If your parents are downsizing to a smaller home, moving in with you, or they’ve (unfortunately) passed, you may be tasked with selling their home. And while you may be familiar with buying or selling your own home, it could be quite a different scenario when selling your parents’ home.
“Selling your parents’ home, especially if it holds significant family history, can be an emotionally challenging experience,” according to Brett Ringelheim, licensed real estate salesperson at Compass in New York. However, with careful planning and the guidance of an experienced real estate agent and attorney, he says you can navigate this process smoothly.
These are some important factors to keep in mind as you sell your parents’ house:
Determine Status/Ownership
There’s a big difference if your parents are alive or dead during the transaction. “If your parents are alive, but you are handling the transaction for them, you should always speak to your family and a real estate attorney to set up a limited Power of Attorney,” advises Hugh Hobbs from The Jessica Peters Team at Douglas Elliman in New York City.
If your parents are deceased, you need to know if they had a will or trust in place. “This will determine who has the authority to sell and how the proceeds will be distributed,” Ringelheim says. “If no will or trust exists, the estate will likely go through probate, which can be a complex and time-consuming process,” he warns.
Yet another consideration: Ringelheim says you need to clarify the type of property ownership (joint tenancy, tenancy in common, etc.).
Identify Debts And Understand Tax Implications
Lisa Wilthew is a realtor-associate with Brown Harris Stevens in Miami, and is currently listing the home of her own parents. Based on her combination of personal and professional experience, I thought she would be an excellent source for this topic. Depending on your parents’ ages and the number of years they’ve lived in the home, Wilthew says there may be important financial and tax benefits to consider. “For example, if your parents lived in the home for more than two years, they could be eligible to deduct discount points from their mortgage,” she explains.
Wilthew notes that any updates made to the home in the 90 days prior to listing may also be eligible for tax deductions. “Your cost basis, including any improvements, may reduce capital gains taxes, and there could be exemptions tied to a trust or will.”
Also, you want to avoid any nasty surprises. “Before listing, conduct a thorough title search to identify any outstanding debts against the property, such as liens or unpaid taxes,” Ringelheim advises. He recommends consulting with a tax professional to understand the potential tax implications of the sale.
Kathy Kwak, COO of Proper Title, recommends retaining a real estate attorney, not only to handle the transaction, but also to clear up any issues that would hold up a potential sale. “These include liens, judgments, or unpaid taxes, and a title search will reveal any of these hindrances ,as well as any outstanding loans such as a second mortgage or a reverse mortgage.” She also notes that mortgage balances will be paid from the proceeds of the sale of the property. “Elderly residents may have also forgotten to pay their property taxes, so the executor would need to pay any delinquent property taxes so the sale can proceed,” Kwak says.
Navigate Family Dynamics (Siblings)
One major difference between selling your own home (which may include a spouse) and selling your parents’ home is that the latter may include siblings. “Selling with siblings can sometimes lead to disagreements, so involve your real estate agent and attorney to help facilitate discussions, provide objective guidance, and ensure a smooth decision-making process,” advises Ringelheim. He says their experience in handling similar family situations can be invaluable.
As an example of how smoothly the process can work when everyone is on the same page, Hugh Hobbs from The Jessica Peters Team at Douglas Elliman in New York City, shares a recent experience with a townhouse sale in which several siblings with an interest In the house needed to decide how they wanted to handle the sale.
“In that case, the family wanted to move quickly and discreetly without public exposure to the market, and we were able to bring them an amazing deal directly from a buyer we were already working with,” Hobbs says. “If there are multiple interests in the transaction, he says it’s important to be on the same page about pricing and timeline expectations. “And choose from among the interests who will handle the communication with your sales agent,” Hobbs adds.
Kim DiPadova, a broker with Baird & Warner, recently sold her mom’s house and also served as the realtor – and she admits that it was hard at times. “Even though we’re a close family, every child had a preconceived notion of how the process should go – as siblings typically do – and it was something I had to manage as both the real estate agent and a family member.”
She’s also worked with potential buyers for a property after the owner passed, and the kids weren’t in agreement on things like pricing, the timing of the sale, or making updates. “I’ve had buyers walk away from deals because the family couldn’t get on the same page,” DiPadova says.
When she works with sellers of a parent’s home, DiPadova explains that she wants to meet in person at the property and requests all decision makers be present. “It reveals a lot about the family dynamic and potential obstacles – and I will ask questions like how much they think the home is worth to see where everyone’s heads are before digging into comparable listings, preparing a report presenting where I think the home should be priced, and reviewing necessary or desirable updates and repairs.”
Respect The Parental View
If your fortunate enough to be selling your parents’ home while they’re still alive – and have all of their faculties – you may face another set of challenges. “Keep in mind that your parents may not have bought or sold a home in a long time, and therefore, might not be aware of the process and complexities involved with selling,” Wilthew says. So, it’s your job to help them understand what to expect.
However, it’s important to be respectful during this process. “Often the home of an elderly person will not be updated or maintained to the same level buyers seek, and you’ll need to make changes to get top dollar or price accordingly to avoid sitting on the market for a long time,” DiPadova says. This was the case when she sold her mom’s home – which was beautiful, but needed renovations.
“When these types of conversations arise, it’s important to keep in mind you’re talking about someone’s home, so you want to be considerate,” she explains. If the parent still resides in the home, you’ll also want to be mindful when scheduling things like showings or inspections to minimize disruptions to established routines,” DiPadova says.
Wilthew agrees that figuring out how to delicately be honest may be the hardest part of the process. “Telling your mother that a painting, chair, or couch needs to be removed because it makes the home feel outdated, or is not neutral enough for prospective buyers can be difficult.” Also, they may not want to incorporate the latest bathroom trends or the most popular interior design trends. However, she says it’s important to remember that you’re there to help sell your parents’ home and benefit from their investment in it. “Be honest and keep the focus on your shared goal – making the home appealing to as many buyers as possible for a successful sale of the home.”
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