Co-owning a house is very common. Cases, where the property was left to one or more heirs are prevalent. Joint ownership helps owners bear the financial burden of maintaining the house, the cost of repairs, and various other bills.
There may come a time when the owners will want to sell the house, and the process might be complicated by owners who don’t agree to the terms of sale. In cases of joint ownership, some of the partners may be doing better than others financially; hence may not be in as much of a hurry to sell as their lesser liquid counterparts.
However, if you have the correct information, it does not have to be too complicated. Let us see what considerations to take when selling a house with multiple owners.
All the Owners Must Agree
In cases where you would like to sell the house, all the owners must agree. It may be challenging to get a group of people to all agree on an offer. If one owner does not decide to sell and a contract was not drafted before joint ownership, as with the case with many inherited properties, the house cannot be sold.
You should all know how to price the house, the date of selling the house, and any other factor that might lead to arguments during the negotiations. Doing this will make it much easier to agree on which price range is acceptable to everyone after negotiations and reasonable closing date.
If one of the owners urgently needs to sell the house and is not in agreement with the rest, they can serve the co-owners with a partition lawsuit. This lawsuit can force the sale to happen. This is not advisable, though, because partition lawsuits can be expensive due to the court fees.
Settling these matters out of court is the best option as each owner can make a sizeable profit.
Use a Realtor
It is paramount for partners to consult a realtor who’s a third party when selling a house with multiple owners. This ensures that the agent equally represents each owner during the whole process. All the partners should agree on one realtor to make the process smoother.
The realtor, who should have vast experience in real estate, will guide this process. They can refer the owners to lawyers, good financial institutions and advisors, and other relevant professionals to ensure that the sale is successful.
It is suitable for owners to avoid referrals from family or friends because some of the partners might feel like their interests were not considered. When one partner feels like they cannot voice their own decisions regarding the house due to bias, it may cause turmoil.
Staging and Selling Costs
An experienced realtor can make the process of selling a home more manageable, but that doesn’t mean that it’s not tedious. The owners should indicate the responsibilities that should be undertaken in their agreement, and these should be written down. The owners should not leave all the commitment to the realtor but also chip in with helpful information.
If the home is run down or needs a considerable number of repairs, the owner should unanimously agree on how to go about the repairs. It would help if you decided on which contractors to hire, what to buy for the repairs, and how much should be spent.
When it comes to staging the house, the owners should all agree on making the house alluring to potential buyers. Think about what will make them want to drop in once they see it. Can someone consider the home near perfect? Is everything where it’s supposed to be? Does the look of the home stir up positive emotions and make you want to live there?
Joint owners should decide whether to be present during showings, touch base with the realtor on what will make the showings successful and how they can help, etc.
Ensure the House Is Appraised
In some cases, you’ll find that not everyone amicably agrees on how much the property is worth. If this is the case, ensure the house is professionally appraised.
Professional appraisals ensure that the figure is objective, as you can now share up the property equally. If each owner doesn’t have an equal stake in the house, professionally appraising it ensures everyone gets their fair share.
However, it’s not cast in stone that one appraisal will put all the owners at ease and make them agree on an amount. If one or more parties feel that the single appraisal is not in their favor, they can get a separate appraisal. They can then find mutual ground, compare the two values, and meet in the middle. If this still doesn’t work for everyone, a judge will be involved,
Selling a House in Probate
Probate is whereby a legal process is undertaken to determine if someone will be valid. Before you sell a house in probate, the inheritors must go through legal procedures to determine if they can inherit the process. The process is more straightforward when the former owner of the house leaves a will.
Selling such a house will require documents to be appropriately filed with the court, and the court, in turn, should approve the sale. The whole process takes roughly 45-60 days but could be longer. If you involve the services of a real estate agent, this timeline increases.
When you sell a house in probate, you need to pay for the house’s utilities, taxes, and insurance which is quite costly. However, following the proper channels will ensure the process is completed.
After potential buyers see the house, they make an offer. Co-owners need to discuss the proposal and the terms that come with it before agreeing on the deal. If the request is verbal, ensure that a hard copy of the same is recorded. The recording will prevent a lot of gossips and it will lay out all the facts.
Recording different offers also help the owners get a picture of the ideas presented by other prospects. The terms of the request and the cost should be incorporated. Some of these terms could be if the buyer comes up with the total amount for the house if there will be a partial payment paid before the contract is made if the buyer will depend on home financing or the date by which the deal should be closed.
The terms of the deal might also include fixtures such as lights or electrical equipment, or if the house passed a termite inspection, loan endorsement, or home assessment.
Splitting the Proceeds
Selling a house with multiple owners might require you to split the shares evenly among co-owners. However, sometimes the people who inherited the house do not have equal shares. Hence, they may need to determine the percentages that each will receive once the house is sold.
In some instances, some people would feel like they should get a larger share of the profits because they did not use the house frequently hence did not cause much wear and tear. Another person would feel entitled to a larger share because they spent more time and money maintaining the house than the rest. These factors should be discussed before selling the house.
There are some tax breaks that co-owners can benefit from if the house is sold under joint ownership. These tax breaks depend on the type of property being sold; hence may vary.
If there was a joint tenancy agreement among the owners, each owner should pay the same expenses, such as utilities, land taxes, or mortgage payments, until after the sale. The amounts owed should be split among the owners according to their share of the property.
All proceeds should be paid after all the incurred costs, including closing costs, are fully paid. Inherited properties attract a capital gains tax which should also be considered. Account for any expense incurred once you sell a house in probate.
Joint property ownership may be complicated, whether you bought the property as a group or inherited it jointly. It is essential to understand the various contracts available for joint property ownership and choose one that favors everyone’s interests. Before entering a joint ownership contract, plan.
Ensure that everyone will be protected and get their fair share if all parties agree to sell the property. Pay attention to all the terms that quickly and affordably expedite conflict resolution. All co-owners should discuss their responsibility and understand their rights.
It is paramount to engage an attorney’s services. An experienced real-estate attorney will take you through what you need to know about the legal aspects of selling a jointly owned property. They will help co-owners tackle stumbling blocks to the sale as effectively as possible and ensure an easy transition.
It is also essential to get the help of a title company once the deal is closed. The title company collects the reports needed when moving the property. They help to pay all liens and gather the assets from the buyer. Co-owners intending to sell their property should engage with the title organization to quell any issues that might arise.
If you need help with a house with multiple owners situation in Dallas, reach out to us today so we can help you.