Selling your parents’ home: the best way to do it
Boston Condos for Sale
Selling your parents’ home: the best way to do it
Are you preparing to sell a parent’s home?
How should one approach an elderly parent who is reluctant to sell their home? What are the common mistakes people make when trying to sell a parent’s home, and how can they avoid them? Here’s what experts and sellers recommended:
Clear out the junk — but keep emotional attachments in mind: Sellers said that clearing out a home that had been lived in for decades was a lengthy process that people should start sooner rather than later.
Two-thirds of Americans over the age of 55 who are selling their home said they are emotionally attached to it, according to Opendoor, a real-estate company. About 56% of sellers over 55 have lived in their homes for 15 years or more.
“For those selling their parent’s home, keep these emotions in mind,” Bryson Taggart, an expert on real-estate trends.
Be clear about what the parent wants: It’s important to have clarity on what the parent’s goals are and how to achieve them. “It needs to be an ongoing discussion. The earlier you can have it, the better,” Venegas said. “The last thing you want is a parent breaking a hip, or [needing] to go into assisted living, and then everything just becomes emotionally heightened because everything feels rushed.”
It’s also ideal if both parents and adult children are aligned on matters such as whether to sell and how much to sell the home for before starting the process. Jeanne Frederick, a Las Vegas–based global luxury property specialist at Coldwell Banker, told MarketWatch that agents worry about older people being manipulated. “We have to do a lot more listening and ask really good questions,” she said, because “the elderly can be taken advantage of so quickly.” Frederick is also trained as a “Seniors Real Estate Specialist,” a designation created by the NAR.
“Sometimes it’s their own family, [and] sometimes it’s friends — so it is important for me to be a layer of protection,” she added.
Fix any problems you’ve identified: Elderly parents may have neglected to fix a leaky roof or a faulty pipe, and those factors could severely impact the value of the home, so take care of such repairs before listing the house for sale, Venegas said.
Ryan Sparks is trying to sell his parents’ home in Jupiter, Fla. He said that, even though his dad had been a general contractor when he was alive, the house still needed little fixes before it was ready to hit the market — “things I didn’t even realize were potential issues” until seeing the inspection report, he said.
Change the air filters, make sure the lightbulbs are working, and ensure the property and landscaping are well-maintained. “It’s more about putting together a fresh, clean home,” Frederick said.
But also “avoid any major renovations, other than maybe a refresh of the paint,” Venegas added. “You can’t anticipate something a buyer is going to want. The most important thing is making the house [the] best as it can [be] in its current state.”
Have realistic expectations about the sale price: Pricing an aging parent’s home fairly is also very important, according to experts.
“The misconception that a lot of older clients have is that they’ll price high and leave room for negotiation,” Venegas said. But that actually works against clients, because buyers will think the seller is not realistic, so the house sits on the market for longer than intended, she said.
What’s more, Opendoor’s Taggart added, “if you don’t price a home correctly when it first lists, price cuts will often become steeper as the home remains on the market.”
Selling your parents’ home: the best way to do it
Will there be fewer sales in California due to kids moving into inherited homes? Or could there be more sales, due to the high home values and the difficulty of paying off the other siblings? Hat tip to the WSJ!
One of the first things people do when they inherit their parents’ home these days is put up a for-sale sign.
Deciding what to do with a family property is often both an emotional and financial decision, but the rising costs of renovations, property taxes and utilities are making it harder for adult children to hold on to the real estate, financial advisers say. Higher home prices and mortgage rates have often also made it impractical for heirs to buy out their siblings, said Dick Stoner, a Realtor in Rockville, Md.
The high home prices of the past few years have made the decision to sell even more attractive. If inheritors can unload a house in a hot location for a high price, the proceeds from the home’s sale can help secure their finances and fund goals such as retirement, advisers say.
“For inheritors, cash is king,” said Paige Wilbur, Wells Fargo’s head of estate services.
Leaving a home to children remains a common way to transfer wealth, according to financial advisers and estate planners. There is no recent data that tracks home inheritance nationally.
More than three-quarters of parents plan to leave a home to their children when they die, according to a 2023 Charles Schwab survey of more than 700 American investors between the ages of 27 and 95. Some children may be reluctant to sell for sentimental reasons, but finances and simplicity of unloading a property often win out. Nearly 70% of those who expect to inherit a home from their parents plan to sell it, the survey found.
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Selling your parents’ home: the best way to do it
If you wanted proof that the tight-inventory era will persist – and possibly get worse – over the next few years…..well, here you go. As prices have risen sharply, so has home equity – which means the long-time owners can be looking at a six-figure tax hit, even after the 2-out-of-5-year tax exemption.
While you can make the case that the capital-gains tax gets paid with the same-and-seemingly free money created by the recent home-price appreciation, Americans have a real aversion to paying taxes. Especially in six-figure amounts!
The long-timers who might consider selling their home are smart to calculate the potential capital-gains tax first. For most, it will probably be the last straw!
Boston Condos for Sale
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The worst time to discuss your parents’ financial planning is either after they become infirm, or during Thanksgiving dinner, as you may have just found out.
It’s an important issue, to be sure. No, not just because you want an inheritance (as your sisters suggested), but because you care about your parents and want to make sure they are taken care of.
How can your parents be assured of keeping their home, until they die? How can their heirs be assured of receiving the biggest inheritance they deserve, or put another way, how can their heirs be assured of paying as little inheritance tax as possible?
I suggest you and/or your parents talk with a tax adviser. Now, versus later.
Here’s one bit of information:
Question: What is the best way to hold title to my residence to avoid probate …? –Steve L.
Answer: . Usually, in a revocable living trust. While you are alive you can buy, sell, refinance, and manage your living-trust assets because you are the trustor, trustee, and beneficiary.
If you become incapacitated, your successor trustee takes over and manages your assets.
After you die, your living-trust assets are distributed without probate costs or delays, according to your living-trust instructions.
It can be financially disadvantageous to go on the property’s title, now, before your parent passes away. If you do, my understanding is that the value of the property is then “stepped-up”, meaning when you actually sell, only the difference between the stepped-up amount (your new cost basis) and the sale amount is yours, tax-free, instead of the whole amount.
See a tax adviser.
Complete story: Living trust streamlines real estate inheritance – By Robert J Bruss, Inman News, by way of The Boston Globe
