The Guide to Selling Inherited Property in Washington

Selling a home can be a daunting process. When that property is inherited, several additional factors come into play, making things even more complicated. The key to overcoming these challenges is understanding what to expect and planning accordingly.

This comprehensive guide aims to simplify the process of selling inherited property in Washington, making the experience as smooth and hassle-free as possible.

Inherited Property Defined

The term inherited property refers to anything that is passed from one person to another upon their death. This includes both assets of value, such as cash, investments, vehicles and homes, as well as personal items that are only sentimental in nature.

In the state of Washington, most inheritances are required to pass through what’s known as probate. This is a legal process through which a court oversees the settlement of the decedent’s estate, including the payment of outstanding debts and the distribution of anything remaining to the appropriate parties.

Before attempting to sell an inherited home in Washington, you’ll want to learn the steps you’ll need to take, and what you’ll need to prepare in order to move forward. Let’s explore these things in greater detail below.

What to Do When You Inherit a Home in Washington

Start the Probate Process

The first step in selling the Washington home you’ve inherited is to initiate probate. This is done by filing a petition, along with the will (if one exists) and death certificate, with the Superior Court in the county where the decedent resided when they passed away. One important thing to note: this must be done within 40 days of the date of death.

Once the court approves the petition for probate, the person named executor of the estate will receive official documents called letters testamentary, which grant the executor authority over the deceased person’s assets. From there, all potential heirs and creditors must be identified and notified.

In Washington, the probate process usually takes between six and nine months, however, it could be longer, depending on the complexity of the estate, whether there are any disputes, and a number of other factors. During this time, it is crucial that you remain as organized as possible. Doing so will improve your chances of a smooth and uneventful process.

Have the Property Assessed

Once the probate process has been initiated, the next important step is to have the home officially appraised. This should be done by a seasoned professional, as the results will be needed for tax purposes (more on that below). This will also serve as the baseline for you to determine how much the property is worth so you’ll have an idea of how much you can sell it for.

Prepare the Property for Sale

Another important step early on in the process is to determine whether or not you would like to fix the property up or sell it As-Is. It can be tempting to want to invest in repairs or renovations to bring the home’s value up, but doing so will require out-of-pocket spending on your part. For this reason, the majority of individuals who inherit property in Washington choose to save time and money by selling as quickly and with as few updates as possible.

Legal Aspects of Selling Inherited Property in Washington

Transfer of Ownership

In Washington State, you cannot sell an inherited house until its title has officially been transferred into the name of its new owner. This essential step is usually handled during the probate process.

Pay Off Mortgages and Clear Liens

When a home is inherited, it often comes with outstanding debt, like a mortgage or home equity loan. These balances must be paid before the property can be sold. Likewise, if the house you’ve inherited has any liens on it, you will need to settle those things prior to placing the property on the market.

Disclosure

The state of Washington requires sellers of residential real estate to disclose all known material facts on a form called the Residential Real Property Disclosure Statement (also known as Form 17). 

A material fact is anything that may affect the title of the property or its physical condition, including but not limited to:

• Structural defects
• Plumbing and electrical problems
• Issues with the septic system
• Flood risk
• Water damage
• Pest infestations
• Environmental hazards
• Legal disputes related to the property
• Deed restrictions

Failure to comply with this requirement could result in serious and costly legal repercussions.

Financial Impact of Selling Inherited Property in Washington

Taxes

• Property Tax: Washington State has an average effective property tax rate of 0.76%, but that rate may vary based on the county where the property is located.
• Excise Tax: The state of Washington charges what’s known as a real estate excise tax (REET) on the sale of real estate, which is typically paid by the seller. The rates are tiered and range from 1.1% to 3% of the sale price, depending on the value of the property.
• Estate Tax: You may be responsible for estate tax at the state level, depending on the value of the inherited property. Additionally, the federal government may also assess an estate tax, based on whether the value of the estate exceeds the exemption limit.
• Inheritance Tax: Only a handful of states charge an inheritance tax. Fortunately, Washington is not one of them.
• Capital Gains Tax: If the property you inherited appreciates in value between the date of death and the date of sale, you will probably end up having to pay capital gains taxes.

Other Expenses

• Repairs/Renovations: If you choose to invest in any repairs or renovations to bring the property up to code or make it more marketable, the costs associated with those updates will be on you.
• Ongoing Maintenance: Until the home sells, you will be responsible for all expenses to maintain it, including mortgage payments, insurance, property taxes, utilities, etc.
• Real Estate Commissions: Most real estate professionals charge a commission as compensation for their work. In the state of Washington, the average real estate commission is 5-6% of the sale price.
• Closing Costs: Closing costs go toward all the administrative tasks involved with real estate transactions, such as title insurance, attorneys’ fees, loan origination fees, etc. In Washington, closing costs are usually around 8-10% of the sale price.

