Siblings Don’t Agree to Sell the Inherited House? Here’s What to Do

If you’ve inherited a house with your siblings, you might assume the next step is simple: sell the house, split the money, and move on.

But what happens when one of your siblings doesn’t agree to sell the house?

Maybe they want to keep the property. Maybe they want to live in it. Maybe they think it would be better to rent it out. Or maybe they simply don’t want to sell.

So what can you do?

I’ve been dealing with probate and real estate for about 10 years, and I’ve seen situations like this many times. There are several different ways you can potentially handle an inherited property when the siblings don’t all agree on selling it.

Of course, every situation is different, so you should talk to a qualified attorney and CPA about your specific circumstances. But let’s look at some of the options.

What If One Sibling Wants to Keep the Inherited House?

The first question is: why doesn’t your sibling want to sell?

Maybe they want the house for themselves. Maybe they want to become a landlord and rent it out.

If the rest of the family is okay with that, you could potentially keep the property as a rental.

For example, maybe you don’t need your share of the money right now. You might decide, “Okay, we’ll rent it out, and you can be the property manager.”

That can be an option.

But there are also some tax considerations you need to think about when you decide to hold onto an inherited property.

Understand the Step-Up in Basis on an Inherited Property

I’m not a CPA, so you should definitely talk to your CPA about your particular situation. But there is something called a step-up in basis that comes into play when someone passes away and you inherit a property.

Basically, the value of the property can step up to the property’s market value as of the date of death.

Let’s say your dad bought a house 25 years ago for $100,000, but when he passes away, the house is worth $400,000.

For purposes of the basis, the property could be valued at that $400,000 figure as of the date of death.

So, if you sell the inherited house shortly after the death for around $400,000, you may not have much of a capital gain.

And when you factor in things like selling costs, real estate commissions, and money you may have spent fixing up the property, you could potentially have little or no capital gain.

The longer you hold the property, however, the more things can change.

If the property increases significantly in value after the date of death, you may have a capital gain when you eventually sell it.

So that’s something you need to keep in mind when deciding whether to sell an inherited house or hold onto it.

You should talk to your CPA about your specific situation, including any estate tax considerations and how the other assets in the estate could affect things.

One Sibling Can Buy Out the Other Siblings

Another option is for the sibling who wants the house to buy out the other siblings.

We see this happen all the time.

I actually helped someone with a situation like this. He called us because he had inherited a house with a sibling, and he wanted to keep the property. He needed to figure out how to buy out his sibling.

I referred him to a real estate attorney and a mortgage broker, and the basic idea was pretty straightforward.

The sibling who wants the house can potentially purchase the property from the estate.

If everyone agrees on the purchase price, and there aren’t other major debts or issues with the estate that prevent the transaction, the sibling can essentially buy the property just like another buyer would.

They may use cash, or they may get a mortgage.

How Does a Sibling Buy Out the Others?

Let’s use an easy example.

Say there are three siblings, and the inherited property is worth $99,000. If everything is split equally, each sibling has a $33,000 share.

If one sibling wants to keep the house, they need to buy out the other two siblings.

That means coming up with $66,000 for their siblings’ shares.

One way to structure it could be for that sibling to purchase the property from the estate for $66,000, essentially taking their own $33,000 share as a discount.

They could then potentially get a mortgage to purchase the property.

However, there is an important detail to understand: you can’t simply use your $33,000 inheritance as your down payment.

You still have to come up with the required down payment money. A mortgage broker can help you understand how the financing might work in your particular situation.

Want to Talk Through Your Inherited Property Options?

If you’ve inherited a house and your siblings are having trouble agreeing on what to do, you don’t have to figure everything out by yourself.

I buy inherited and probate properties for cash, and I’m also a licensed real estate agent. Depending on your situation, we can discuss whether selling the property for cash or putting it on the traditional market makes more sense for you.

If you’d like to talk about the options for your inherited property, fill out the form. A member of our team will be in touch with you as soon as possible.

What If All the Siblings Want to Keep the Property?

Maybe nobody wants to sell.

That’s another possibility.

If all of the siblings decide to keep the inherited property together, you need to think about how you’re going to structure ownership.

You might want to talk to an attorney about setting up something like an LLC or a trust.

Instead of continuing to hold the property in the name of the estate or individually, you may be able to transfer it into a new legal entity where the siblings have ownership interests.

With an LLC, for example, there can be multiple members. With a trust, you can have owners and a trustee.

But this is where I would strongly recommend getting an attorney involved.

Don’t try to set this up yourself. There are a lot of details involved, and you want an attorney to help you structure everything properly for your particular situation.

Get the Inherited Property Out of the Estate

If you’re keeping the property, you’ll eventually need to deal with transferring ownership from the estate to whatever structure you’ve decided to use.

That could be an LLC, a trust, or another ownership arrangement that makes sense for your situation.

Your probate attorney may be able to help with this. A lot of probate attorneys also understand real estate because probate and real estate can be closely connected.

If they don’t handle the real estate side themselves, they may be able to refer you to a real estate attorney who can handle the transfer.

And if you need help setting up a trust or LLC, your attorney may be able to help with that as well or point you toward someone who specializes in it.

It isn’t necessarily as complicated as it sounds, but there are enough moving parts that it’s worth having the right professionals involved.

And yes, it’s going to cost you some money. Attorneys don’t work for free!

What Should You Do When Siblings Disagree About an Inherited House?

If your siblings don’t agree to sell the house, you have several things to consider.

Maybe one sibling wants to keep the property and can buy out the other siblings.

Maybe everyone agrees to keep it and rent it out.

Or maybe all of you want to continue owning the property together and decide to establish an LLC or trust.

The right answer depends on your particular estate, the property’s value, any debts involved, everyone’s financial situation, and what each sibling actually wants.

That’s why it’s important to talk with the right professionals before making a decision. Your probate attorney, real estate attorney, CPA, and potentially a mortgage broker can each help with different pieces of the puzzle.

And if you decide that keeping the property isn’t worth the hassle and everyone agrees to sell, there are also options for selling the inherited house.

Selling an Inherited House for Cash or Listing It

If you and your siblings ultimately decide that you don’t want to keep the property, I can help with that as well.

My company has been buying properties for cash for about 10 years, and we’ve helped hundreds of families sell their properties.

I’m also a licensed real estate agent, so I can help you list the property on the traditional market.

In other words, you can either sell the inherited house for cash or put it on the market and sell it the traditional way.

The important thing is figuring out what makes the most sense for your family and your particular situation.

If you’ve inherited a property and your siblings don’t agree on what to do, don’t assume that selling is your only option—or that keeping it is your only option.

There are different ways to structure the deal.

If you want to talk through your options, fill out the form. We can discuss the property, whether you’re considering a cash sale or a traditional listing, and help you figure out what the next step could look like.