If your parents are reaching old age and need to sell their home, you a number of options to help them through this process.
Most older adults reach the stage where they can no longer live independently, so they move into a skilled nursing facility or into their child’s home. This leaves the adult child to make important decisions regarding selling their house.
Selling your parents’ house if they are medically or cognitively impaired can involve several legal steps. If you’re in this situation, you should know what your legal options are and what you should expect as you put their home on the market.
Determining Home Ownership
Only the owner of the home can sell it. No matter what, children can not sell their parent’s home unless they have obtained the legal right.
If your parents are cognitively healthy and feel ready to sell their home, you can simply help them prepare and list it for sale. However, if they don’t feel like they can take care of the legal proceedings independently, your best option is to get power of attorney. This will allow you to make decisions about their property and finances.
Getting power of attorney is fairly easy if your parents can make legal decisions. If you expect medical problems or cognitive decline in the future, it’s best to get a power of attorney sooner rather than later when issues may arise.
Power of attorney isn’t always foolproof, though. Title companies don’t always accept power of attorney when the adult child of a homeowner tries to sell the house. They might question whether or not your parent was competent enough to sign the power of attorney agreement, and they may ask to meet with your parent to confirm the agreement.
Be prepared for this situation by keeping a careful record of all your legal documents.
If your parents are unable to make an informed legal decision, getting power of attorney may not be possible. Another option is applying and be approved for guardianship.
To get guardianship over your parents, you’ll first need to file a petition with the court that states that your parent isn’t able to make decisions regarding their finances. Consult with an attorney as you create this petition. Guardianship laws vary from state to state, and the documentation can be complicated.
Preparing for Listing
Once you have the legal right to sell your parents’ home through power of attorney or guardianship, it’s time to prepare the home for the market. Hire a real estate agent at the very beginning of this process for assistance.
Your real estate agent will evaluate the condition of the home and compare it with others in the neighborhood to help you decide on a price.
Then, order the title report for the home. This will tell you if the mortgage is paid in full or if there’s a second mortgage on the house. You don’t want any surprises before or after selling the home, so the title report will give you valuable information.
This is especially important if your parents are currently unable to tell you accurate information about the state of the mortgage.
Your parents may have accumulated a wide range of items over the years, including furniture, clothing, and sentimental keepsakes. They will probably only take a fraction of these items when they move out, so you and your family will need to decide how to handle your parents’ possessions.
This can be a stressful experience for families, so be prepared for some tension as you and your relatives get to work.
This can be especially difficult if your parents have not previously expressed their wishes for their belongings. If you’re trying to sell the home quickly, consider renting a storage unit as a short-term solution.
As with any type of home sale, it’s up to you to decide whether or not to make repairs before listing. You could get more from the sale by fixing up the home, or you could save time by selling it as-is. In many cases, people list their parents’ home as-is because making the needed repairs is a great deal of work.
However, if the other homes in the neighborhood are modern and updated, you may have a hard time selling your parents’ house without any upgrades.
Tax Considerations
Paying taxes after selling your parents’ home can be complicated. You should consult with an accountant or lawyer before the sale to confirm the amount of taxes you’ll owe.
Property sales are exempt from capital gains taxes on the first $250,000 if the homeowner is single and on the first $500,000 for married couples. The homeowner also has to have lived in the home for two years and used it as their primary residence in order to avoid capital gains.
If you’re inheriting the money from the sale, your parents can gift you $15,000 per year tax-free. If you’re married, they can gift you and your spouse a total of $30,000 per year with no taxes. This plan is only possible if your parents are mentally capable of making the agreement, though.
Selling your parents’ home when they’re incapacitated can be a complex legal process, so you shouldn’t attempt it alone. With the help of a real estate agent, tax expert, and attorney, you can be sure that everything you’re doing is acceptable in the eyes of the law.
Enlisting the help of others also frees up more time for you to spend with your aging parents, which can be incredibly valuable during such a big life transition.
I am an advocate for sellers getting a pre-inspection before they sell.
I’ve been practicing real estate for well over 20 years, I list many homes each year, and I am a strong proponent for sellers getting an inspection before they list their house for sale. It allows sellers to choose which repairs they want to make, and decide which ones are minor enough to disregard. In North Carolina, the Offer to Purchase contract is very easy for buyers to terminate, so the more issues you can take off the table, the better. You don’t want buyers to even consider terminating.
One thing buyers get very uneasy about is significant repairs that need to be mended. It’s all about disclosure; buyers will feel more at ease knowing the home is in good condition. It’s best when we can do the buyer’s due diligence for them. If you get a pre-inspection and it comes out well, buyers may not even get one done themselves. They might just have their inspector check the repairs to ensure they were done properly. If you have a pre-sale inspection, you have more control.
“The more issues you can take off the table, the better.”
