longer, and you may need to lower your asking price to attract buyers. Keeping an eye on market trends can help you make informed decisions when selling your inherited property.

Beyond real estate market trends, broader economic indicators can also impact selling. Factors such as changes in interest rates, the local job market, and economic growth projections can influence buyers’ behavior and property values.

Final Words About Selling Your Inherited Property in Florida

Navigating how to sell an inherited house in Florida can be overwhelming due to its unique complexities. Whether dealing with capital gains taxes, sorting through personal belongings, managing the probate process, or coordinating with multiple inheritors, each step presents its own challenges.

Remember, each inherited property scenario has unique hurdles, like arranging open houses, addressing financial issues, or scheduling home inspections. But knowing what to expect can equip you to handle these situations effectively.

We hope this comprehensive guide helps you navigate this process smoothly and eventually leads you to a successful real estate transaction. Feel free to reach out to us if you have any questions about selling your inherited home in Florida. We’ll be happy to advise you and assist in any way we can!