There is always some level of elation that comes with inheriting a property. It can also come with a lot of emotions: inherited houses or property can be very valuable to you and your family. At the same time, it also comes with the prospect of several daunting financial decisions. These decisions, in the wake of a loved ones’ passing can be equally challenging as they can be overwhelming. In the face of your uncertainties of what to do with an inherited property, there are logically three things to do: sell it, rent it out, or do a traditional move of moving into it. The simplest of the three options is to sell the house and share the proceeds with the other entitled heirs – in this case there are other entitled people. Hence, these are the things that you should take cognizance of, if you inherited a house in Eastern North Carolina.
ADMINISTRATIVE CHALLENGES OF INHERITING A HOUSE
Learning about inheriting a property can be a real challenge, there are several things you have to deal with that are not limited to the probate law (which in itself is an issue). Due to the several laws and administrative red tapes associated with an inherited property in probate, it can take several months before the title changes hands and becomes yours. When it finally does, you might be accosted with a property that is in need of quick amenities maintenance. There is also the question of estate tax that comes with inheriting a property. Luckily, the state of North Carolina does not collect an inheritance tax or estate tax, residents only have to take into account the federal estate tax laws, if they are inheriting an estate that is valued north of $11.8 million.
FIXING YOUR INHERITED HOUSE
The suddenness of inheriting a property, sometimes might meet you with uncertainty of what to do with it, due to the fact that you are unprepared for the financial implications of inherited property. A wealthy person might have the necessary capital to be able to fix up his/her inherited house; which may not be the case from most individuals. Your present financial situation might mean that money is tied up in some other properties, credit cards could be maxed out, or you simply don’t have the money to be able to fix up the repairs that the property may need. The implication of this, even in a booming Eastern North Carolina market is that, not being able to make the necessary improvement will limit your selling option. There is the fact that most buyers are wanting a turnkey property that won’t give them unnecessary hassle, unless they are getting a big discount of the property. You can try to increase your buyers’ pool by taking loans from lenders, credit cards or find a short term partnership to fix up the property. But each of these options have drawbacks that will diminish your ultimate goal of selling the property at no financial cost to you.
THE ISSUE OF AN EMPTY HOUSE
The problem with hanging on to an unintended property without taking the necessary steps is that even a “free” house can still be expensive. An empty house creates mountains of costs and continuous expenses. Every month that you owned the property, you are obligated to cover the property tax, homeowners insurance, general maintenance, and a host of other expenses that might have significant negative effect on your personal finances. Not to mention the deterioration of the property, and the subsequent drop in home value if the house is not being lived in. The best thing to do once the probate and red tape has been sorted through the court is to sell it immediately.
If you don’t have the necessary capital to improve the condition of your inherited property, you are automatically deferring that duty to the next owner of the house. This in itself can create some issues in itself. As it was explained above, an unimproved house decreases buyers’ traffic. This is because many of the potential buyers don’t have the urge to throw lots of money into a new home purchase; they are already dealing with the prospect of making a down payment for a property. This scenario leaves you with a pool of investors and buyers that are ultimately looking for discounted home investment. The bottom line of inheriting a house is that you may never know the expenses that you have to put out in advance in order to recoup any form of profit. If the inherited house lacks equity, your profit margin will not be large and you may even have to come out of pocket just to cover the closing costs.
LOCAL MARKET KNOWLEDGE
Sometimes an inherited property does not have to come from your immediate family. It also could be an instance where the property is in a completely different state than the one you currently live in. Regardless of what you are thinking of doing with the property, you will need to have a strategy you will need to implement once the ownership names has been changed by the court. If you start the process of property improvement, without local knowledge — because you have the capital to – you would probably be throwing away money. Doing online research can help you with local knowledge of the area. But nothing beats having boots on ground; it would be nice to reach out to maybe three Real estate agents in NC (before picking anyone of them) that can help you with the market experience and property value in the city. Another option could be to sell the home to a reputable investor that will give you a fair value for the property with no hassle to you. Whichever you choose, be sure to complete the proper research first.