Are you feeling lost at the prospect of selling your parent’s home with your siblings?
Are you worried about how this will work, working with your siblings to sell a home while you are also all grieving the loss of your parents, or dealing with a parent with health issues or who are themselves too overwhelmed with changes to their life to be able to tackle this important task. How do you navigate this situation with your siblings to a successful outcome?
Get on the same page early on. there are many options available to families on what to do with selling the family home. Let’s look at the some pros and cons of the 3 most common options available, Keep it, rent it, or sell it.
Keep It:
Often keeping the family home becomes a factor to consider when one or more family members decide that they would like to live in the family home. the advantage of this could potentially be avoiding the inevitable costs to sell a home and the home gets to stay in the family as an heirloom to be passed on.
In the circumstances of holding onto the home, the fair market value will need to be determined and the sibling(s) retaining the home will need to buy out their other heirs or the owners. In the case of an estate, depending on the size of the estate, some horse trading may be able to take place with other assets to offset the price of the home.
If you are an executor of a parent’s estate, you will want to be careful with this option and consult an attorney about possible pitfalls. a seemingly easy decision early on could lead to conflict later, if someone feels they got the short end of the stick or were not treated fairly.
Selling a home for a beloved family member is often the source of conflict. Learn how to avoid it in the posts below:
- Preventing Family Conflict When Selling Your Parent’s Home
- Preventing Family Conflict When Your Kids Sell Your Home
Rent it:
Many clients will think that renting it is a good short term alternative to selling a home. Particularly while they get their affairs in order. Why not have a tenant in place to help defray the costs of maintenance of the home while we sort out the details of the estate? Sounds like a no brainer, right? Wrong.
Ontario is one of the most unfriendly jurisdictions to landlords in all of North America. Placing a tenant into your home which you know you eventually want to sell will instantly devalue your home by up to 10%, sometimes more.
There is no such thing as a legal short-term tenancy in Ontario. Also, did you know you cannot legally evict a tenant to prepare a home for sale? Did you know that even if you find a buyer who wants to buy the property, wait times at the landlord tenant board for an eviction hearing could take up to a year. How many buyers will be willing to wait for you to secure the eviction if your tenants refuse to leave? Now you understand why buyers actively avoid tenanted properties. Be very wary about pursuing this option.
Ultimately, most of my clients will choose option 3, to sell it. Selling the home allows the proceeds to be split equitably between all the heirs according to the instructions in the will. Or in the case of a living parent, provide the funds to provide continued care.
How do you make a decision as a team? Ultimately there are 3 choices available to you:
1. Come To A Consensus:
This means discussing all the options until you have reached a decision you all agree you can live with. This is always the preferred method for preserving relationships and allows everyone who is impacted by the decision to have input into it. This is the way to go, if you want buy-in. However, this can be difficult to achieve, particularly when emotions are high when people are grieving. This will take longer, but often yields a better result.
2. Take A Vote:
While voting may seem fair on its surface, it is inferior to consensus, because there are winners and losers and somebody may feel hard done by, in the end. Think about country elections and some of the divisions this method of decision-making can foster.
3. Authority (Executor Noted In The Will):
In the world of estates, the executor has the final and ultimate responsibility for the decisions surrounding the estate. Many times these decisions are dictated by the will and they are required to execute them as such, regardless of their personal feelings on the matter.
Where there may be ambiguity and the family can’t come to an agreement, the executor will be the ultimate decision-maker. The buck stops with them. While an executor may consult the heirs on their wishes, they aren’t required to take direction from the heirs, though they do owe fiduciary duty to them. In the world of Powers of attorney, the authority will be the individual who has the power of attorney over financial matters.
4. Communicate, Communicate, Communicate:
Communicate and then communicate some more. Selling a home is not just one decision, there are many small decisions to make along the way, from choosing how and when you will sell the home, choosing the realtor, presenting the home, disposing of household items, repairs, maintenance etc. It is helpful to keep all stakeholders informed of progress along the way, to maintain harmony. In families who are aligned, this may be done by the executor but it is not uncommon for my clients to use me as a conduit to keep all parties informed of progress.
Delays May Cost You Time, Money And Relationships
Not making a decision is a decision. In the case of selling a home, there are things to consider, like who will maintain the home while things are being sorted out? Who will cut the grass or shovel the snow?. There are also costs of ownership that will be borne by the estate: mortgage, utilities, taxes and insurance.
Did you know your insurance company may require someone to check on the home every few days to keep the policy current if it is vacant? Who will be doing that? While not everyone may be ready to part with the past, there is a real and tangible cost to delaying. This is why getting heirs onto the same page early on is best.
The most successful situations I’ve observed have been ones where a timeline was agreed to for each step in the process, up front, with outcomes that will occur once the timelines elapse. That way everyone is informed and rowing in the same direction.
If you are feeling overwhelmed by the multitude of decisions facing you as you navigate the sale of your parent’s home, give me a call. As a Senior Real Estate Specialist (SRES) there is a lot I can to do help make your decisions easier, take things off your plate and connect you to resources that can help.
You can reach me at 647.283.2127, send me an email at stuart@stuartnodell.com, or complete the form on this page for more information.
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