As an example, I just had buyers that put a house under contract that did not have a pre-sale inspection. Our inspector came out of the crawl space and said that it was basically a disaster. So my buyers are, understandably, terminating. The seller could have headed that off at the pass; if he knew there were problems in the crawl space, he could have fixed all or most of them, and the buyers would have felt much better about the property.
If we can be of any help to you at all, whether you have questions or need advice, please don’t hesitate to reach out to us via phone or email. We’re always glad to help. I hope you found this information helpful; I’m going to keep these videos coming.
Planning what to do with your assets is a critical part of moving into an assisted living facility. This will involve deciding whether to sell your primary residence. There are several good reasons to keep your house, so it’s important to consider the pros and cons carefully. Fortunately, selling isn’t your only option. Here are a few different things you can do with your home when it’s time to move out.
Rent It Out
Renting out your home after moving into an assisted living community is a great way to make some extra money. You get to keep the home in the family while receiving monthly income to fund your care.
Renting to tenants on a one-year lease isn’t the only way to do this. According to Mashvisor, there are four other ways to rent out a property—as corporate housing, senior co-housing, low-income housing, or a vacation home. These options allow you to generate higher income from your property or guarantee a steady cash flow.
Whichever way you decide to rent your home, consider hiring a property manager. Renting out a property requires a lot of hands-on work, from finding tenants to coordinating maintenance. A good property management company will keep you and your loved ones in the loop about your property and offer 24/7 support for both you and your renters/guests. Some management companies even offer online booking and take care of hiring housekeeping services. That way, you can enjoy the extra cash from renting out your home without being too involved.
Unfortunately, there are some disadvantages to renting out your home. First of all, you may not be able to charge high enough rent to offset the cost of your assisted living care. It’s also possible that you may end up with bad tenants who cause damage to your property or do not pay rent on time, leaving you scrambling for the funds to cover your expenses. It’s important to consider these risks before deciding to rent out your home. If you decide to go this route, take some advice from Military.com and protect your property with insurance and a lease reviewed by a lawyer.
Sell It
Another option is to sell your house. This is a good idea if keeping your home would be too expensive or labor-intensive. Selling your home will give you access to a large amount of money to fund your care, but it may create a substantial tax burden. There are also various fees involved in selling a home, such as real estate agent commission and closing costs.
If you’re leaning toward selling, make sure you consider the condition of the home, the local real estate market, and the work involved in selling. Remember, you may have to make a few upgrades if your home is on the older side. Secure a trusted real estate agent so you can get the best value for your home. The Balance cautions against choosing a listing agent based on their commission or their list price for your home. Instead, look for someone with the experience and education to back up their claims.
Have a Family Member Care for It
You may not have to sell or rent out your home if you have a family member who wants to move in. This way, you can be comforted knowing that your home is in the care of someone you trust. Having someone in the home will prevent unexpected issues like roof leaks or basement mold from going undetected and becoming large, expensive problems to fix.
This option may only work for people who have other ways to fund their assisted living care. If you need the money from your home, you may consider charging your family rent for the use of your home. Just make sure you understand the tax rules for renting out your home to family members.
Moving into an assisted living facility is a huge decision in and of itself. Once you’ve worked out the finer details of this move, deciding what to do with your home can be completely overwhelming. If possible, take some time to consider your options carefully and ask your trusted family members for their thoughts. Careful planning will help you come up with the best possible solution for your circumstances.
At Real Estate Experts we sell homes and manage rental properties. Contact Real Estate Experts and we can advise you of the pros and cons and provide you with a comparative market analysis for selling your home and a rental analysis as well.
As you grow older, downsizing to a smaller, more manageable home seems like an increasingly attractive option. However, that doesn’t mean it isn’t a complicated process. Before you even start dealing with the move, you need to decide what you are going to do with your existing family home. In this article, we will go over a few of the basic things to keep in mind.
Selling the House
This is perhaps the most obvious solution, and the one most people choose. After all, most people will need the cash from a home sale in order to be able to afford to buy a new place. However, it’s important to actually understand the local market before deciding.
According to the Triangle Multiple Listing Service, the average home in Chapel Hill sells for $400,000, and homes take an average of 62 days to sell. This is because Chapel Hill is not a particularly competitive market. What this means is that you cannot be guaranteed a quick sale.
This becomes especially relevant if you are selling a big family home. According to Business Insider, the large multi-bedroom homes owned by boomers are becoming harder to sell to the younger generation. In other words, your big house may be hard to sell, and you are less likely to make as much profit from downsizing.
There is also the matter of downsizing your possessions. Selling the house means you likely have to get rid of many items and furniture. You need to be organized and have a plan to make sure you don’t get overwhelmed. My Move recommends starting early and starting small, prioritizing the rooms you won’t have in your new house (like an attic or home office).
