Inheriting a house with siblings and how to sell it
Inheriting a house can be stressful, especially if you’re sharing it with siblings. This is because, in order to sell the property, all shareholders must give their consent. When people are in different financial situations, have different viewpoints or maybe don’t have a strong bond with their siblings, this may create tension.
The best-case scenario would be that all siblings agree to sell the property and they then split the money equally amongst themselves. Alternatively, if the property is in a good condition and can be rented out then all siblings can split the rental income.
Regardless of whether siblings are united or against each other when it comes to their views on the property, no one person can force the sale and an agreement must be reached.
It is possible for one person to sell their share of the property, either to another sibling or a third party, however, third parties are unlikely to want such a small proportion of a property, especially if it means sharing with warring family members.
In this blog post, we will be looking at what it means to inherit a property, the taxes you may have to pay, and how you can sell your inherited home.
What Happens When You Inherit A House?
In the tragic circumstances that you inherit the estate of either a dead family member or friend, it is your responsibility to work alongside the beneficiaries in order to come to a fair outcome, according to the will.
Typically, this will involve a designated executor of the will taking the process into their own hands. Handling inherited property is not always a walk in the park and deciding what should be done with it when you and your siblings have very different ideas can be a challenge.
Inheriting A Property (Joint Tenants VS Tenants In Common)
What's the difference between joint tenants and tenants in common?
Joint Tenants - All siblings have equal rights to the property as a whole. If any sibling dies, then their share automatically passes to the other siblings.
Tenants in Common - Each sibling owns a specific and defined proportion of the property.
As tenants in common, if all siblings agree that the house should be sold, then the income from selling the inherited property should be divided out between them according to what percentage they own.
What If Joint Tenants Disagree About Whether To Sell?
In the case that you and your siblings are joint tenants and are disagreeing about whether or not to sell, then the sibling who wishes to sell will need to apply to change the ownership of the property from joint tenants to tenants in common. This is what called “severance of tenancy”.
This change can be done with or without the owner’s agreement.
How to sell inherited property with siblings
When you inherit a house you a few different options of what you can do, and it generally depends on whether or not the siblings as a collective can agree on what action they want to take with the inherited property.
We've provided a few of the options you have available and some detail about each:
Selling The Property & Dividing The Cash
If you agree to sell the property with your sibling(s) then that really is the ideal and easiest to sell scenario.
You would sell this property much like selling your own property, you can choose between going to the open market through an estate agent, a property auction or using a sell house fast company such as ourselves.
The only sticking point that you often get around these traditional sales is that all the siblings need to agree on the sale price of the property - meaning you all need to accept the bid.
Buying Other Siblings Out Of The Property
Majority of the time each sibling will be given an equal share of the estate. One sibling may wish to purchase other siblings share of the property and this is a simple way to split the inheritance.
You do this by agreeing the value of the property and paying cash for the other shares, or you can even apply for a house repayments.
If you're unable to get a house repayments, you might even be able to arrange with your siblings for them to become lenders themselves, meaning you will pay a monthly fee until the share is paid off, but you should do all through legal routes to avoid any future issues.
Not All Siblings Sell Their Share
Sometimes siblings disagree, it happens, and not all the siblings might want to sell their share. If this is the case, you might have the option of selling your share to a third party but this can further complicate the situation for your siblings.
Alternative - Keep The Property As A Rental Investment
A further option, that you may want to consider before selling the home is renting it out. If you feel you and your siblings could be co-owners then it can be an excellent source of extra income whilst still keeping the house in the family.
This could provide time for one of the siblings to raise the funds to purchase the shares of the property off the other siblings.
Can Siblings Force The Sale Of An Inherited Property?
If you’re in favour of selling, but other siblings want to keep the property then you can apply to the court requesting an ‘Order to sell’.
To do this, you must write to each sibling that you share the property with, outlining exactly why you feel the house should be sold.
Your siblings can then discuss or dispute the sale. If you were the only one wanting to sell then your argument must be compelling in order to win.
Sometimes the best way to resolve this particular situation is to hold onto the property and own it together as either joint tenants or tenants in common.
Will You Have To Pay Any Taxes On Inherited Properties?
If you’re selling an inherited property then you may have to pay Capital Gains Tax, inheritance tax and income tax if it's applicable.
The main tax you will likely need to be concerned about is the Capital Gains Tax (CGT), and it's quite a comprehensive subject which we've covered in another post about how much Capital Gains Tax, you need to pay.
How We Can Help
If you have an inherited house that you own with siblings but are unsure of what to do with it, then you have a couple of options.
You can sell the property on the open market through an estate agent or auction, or you could sell to a cash buying company. All of these options have their own pros and cons which we will discuss down below.
The most common way of selling an inherited property is through an estate agent. An estate agent will undertake all of the work involved in a property sale in return for a cut of the final profit, known as a ‘commission’.
One of the biggest advantages to selling through an estate agent is that they will do all the hard work for you, such as creating a listing for your property and advertising it for you.
However, the downside to selling through an estate agent is that it is time consuming. If you are selling an inherited property, then chances are you want it out of your hair as soon as possible, and on the open market, time is not on your side.
You will need to book viewings at the property for potential buyers, decide who will book time off for viewings as well as making sure that any issues with the property are fixed and at the end of the viewing you may still not have a buyer and you will have to start the process again.
Selling through an estate agent also means that after you have dealt with the estate agency fees and taken time off work for viewings, you will still have other fees to pay such as legal fees and removal costs. These extra costs can add up and eat away at the final profit of our house.
Another route you can go down when trying to sell an inherited property that you share with your siblings is to sell through a property auction.
The auction house route is a less explored option although in recent months it has seen a surge in popularity.
The way a property auction works is that you agree on a minimum reserve price for your home. Multiple bidders will bid on it and once they meet the reserve price, the property will sell to the highest bidder.
The best-case scenario for an auction is that multiple buyers will be interested in the property and will be outbidding each other, raising your total profit.
A positive to selling through a property auction is that unlike the open market, a sale is much less likely to fall through.
If a buyer pulls out of a sale at a property auction, they will not only lose their deposit, but they will also incur fees.
However, much like selling through an estate agent, the biggest downside to selling through a property auction is time.
Once you have listed your property for sale, you will need to wait for the next auction which could be weeks or even months away.
Even after the auction is finished, you will still need to wait for the paperwork to go through which can end up adding an additional month or more to the whole process.
Another downside to selling through a property auction is that it is not done without cost. Auctioneers, much like estate agents, charge a commission in order to cover costs of marketing and selling your home.
Cash Buying Company
The best option for selling an inherited property is to sell it through a genuine cash buying company as they are able to ensure a quick sale.
Another positive to selling through a genuine cash buyer is that they will complete the sale in a time scale that suits you.
If this sounds like something you might be interested in, then look no further! At The Property Buying Company we are here to take the stress out of selling an inherited house that you own with siblings.
We are a cash buyer of houses who buy any house, in any location in a time scale that suits you! Plus, we cover all fees for you – even the legal ones!
We only require one quick viewing in order to make sure that our valuation is correct and as we are a genuine cash buyer, once you have accepted our offer, that is the amount you will get in FULL in your bank.
Additionally, our fantastic customer service team are experts at handling the tricky world of inheritance and probate, we can act as a go between for all siblings & hold your hand through the whole sale process.
We are also a member of the National Association of Property Buyers and The Property Ombudsman, as well as being rated as excellent on TrustPilot.
So, if you are ready to leave the stress of selling an inherited property behind you, give us a call or fill in one of our online forms for a free, no-obligation CASH offer which we could have in your bank as soon as you choose…