15 Nov 2017
Author: Stephen Breen
Selling a home after a family death can be a stressful experience. Having lost a loved one, the last thing you want to do is deal with pushy estate agents, endless forms and complex jargon. To add to all that, you’ll need to clear the property ready for sale and the task of sorting through a parent’s or grandparent’s belongings can be overwhelmingly emotional. To help you navigate through this difficult time, here are a few things to keep in mind:
DIY, part service or full service
In most cases a Grant of Probate (or Letters of Administration if there was no Will) will be needed. This document is the Court’s permission to deal with the estate. As an Executor or Administrator, you’ve got three options:
- 1.Apply for the Grant of Probate (or Letters of Administration if there was no Will) yourself then ‘administer’ the estate yourself.
- 2.Ask a solicitor to apply for the Grant on your behalf, then ‘administer’ the estate yourself.
- 3.Ask a solicitor to apply for the Grant and administer the estate for you.
So which is the best option? To answer this, consider what an Executor (or Administrator) has to do:
- Locate the Will
- Notify all banks, building societies etc of the death
- Obtain a valuation of all assets
- Assess all debts and liabilities owed by the Deceased (including advertising for debtors)
- Complete the inheritance tax returns
- Pay the inheritance tax due and get a receipt (needed for the grant)
- Apply for grant of probate/letters of administration
- Collect the assets
- Pay the debts and liabilities
- Divide up the estate in accordance with the Will or intestacy rules
- Prepare and distribute Estate accounts to relevant parties
If you’re struggling to cope, it makes sense to get the help of a solicitor. The fees will reduce the value of the estate slightly but it will be money well spent at a difficult time.
There’s no rush
Give yourself some time to come to terms with your loss before you start dealing with the practicalities. Preparing to apply for the grant can take up to 9 months, with most of this time spent collecting the required information. Once the application is ready, it can take a further four weeks to actually obtain the document. So although you could in theory put the property on the market straight away, you can’t exchange contracts without the grant and most buyers won’t want to wait 9 or 10 months while you are sorting out the paperwork.
Understand the inheritance tax rules
If the estate is worth more than £325,000, inheritance tax may be due (check the Government’s website to see the current rates including the new Residence Nil Rate Band which is being rolled out over a number of years).
The payment of inheritance tax is due six months after a person’s death but if there’s not enough cash in the estate, it can be paid by instalments of 10% per year. There is a 2.75% interest charge added on until you settle the full balance. This can cause a problem for some cash-poor estates where the main asset is the deceased’s home – you need the grant to be able to sell, you need to be able to sell to pay the inheritance tax, and you can’t sell without the grant. Speak to your solicitor for advice.
Choose a conveyancing solicitor
An experienced solicitor will ensure you have everything you need for a smooth sale such as guarantees and planning permissions. It’s advisable to speak to a solicitor early on, even if you don’t yet have the grant of probate. They can start gathering the necessary paperwork together so that when you come to sell, nothing delays the sale.
Watch for bogus offers
Typically you’ll receive at least one if not more letters from local ‘property buyers’ making low offers for the property. They’ll have learned about the death from one of a number of sources.
The value of the property is inserted in the Inheritance Tax account and Executors have a duty to obtain two or three estate agents’ valuations, taking the average price – or alternatively, to obtain a surveyor’s valuation. If the price you quote to HMRC is low, they may ask the District Valuer to provide a valuation and you could be penalised if you undervalued it (and therefore underpaid tax).
The beneficiaries could also sue you for not doing your job properly if they can prove they have suffered a loss. Your duty is to get a fair price for the house which may be a little under market value (to encourage a quick sale) but certainly not ridiculously under. In other words, ignore any offer which isn’t for a sensible price.
Find an agent
You’ll need to find a local estate agent which involves a comparison of commission rates and fees. Don’t dismiss the new breed of ‘online agents’ whose fees are often hundreds less than bricks and mortar agents on the high street. Having a high street presence means very little now with Rightmove and similar property websites being the main shop window for properties. Online agents will measure up your house, take photos and can usually arrange an EPC if needed. Most online agents will also carry out viewings for you although there could be an additional fee to pay.
Check the insurance
As the house will be empty, check the terms of the buildings and contents insurance. Most standard policies will not cover a property if it is empty past a certain number of days – typically 30. You may need to obtain Unoccupied Home Insurance up until the point of sale.
Make the house seem occupied
There’s nothing quite so attractive to burglars as an empty house! Invest in some auto lights that come on when it’s dark, to make it appear as if someone is home. It’s also a good idea to leave the heating on low so that the house doesn’t smell damp and musty.