The Guide to Selling Inherited Property in Missouri

Inheriting a home can be a complex and emotional process. Not only are you dealing with the grief of losing a loved one, but now you’ve also got the added stress of figuring out what to do with the property you just inherited.

If you’re thinking of selling, you’ll have a whole new set of things to consider. To make this challenging time a little less chaotic, we’ve put together a comprehensive guide designed to cover all the ins and outs of selling inherited property in Missouri.

From understanding the probate process to navigating taxes and other financial issues, this resource should cover everything you need to make the process go as smoothly as possible.

What Is Inherited Property?

The term “inherited property” refers to anything that is passed from a deceased person to their heirs or beneficiaries. This includes assets that are of value, such as bank accounts, investments, vehicles, and real estate. It may also include personal items that are sentimental in nature, but don’t necessarily have any monetary value.

In the state of Missouri, the process of passing along inherited property to its new rightful owner(s) begins with a legal process called probate. This ensures that all of the decedent’s remaining debts are settled, and that whatever is left over is transferred to the appropriate person(s).  

Before selling a home you inherited in Missouri, you’ll want to know what to expect and how to prepare for what’s to come. Let’s start by going over the initial steps you should take once you’ve been informed of your loved one’s passing.

What to Do When You Inherit a House in Missouri

Initiate the Probate Process

The first step in selling your inherited property is to initiate the probate process. This is done by filing a petition with the local court in the county in which the decedent resided. The petition must be accompanied by a copy of the death certificate and the will (if one exists).

Once this is filed, the court will then review, approve, and name an executor or personal representative to manage the estate. This includes notifying potential heirs and creditors, inventorying and assigning value to assets, paying off debts, and ensuring the remaining assets are distributed accordingly. 

In Missouri, the probate process can take anywhere from six months to a year or longer, depending on the complexity of the estate and whether there are any disputes. While probate is open, it is in your best interest to stay as organized as possible.

Have the Property Assessed

Next, you’ll need to determine how much the property is currently worth. This is typically done through an appraisal, which should be completed by a reputable professional. The results of the appraisal will help you decide how much you can sell the property for. It will also give you a basis for tax purposes, which will come into play when you finally sell.

Prepare the Property for Sale

Once you’ve established the home’s value, the next question you’ll need to ask yourself is whether or not it’s worth investing in repairs or renovations, or whether it’s better to simply sell the property As-Is. If you do decide to fix the place up, don’t forget to also calculate how much it will cost you to maintain the property in the interim. Remember—until it sells, you’ll be on the hook for ongoing expenses, like mortgage payments and utilities.

Legal Aspects of Selling Inherited Property in Missouri

Transfer of Ownership

In Missouri, inherited property cannot be legally sold until its title has officially been transferred into the name of the new owner. This process is typically handled during probate.

Pay Off Mortgages and Clear Liens

A home that is inherited will often come with outstanding debt, such as a mortgage or existing home equity loan. Additionally, it’s not unusual for an inherited property to have liens, which are legal obligations that must be resolved in order to clear the title for sale. Make sure any and all encumbrances associated with the home are taken care of before you attempt to sell.

Disclosure

Home sellers in Missouri are required by law to disclose certain pertinent information about the status and condition of their property. This is done in writing through a Seller's Disclosure Statement for Residential Property form.

Specifically, sellers must disclose any known material defects in the home’s structure and major systems, as well as any issues with the included appliances that the seller is aware of.

The International Association of Certified Home Inspectors describes a material defect as "a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property or that poses an unreasonable risk to people."

Known defects that must be disclosed include but are 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 complete the form and/or disclose any known defects could result in a potential law suit, fines, and a whole host of other serious consequences.

Financial Impact of Selling Inherited Property in Missouri

Taxes

• Property Tax: The effective property tax rate in Missouri is 1.01%, but that rate may vary based on the county where the property is located. You can determine the your specific obligation using the state’s online property tax calculator.
• Transfer Tax: Unlike many other states, Missouri does not charge a tax when real estate is transferred from one party to another. 
• Estate Tax: Missouri also does not charge any estate tax. The federal government may, however, based on whether the value of the estate exceeds the exemption limit.
• Inheritance Tax: Only a few states assess an inheritance tax. Fortunately, Missouri isn’t one of them.
• Capital Gains Tax: If the inherited property appreciates in value between the date of death and the date of sale, you will most likely owe capital gains taxes. (This is where establishing the tax basis from earlier comes into play.)

