Inherited House Calculator: Sell As Is, Fix and Sell, or Keep and Rent

Authored by Carson Nordmann, Founder of Keystone Court Data. See our editorial standards.

When a house passes to heirs, the first question is usually what to do with it: take a cash offer as it stands, list it, fix it up before listing, or keep it and rent it out. Each way leaves a different amount after the mortgage, the selling costs and the months of taxes, insurance and upkeep while it waits. Type in your figures and estimates, and the calculator puts the four ways side by side, in total and for each heir.

How each number is worked out

• Listing it as it is: the value as it stands, less selling costs at the percentage you typed, less the mortgage and other debts, less the monthly holding cost for each month until it closes.
• Fixing it first, then listing: the price after repairs, less selling costs, less the repairs, less the debts, less the holding cost for each month until it closes.
• The cash offer as it is: the offer, less the seller's costs in that sale, less the debts, less the holding cost for each month until it closes.
• Even at a price after repairs of: the price after repairs at which fixing first leaves the same as listing as it is, with everything else as typed.
• Keeping it as a rental: the rent less the holding cost and the other rental costs (including any loan principal paid each month), each month and times twelve for a year. The house's value is held where you typed it.
• Each heir's share: each figure, rounded to the dollar, divided equally by the number of heirs; for a sale below zero there is nothing to split, and for a rental that costs more than it brings in, the table shows each heir's equal part of the monthly pay-in.
• If the price after repairs is off: what fixing first leaves at 10% and 5% below, and 5% above, the price you typed, and how that compares with listing as it is.

What it leaves out

Income or capital gains tax on a sale or on rent (inherited property has its own tax rules, and a tax professional can say how they apply), any estate or inheritance tax, the estate's other debts and costs, probate court fees and how long probate takes, a rise or fall in the market while the house waits, repairs that cost more or take longer than typed, a price from any buyer that changes after an inspection, months with no tenant beyond your allowance, and any agreement between the heirs. If the house goes through probate, the executor or administrator, not the heirs, may control whether and how it is sold or rented until the estate is settled, no sale can close until someone has been given the authority to sign, and a sale may need a court's approval or the heirs' consent depending on the state; the estate's debts can come before the heirs' shares. A house held in a trust, or with a transfer-on-death deed or a surviving joint owner, may pass differently. Whether an heir can keep an existing mortgage in place depends on the loan and on federal and state rules; in many cases a lender cannot call an ordinary home loan due just because the house passed to a relative at the owner's death, while a reverse mortgage generally comes due when the last borrower dies. The loan servicer and an attorney can say how this applies. Renting the house out brings landlord rules that vary by state and city. In some states the property taxes can be reassessed when a house passes to heirs, which can raise the cost of keeping it. A rental also carries its own risks: tenant damage, liability if someone is hurt on the property, the time and cost of an eviction, and the work of managing it, which several heirs have to agree on. An attorney licensed where the property is can say which of these apply.

If one heir wants to keep the house and buy out the others, the co-owner buyout calculator works out that price.

Related

• Co-owner buyout calculator
• Probate sale timeline by state
• Deal math calculator
• All free tools

General information only, not investment, financial, tax or legal advice. The calculator only does arithmetic on the numbers typed into it; it holds no data about any property, owner, estate or market.