You inherited a house in Knoxville. Now what?
Can you sell it right away? Do you have to wait for probate? Who is actually allowed to sign the listing paperwork? And what in the world are you supposed to do with a house full of 30 years of someone else's stuff? These are all questions that I get asked on a regular basis.
The house itself is usually the easy part.
Figuring out who has the legal authority to sell it is where we need to start.
First Question: Is There a Will?
Before we start talking about cleaning out the house, replacing carpet or putting a For Sale sign in the yard, we need to understand what we're working with.
Is there a will? How is the property titled? Is there a trust? Who has been named executor? Has probate already been opened?
Depending on the answers, you may be able to sell an inherited home before the entire probate process is finished. In other situations, additional legal steps or court approval may be necessary before the property can be sold.
That's why one of my first recommendations is usually to talk with a Tennessee probate or estate attorney.
I handle the real estate side. Your attorney handles the legal side.
Those two need to work together.
How Was the Knoxville Property Owned?
This matters more than most people realize.
A home held in a properly established trust may be handled very differently from a home owned solely by someone who passed away.
The same is true if another person has survivorship rights to the property.
And if the home becomes part of a probate estate, the will, the property's title and the authority given to the executor or personal representative can affect how and when the property can be sold. In other words, there isn't one answer that applies to every inherited house in Tennessee.
Don't spend money getting the house ready to sell until you know who actually has the authority to sell it.
Do You Have to Wait Until Probate Is Completely Finished?
Not necessarily.
Depending on the circumstances, an inherited property may sometimes be marketed or sold while an estate is still being administered. Other estates may require additional steps before a sale can happen. Your probate attorney or closing attorney can determine what applies to your specific situation. This is something I would find out early. Not after we've painted the entire house. Not after you've rented a dumpster. And definitely not after we've found a buyer.
Then There's the Stuff...
This is the part nobody really prepares you for.
You didn't just inherit a house.
You may have inherited furniture, dishes, clothes, tools, Christmas decorations, paperwork, photographs and closets that haven't been opened since 1998.
And sometimes the person responsible for all of this doesn't even live in Knoxville.
I've helped families in exactly this situation.
Recently, I worked with a son who had moved his mother into assisted living. He lived out of town and came to Knoxville to deal with her home and everything she couldn't take with her.
One of his biggest questions was simply:
"What do I do with all of her stuff?"
That's a real problem. I told him we could coordinate with a local charity for donations or connect him with an estate sale company.
Earlier this year I referred a seller to an estate sale company. The Executor of the will hired the estate company to have the estate sale prior to putting the home up for sale. We put the home up for sale once the home was pretty much vacant. You don't have to figure every piece of this out by yourself.
Should You Fix Up an Inherited House Before Selling It?
Maybe. But please don't start remodeling the kitchen because somebody told you updated kitchens sell houses.
This is where I want to see the house before you spend money. When I walk through an inherited property, I'm looking at it through a buyer's eyes.
What is going to bother them? What will show up during an inspection? What would actually help the house sell?
And what are you about to spend $15,000 on that probably isn't going to give you $15,000 back?
Those are two very different lists.
Sometimes paint, flooring, landscaping and a good deep cleaning can completely change how a property shows.
Other times?
Sell it as-is.
There is absolutely no reason to spend money just because you think you're "supposed to."
My job is to help you figure out where the money is worth spending and where it isn't.
Pricing an Inherited Home in Knoxville
This is a big one.
Let's say Mom and Dad lived in the house for 35 years.
The house down the street just sold for $600,000.
Great!
But that house had a new kitchen, updated bathrooms, new windows, refinished hardwood floors and a new roof.
Mom and Dad's house still has the original kitchen and a bathroom that hasn't changed since everybody was watching Friends on Thursday nights.
Those aren't the same house.
And buyers know it.
The goal isn't to make an inherited property something it isn't.
The goal is to position it correctly for the buyer who wants it.
There are buyers who specifically look for homes they can update themselves. There are investors. There are buyers who would rather buy at a lower price and make improvements over time.
We just have to price and market the home for the right buyer.
Also, if the estate has required an appraisal to be performed prior to listing the home keep in mind that may not be the selling price. I recently had a home for sale and the Executor of the estate had an appraisal done. The home sat on the market for months and did not sell close to what the appraised value was. Market conditions can change, the time of year can all come into play.
Don't Forget About the Cost of Holding the House
This gets overlooked all the time.
Every month an inherited home sits vacant, someone is paying for:
Utilities, Insurance, Property taxes, Lawn care, HOA fees if applicable, Maintenance, Maybe a mortgage.
Those expenses are ultimately coming out of the estate or someone's pocket.
So when we're deciding whether to spend three months remodeling a house before selling it, I don't just look at what those improvements might add to the sale price.
I look at time and carrying costs too.
Sometimes doing less and getting the home sold sooner leaves the estate with more money in the end.
What About Property Disclosures?
Inherited and estate properties can have different disclosure requirements than a typical owner-occupied home.
That makes sense.
If you inherited your dad's house but haven't lived there in 20 years, you may have no idea how old the water heater is or whether the crawl space has ever had water in it.
Tennessee law provides disclosure exemptions for certain transfers, including some involving fiduciaries administering a decedent's estate.
But an exemption doesn't mean known problems should be hidden.
This is another area where I want the estate's attorney and the real estate side working together so everything is handled correctly.
Get Everyone on the Same Page
Oh boy. This one matters.
If there are several family members involved, have the conversations before we list the house.
Are we selling as-is?
Are we making repairs?
What price are we comfortable accepting?
Who is making the decisions?
What happens when an offer comes in?
One sibling thinking the house is worth $450,000 while another thinks it's worth $600,000 is a problem I'd much rather discover before a buyer is waiting on an answer.
You would be surprised how often the hardest part of selling an inherited house has nothing to do with the house.
It's getting everybody on the same page.
What About Taxes When You Sell an Inherited Home?
Tennessee's inheritance tax was repealed for people who died in 2016 or later.
Federal taxes are a separate issue, and inherited real estate may receive what's commonly called a step-up in basis, which can affect the capital gains calculation when the property is eventually sold.
This is definitely CPA territory.
Before making financial decisions based on taxes, talk with a qualified CPA or tax professional who can look at your particular estate and property.
Selling an Inherited House in Knoxville Doesn't Have to Be Overwhelming
If you just inherited a house, you don't need to know everything today.
You don't need to have the house cleaned out.
You don't need to know what it's worth.
You don't need to know whether to fix it up or sell it as-is.
And you definitely don't need to have all the answers before calling me.
That's what the first conversation is for.
Tell me what you know.
Maybe it's simply:
"My mom passed away. There's a house in Knoxville. There's a will. I live three states away and I have absolutely no idea what I'm supposed to do next."
That's enough.
We'll start there.
I can look at the property, give you an idea of what it could sell for in its current condition, tell you what I think is worth doing before we put it on the market and help coordinate the real estate pieces that need to happen.
If we need an estate sale company, let's talk about it.
If we need someone to clean it out, let's figure that out.
If selling it as-is makes the most sense, I'll tell you that too.
And if spending a little money will put substantially more money back into the estate, I'll tell you that.
You don't have to figure out the whole thing before you call me.
Send me the address.
We'll figure out the real estate part from there.
Angie Cody | LPT Realty
My Expertise, Your Profit.
This article is for general information and is not legal, tax or financial advice. Probate, title and tax situations vary. Consult a qualified Tennessee attorney, CPA or other appropriate professional about your specific situation.
