When a parent, unfortunately, passes away, many will often leave their home and property to their children. If they have more than one child, each child will be given a percentage of the estate and property.
But how can one property or home be split up amongst multiple people? Ultimately, the choice that many siblings take is to put up the inherited property for sale. However, before you go ahead and do this, it’s a good idea to make a couple of important considerations. These can help ensure the entire process goes smoothly, and help you see if it is even the right choice for you.
Keep reading to learn about some important considerations to make before selling an inherited property with your siblings.
STRUCTURING A BUYOUT
One common option siblings will take is that one person will take possession of the home, and buy the others out. Three or four adults, who may have families of their own, all can’t live under the same roof.
This idea will allow one person to own the house solely and do what they want with it, while the other siblings are simply paid out in cash. If they don’t have enough cash or liquid assets, a home equity loan or some other type of financing could be taken out.
Of course, be sure the amount is fair, and no one is being taken advantage of here. It is a good idea to get multiple valuations done on the home, to keep everyone happy and make sure the arrangement is fair for everyone.
SELLING TOGETHER AND SPLITTING PROFITS
Another common choice is to simply sell the home on the open market, and split the amount it sells for. This gives everyone fair value, and no one has to worry about upkeep or moving into a new home if they don’t want to.
Take time to find a way around disagreements, as they can often ruin a deal and hold back any significant progress being made. Ensure you can all agree on how much you want to get for it, and how much everyone is comfortable moving off of that number. If you don’t do this, disagreements and miscommunications will surely arise, and these have the potential to ruin a relationship.
While selling the property is an option, you also need to entertain the idea of keeping it. You could treat it as a vacation home for all of you to split, or can allow other family members to live or spend time there.
But in addition to living in it, you could also make some updates and rent it out to the public. Depending on where it is and its condition, it could fetch thousands of dollars every year, which you and your siblings could split. Of course, be sure to designate one of you to be the landlord or manager, so hire someone to do the job.
The space could even be rented out as a vacation rental if it is located in a place where people frequently travel to. Of course, if you are going to set it up as a vacation rental, there are some expert tips to check out to give yourself the best chance of success.
CREATING A FORMAL AGREEMENT
Before you do anything official, it is a good idea to craft a formal agreement. This will establish the plan you are going to take, and all the rules that need to be abided by. Whether you keep it, sell it or perform a buyout, a formal agreement is always a good idea.
This will prevent anyone from changing their mind, lying about things, or incorrectly remembering the terms of the agreement. Decide who is responsible for what costs, and the various other terms. Creating this can take some time, and you may want an expert or lawyer to assist, but it is very important to ensure no arguments take place and everyone is content with the outcome.
In conclusion, be sure to consider these four things before selling an inherited property with your siblings.
Guest Contributor: Ashley Lipman