When Is the Time Right to Sell Your Parents’ Home?

Inheriting the family home represents both a generous gift and a tremendous responsibility. Having this asset to your name can change your financial future and help your own family get a secure footing in life. 

However, this legacy also comes with many tough decisions, and choosing to sell the home opens up even more questions. Your goal will be to earn the maximum proceeds from the sale, but how do you do that when you have a busy life of your own? 

The first step is deciding on a time frame. In this post, we’ll talk about the various types of markets and how you can make the most of any situation.

Can You Sell the Home?

The first question to ask is not, “Should you sell your inherited home.” Instead, you need to make sure you have the legal right so that you can sell the house. Inheritance law is complex, and your best bet is always to consult a lawyer to guide you through your rights and responsibilities.

Before you can even consider selling the home, you must be sure that you have clear ownership. If the will goes into probate, that process can take some time. Once you have ironed out all of the legal details, then you can begin analyzing the market and exploring your opportunities. 

Learn more about the legalities and challenges of selling an inherited home in the posts below:

• What Is the Difference Between a Power of Attorney and Executor?
• How to Sell an Inherited Home 

The Fallacy of Timing the Market 

Every seller would prefer to wait until prices reach their highest point before listing their home for sale. However, the current real estate market is complicated. Even the most informed experts cannot say what direction it will go, up, down, or sideways. 

After doing your homework and analyzing all of the latest data, you may feel that you finally have a handle on the market. Then, all of a sudden, everything changes again. 

Though you want the best possible results, trying to time the market is challenging, if not impossible. Instead of worrying about listing when prices are at their peak, it’s often better to focus on getting the best results from whatever the market is doing right now. This is especially true if your plans include buying a new house once yours sells. 

For example, imagine you sell your parents’ home and buy a new one right away. If prices go up after the fact, you’ve lost nothing because your new house is also increasing in value. By conducting both transactions in the same market, you offset any disadvantages of not getting the timing perfect. 

You may not be able to time the market, but you can still benefit from the changing cycles. Learn more in Know the Real Estate Cycles and Hack the Market.

The Risks of Waiting

As the executor of the will, your parents have placed a great deal of trust in you. Waiting for prices to increase may feel like the best option. However, this can be a risky decision. For one, prices may not change for some time. Secondly, waiting and hoping to sell at top dollar can actually cost you more in the end. There are a lot of expenses of holding onto a vacant property, including: 

• The longer a home is left empty, the more likely it is to run into significant repairs and maintenance issues. 
• You will have ongoing carrying costs each month, such as insurance, utilities, property management and property taxes.
• There’s a good chance you’ll get hit by the new Toronto Vacancy Tax, which houses that are unoccupied for six calendar months are subject to. The tax is calculated at 1% of the CVA (Current Value Assessment) of your property. That may not sound like much, until you consider the average price of a Toronto home is over $1,000,000. That means your minimum cash outlay would be $10,000 (1% x $1,000,000). Since this is a recurring cost each year, holding a vacant property can get very expensive very quickly.

Not all costs are tangible or easy to calculate. Think of the opportunities you miss out on the longer you hold on to an inherited home you don’t plan to live in or rent out. You might earn a higher amount if you wait for a better market. But what could you do in the meantime? Selling now can help you pay off your own mortgage, eliminate your credit card debt, or even buy a vacation property somewhere.

Real Estate Remains Unpredictable

Over the long term, most experts expect housing prices to go up eventually. However, real estate is unpredictable, and there are too many variables that can impact prices for the foreseeable future. For example:  

• High interest rates restrict the number of buyers that can afford to buy, which reduces the demand for your home. 
• Banks tighten mortgage requirements, making it more difficult for buyers to obtain financing. 
• Fluctuating inventory of homes for sale. The housing supply can spike when homeowners with low mortgage rates renew after rates increased. This can make their existing home unaffordable and trigger the decision to sell.  

The market will always rebound at some point, but remember that no one knows when this will happen. In the worst-case scenario, you may hold out on selling only to find that prices drop due to some unforeseen event.

Looking for more tips on selling in a challenging market? The following posts can help:

• My House Didn’t Sell. Now What Should I Do?
• What to Look For in a Real Estate Agent When Selling Your Home
• Can You Earn More Money By Staging Your Home?

Positive Signs on the Horizon

The Etobicoke market faced some serious challenges in 2023, but there have been positive signs in early 2024. The number of homes sold increased drastically as many buyers re-engaged in their search. 

With news that the Bank of Canada could soon introduce lower interest rates, buyer activity should increase even more. 

We have even seen the return of multiple offers in some scenarios. If you decide that the time to sell your parents’ home is now, there are many things you can do to take advantage of this new momentum in the market.

The key is to work with an experienced and skilled real estate agent who can effectively price, prepare, and market your listing. This strategic approach will help you maximize the value of your parents’ home and ensure a lasting legacy for your family.

Do you have questions or need more advice about selling an inherited property? We are standing by to support you in any way you need. Reach out today at contact@thompsonsells.com or call 416-450-5900 for more information.