Renting Out the House
Renting out your house is a great option if you plan to sell the house someday but would rather hold onto it for now. Rent does not bring in a big cash sum, but it can provide a regular, ongoing source of income. This can be more convenient in terms of cash flow for someone on a fixed retirement income.
The average rent for a three-bedroom apartment in Chapel Hill is $1,875, and this is likely to be higher for a house. If you are looking to rent a one-bedroom apartment in the city center (average rent $1,068.75), you could be looking at a net monthly profit.
If, on the other hand, you are buying your new home, things can be a bit more complicated. For seniors, Bankrate recommends looking at 10-year or 15-year mortgages, which will allow you to pay off the smaller home faster. Using the SmartAsset calculator, we can see that a 15-year mortgage on a $400,000 home, with a $50,000 down payment, would cost almost $3,000 a month. If you wanted to pay off your mortgage with your rent income, your down payment would have to be as big as $200,000.
Of course, these are all approximate figures, which will vary pretty significantly. It is worth noting that a senior could get a traditional 30-year mortgage, which would be a lot easier to finance using rent income. However, experts do tend to recommend seniors minimize debt in retirement, and this may not be the most convenient option.
If you are considering renting your home, Real Estate Experts property management group will take care of your all important investment — your home. If you want to learn about property managers and what we do and what Real Estate Experts does to protect your home, watch our video about What Property managers Do and visit our web site.
Keeping It in the Family
This is obviously the best option if there is someone in the family who actively wants the home. There are several options here, from giving the house as a gift to passing on the mortgage to your family member. Each has its own tax implications, so do plenty of research before deciding. For instance, if you try to sell your house to a relative for a big discount, the IRS will still count this as a gift, and the gift tax will apply.
Deciding what to do with a family home when downsizing is never an easy choice. There are a lot of complex financial factors but also significant emotional and practical ones. For this reason, you need to give yourself plenty of time to consider all these carefully and discuss them with your family if needed. In other words: When it comes to downsizing, don’t rush things!
Real Estate Experts can help you evaluate your home and help you make the decision about selling or renting. The foundation of our business is that is It All About You.Our goal is to help you make the best decision that meets your family goals. Contact us anytime!
With buyers increasingly starting their home search online, your marketing efforts are actually reaching them all over the world.
From the outset, buyers want to see pictures of your home. If one room of your home is messy in any way, it’ll be reflected in the picture online, and buyers have a low tolerance for clutter. Your Realtor will help you position your property with professional photography so that your home is highlighted in its best possible light.
Your Realtor may use a staging service or they may conduct the staging on their own by way of drone footage or virtual staging.
Ultimately, the goal is to have a marketing plan and professional photography is an incredibly important way for buyers from all over the world, and who are looking in your area, to see your home.
If you have any questions about professional photography or these types of services, don’t hesitate to be in touch. I’d be happy to help!
The North Carolina Offer to Purchase and Contract is also often called a due diligence contract. We have a due diligence period, and within this time frame, a buyer can terminate a contract for any reason. It doesn’t have to be because of a bad inspection, loan, or other obvious problems.
When an offer in North Carolina is made, there are two important dates and two important checks that accompany all the terms and conditions of the offer:
The first date is the due diligence date; this is the time frame in which the buyer does all of their investigations concerning the property, including home inspections and loan processing. Again, regardless of your reason, you can cancel your contract at any time—as long as you do so on or before the due diligence date.
The second date to remember is the closing date. Everything in our contracts is negotiable. Typically, we see closing dates set about two weeks after the due diligence date, but it can be longer. The due diligence period is, on average, three to four weeks, depending on how competitive your offer is; the shorter the due diligence period, the better it is from a seller’s perspective.
Now let’s talk about the money:
In our market, the earnest money deposit is usually about 1% of the purchase price.
On the other hand, the due diligence money can range anywhere from $500 to $2,000 or more, depending on the price of the house and whether you’re in competition with other buyers for the same house. If a buyer terminates a contract before the due diligence date, the only money that is at risk is the due diligence money; your earnest money will come back to you unequivocally. So when you’re making your offer, you need to think through the process and consider how much money you’re willing to lose if you end up terminating the contract.
If you go all the way to closing, the due diligence and the earnest money deposit both come back to you at closing as part of your down payment.
The only way a buyer can lose everything—both the due diligence AND earnest money—is if you say that you’ll buy the home, but then cancel the contract AFTER the due diligence date. That’s considered a breach of contract, and you’ll receive neither of those deposits back.
When you’re interviewing prospective Realtors, talk to them about the due diligence process and what it means for you, because it’s different when looked at through a buyer’s eyes and a seller’s eyes.
At Real Estate Experts, we’re more than happy to discuss this period with you. All you have to do is reach out to us, and we’d be happy to help.