Documents Required for Selling Inherited Property in Washington

You’ll need the following documentation to sell a property in Washington State:

• Photo ID: A current, valid license or other photo identification will be required throughout the selling process.
• Proof of Inheritance: This documentation is generally provided to the heir or beneficiary at the end of the probate process.
• Death Certificate: Many of the parties involved with the sale of an inherited home require a certified copy of the death certificate.
• Property Title Records: You’ll need to show evidence that the title of the home is clear and that it has officially been transferred into your name.
• Property Tax Records: You may also be required to provide proof that there are no outstanding taxes associated with the property.

Options for Selling Inherited Property in Washington

When it comes to selling inherited property in the state of Washington, you have several options. The three most popular include:

For Sale by Owner (FSBO)

First, you can choose to sell the property on your own without hiring a real estate agent. While this approach has its benefits, it also comes with challenges.

Pros:

• Avoid paying a real estate commission (a.k.a. save money)
• Maintain full control over the selling process

Cons:

• The process can be complex and confusing
• Limited experience and access to essential resources
• Potential legal or tax complications

Real Estate Agent

Another option is to partner with a local real estate agent. Like FSBO, this option comes with its own advantages and drawbacks.

Pros:

• Industry expertise and access to valuable resources
• Skilled at negotiation to secure the highest sale price
• Proper documentation to ensure legal and tax compliance

Cons:

• Commissions and fees may reduce your overall profit
• Less control over the selling process
• Traditional home sales can take longer to complete

Real Estate Investor/Cash Buyer

The third option is selling to an investor who offers a lump-sum cash payment. This method has its own set of advantages and drawbacks.

Pros:

• No commissions and, in some cases, no closing costs
• Fast and hassle-free transaction (close in as few as seven days or less)
• Ability to sell the property As-Is, avoiding costly repairs or renovations

Cons:

• Cash offers are often slightly below market value
• Limited room for negotiation
• Potential risk of scams if you don’t choose a reputable buyer

Challenges to Selling Inherited Property in Washington State

Unfortunately, selling inherited property in Washington isn’t always as straightforward and simple as one might hope—especially when one of the following scenarios occurs.

Multiple Heirs

The inheritance process can be a complex one, and adding multiple heirs or beneficiaries can make things even more challenging. Conflicts often occur when one or more co-owners refuse to sign probate documents or oppose selling the property.

Even if everyone agrees to sell, determining when and how to do so can lead to additional complications and further disagreements.

If you and your co-heirs are at an impasse and want to avoid court (which is highly recommended), working with a mediator who is experienced in inheritance disputes may be in everyone’s best interest.

Title Issues

As mentioned earlier, in Washington State, inherited property cannot be legally sold without a clear title. Many inherited homes have liens or unpaid taxes, which can complicate and delay the transfer process.

If you're dealing with a complex situation or are uncertain about the next steps, consulting a knowledgeable real estate attorney could help guide you through the process.

Property in Disrepair

Inherited homes are often in significant disrepair by the time they are passed on to a new owner. This can happen for various reasons, such as the previous owner being elderly or physically unable to maintain the property.

Restoring a home to marketable condition can be expensive, sometimes costing thousands or even tens of thousands of dollars. As the new owner, you would be solely responsible for these expenses, as well as ongoing costs like property taxes, insurance, utilities, and general upkeep.

In such cases, selling to a reputable cash buyer might be the most practical solution. If the home is in really bad condition, selling it As-Is to a real estate investor may be your only option, as many banks won’t approve mortgages for properties that are serious disrepair.

Selling to an investor allows you to walk away without the hassle of repairs or cleanup. Some cash buyers even handle the process of cleaning out the leftover belongings from inside the property, which can be especially helpful in hoarding situations.

Avoiding Probate in Washington

In the state of Washington, most inheritances are required to go through probate, which can be a time-consuming and expensive process. Thankfully, there are a few ways to avoid this:

• Living Trust: A living trust allows the owner of the home (referred to as the trustee) to maintain control over the property while alive and distribute said property to its new owner(s) upon death, without requiring probate.
• Joint Ownership with Right of Survivorship (JTWROS): Individuals who co-own property can set up a Joint Tenancy with Right of Survivorship (JTWROS). With this arrangement, when one owner passes away, the survivor automatically inherits their share, avoiding probate.
• Community Property: The state of Washington allows married couples to create community property agreements, which ensure that when one spouse dies, the surviving spouse automatically inherits their portion of the joint assets.
• Transfer on Death Deed (TODD). A Transfer on Death Deed allows the homeowner to transfer ownership of the property directly to someone else upon their death without having to go through the probate process.

If you are planning your estate and looking for ways to help your heirs avoid probate after your death, we recommend consulting with an experienced estate attorney and/or a qualified financial advisor for specific guidance.