You Inherited a House in Colorado. Now What?

Selling an Inherited House in Colorado

Inheriting a house in Colorado can be both a financial opportunity and an overwhelming responsibility. One day, you are dealing with the loss of a parent, spouse, relative, or friend. The next, you may be responsible for a property you didn't expect to own, possibly in a city or state where you don't live. If you are dealing with selling a parent's house after death, you are facing a difficult time. I know, I've lived it.

If you're wondering what to do with an inherited house, you may be asking: Should we sell it or keep it? Do I need to go through probate? Is the house owned by an estate, a trust, or the heirs? What is the property worth? How do I manage an inherited property from another state? How do I manage this so all heirs think it's fair? 

Choose a Realtor® Experienced in Inherited and Probate Real Estate

Some Realtors® specialize in probate and inherited-property transactions and have completed industry certification programs of four to fifteen hours. My background is different. In addition to more than 20 years of real estate experience, I have a Juris Doctor (J.D.) and a professional background in law. I don't provide legal advice or replace your estate attorney. Instead, I bring a legal perspective to the real-estate portion of a complicated transaction and understand the importance of working within the authority established by the estate documents and your legal team.

What Should You Bring to Our First Meeting?

You don't need to have everything figured out before you contact me. If you have these documents, they can help me understand the situation: Letters Testamentary or other documents establishing authority; contact information for the estate attorney; names and contact information for the Personal Representative and beneficiaries; the deed; and the part of the trust document that identifies the successor trustee. Probate Court orders to sell property and affirmation of personal representative. Please email me for a more comprehensive guide to the process and duties. This is a brief outline of some of the process:

Determine How the Property Is Owned: This is a good time to consult an estate or probate attorney. The attorney will determine who has authority to sell the property. They will provide documentation so we can start preparing the home for sale. 

Determine Whether Probate Is Required

If you inherited a house and are wondering whether probate is required to sell an inherited property in Colorado, don't assume the answer. The answer depends on how the property was titled, whether there is a trust, whether beneficiary or transfer-on-death arrangements exist, and the circumstances of the estate. If you are the Personal Representative, you may be responsible for protecting and managing estate assets, dealing with creditors, communicating with beneficiaries, and ultimately distributing the estate according to the applicable documents and law. Your attorney will evaluate all documents, title recordings, trust documents, wills, and work. They will tell you the steps. We work together, based on authority, to prepare the property for sale. If you don't already have a probate estate attorney, I am happy to refer you. The last thing you need is to pay your attorney to educate your Realtor®; I pledge to work efficiently.

Secure the Property

If the house is vacant, protecting it becomes a priority. Change or rekey the locks, maintain homeowners' insurance, keep utilities operating, winterize the property, arrange lawn care or snow removal, stop mail and package deliveries, monitor the property, check for leaks or maintenance problems, maintain security systems, notify the insurance company that the property is vacant. A vacant house can deteriorate surprisingly quickly. Water leaks, frozen pipes, roof problems, landscaping issues, vandalism, and other problems can become expensive if no one checks the property.

Find Out How Much Is My Inherited House Worth?

Before deciding whether to sell, you need to understand the property's current market value. This is different from simply looking up the home's value online. An experienced Realtor® will evaluate recent sales and current competing listings and perform a comparable market analysis (CMA). This should include analysis of location, condition, lot characteristics, renovations and improvements, floor plan, market conditions, buyer demand, potential repair issues, and whether the property is best positioned as move-in ready, renovated, or an opportunity property. We can discuss your timeline and estimate a price range. This will be dynamic as a property nears going on the market. For an estate property, I also recommend viewing it from the eventual buyer's perspective. The goal isn't necessarily to spend the most money preparing the house. The goal is to determine which improvements are likely to produce a meaningful return and which are unnecessary expenses.

What If You Inherited a House in Colorado but Live Somewhere Else?

Out-of-state heirs and Personal Representatives may need someone local to monitor the property, coordinate repairs, obtain valuations, prepare the home for sale, manage vendors, oversee inspections, and communicate with the estate's professionals. If you inherited a house in Boulder County while living in another state, having a local Realtor® who understands the transaction can make the process considerably easier.

Don't Rush to Clean Out the Inherited House

One of the most common mistakes I see is removing everything from the house before deciding what needs to happen. You may need to consult an attorney or have permission from the court. Take a breath. Before family members haul furniture, donate possessions, or throw things away, consider creating a plan. This situation could cause bad feelings among family members. Some successor Trustees have inadvertently failed to follow the Trust. Get good advice to avoid problems later. 

Talk With Your Attorney and Tax Professional About Basis and Taxes

Professional advice matters here. Ask your CPA or tax attorney: "What value should we use for the property's basis, and what documentation should we keep?" The basis of property inherited from a decedent is generally the property's fair market value at the date of death, subject to specific rules and exceptions. If inherited property is later sold for more than its applicable basis, there may be a taxable gain. That doesn't mean you should try to calculate the tax consequences yourself. You may need to obtain an appraisal or other appropriate valuation as part of the estate's records. 

As your Realtor®, I will help you understand the real estate implications and the property's marketability, but your attorney and tax professional should advise you on legal and tax matters.

Inherited a House in Boulder County? Let's Talk.

If you've inherited a home in Boulder County, Broomfield, or beyond, and aren't sure what to do next, I'm happy to have an initial conversation about where you are in the process. I can help you understand the real estate steps involved in preparing and selling an inherited property, coordinate with your attorney and other professionals, and help you evaluate whether selling now—or preparing the property for a later sale—makes sense. If you are a Personal Representative, heir, or successor trustee dealing with inherited real estate in Boulder County, contact me to schedule a consultation.

Tamara

Tamara Grosvenor, Realtor® J.D.

Compass | Boulder Property Advisors Blog

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Disclaimer: This article is for general informational purposes and is not legal, tax, or financial advice. Every estate and property situation is different. Consult your attorney, CPA, or other qualified professional regarding your specific circumstances. Sources & Resources: Colorado Judicial Branch — Probate