Other Expenses

• Repairs & Renovations: If you choose to make improvements to the property before selling, you will be responsible for all the costs associated with those repairs or renovations.
• Ongoing Maintenance: Until the property sells, you will need to stay on top of the everyday expenses that come with owning a home, including mortgage payments, property taxes, utilities, and insurance premiums.
• Real Estate Commissions: Most real estate agents charge a commission, which is typically a percentage of the sale price. In Missouri, this is typically around 5-6%.
• Closing Costs: Selling a home involves many administrative expenses like title insurance, attorney fees, and loan origination fees. These costs, which come out of the closing proceeds, usually range from 6.25% to 9% of the total sale price.

Documents Required for Selling Inherited Property in Missouri

When preparing to sell an inherited home in Missouri, you'll need to gather several critical documents to ensure a smooth and timely transaction. Here's what you should prepare:

Personal Identification

• A current, government-issued photo ID (such as a Missouri driver's license or passport) must be maintained throughout the entire selling process

Inheritance Verification

• Legal documentation confirming your status as the rightful heir
• This typically becomes available after the completion of probate proceedings
• May include Letters Testamentary, Letters of Administration, or a court order distributing the estate

Official Death Certificate

• Nearly all parties involved (title companies, mortgage lenders, county recorder's office) will require a certified copy of the deceased's death certificate

Property Ownership Records

• Complete title documentation showing clear ownership
• Evidence that the property has been legally transferred into your name
• Title search results confirming that there are no existing liens, judgments, or encumbrances associated with the property

Tax Documentation

• Proof that property taxes are paid and current
• Documentation demonstrating there are no other outstanding tax liabilities attached to the property

Having these documents organized and ready to go before listing the property for sale will significantly streamline the process and help prevent potential delays or complications during the transaction.

Options for Selling Inherited Property in Missouri

There are a few different options for selling inherited property in Missouri. The three most popular one are:

For Sale by Owner (FSBO)

First, there’s the option of selling your property without a real estate agent. Of course, this approach comes with both benefits as well as challenges.

Pros:

• Maximize your profits by avoiding real estate commissions
• Maintain total control over the selling process

Cons:

• FSBO can be complex and difficult to navigate without prior experience
• Lack of industry knowledge and professional connections
• Risk of potential legal or tax complications

Real Estate Agent

Another option is to sell your inherited property with the assistance of a real estate agent. While this approach does come with some advantages, it also has a few drawbacks to consider.

Pros:

• Industry expertise and access to valuable resources
• Ability to negotiate to ensure the best price
• Proper handling of documentation to ensure tax and legal compliance

Cons:

• Agent commissions and other fees can eat away at your profit
• Less control over the selling process
• Traditional home sales can take a long time

Cash Buyer

The third option is to sell your inherited property to a real estate investor for a lump-sum cash payment. This method definitely has its perks, but also has a few trade-offs.

Pros:

• No commissions, and in some cases zero closing costs
• Fast and hassle-free transaction (close in as few as 7 days)
• Ability to sell the home As-Is, avoiding the need for costly repairs or renovations

Cons:

• Cash offers may be slightly lower than market value
• Little room for negotiation
• Risk of being scammed if you aren’t careful about choosing a reputable buyer

Challenges to Selling Inherited Property in Missouri

Selling inherited property in Missouri may not be as simple as you hope—particularly when faced with one or more of the following scenarios.

Multiple Heirs

When multiple beneficiaries inherit a property together, what should be a straightforward transaction can quickly dissolve into a challenging situation fraught with unexpected and often emotional complications.

Families run into issues when certain heirs delay or refuse to sign probate paperwork, are reluctant to sell, or have sentimental attachments to the property that impede their ability to make objective financial decisions.

Even with unanimous agreement on selling the property, secondary disagreements frequently arise about when and how to move forward with the sale.

When direct negotiations between beneficiaries reach a stalemate, professional mediation could be the ideal next step. This can help preserve family relationships while avoiding the substantial financial and emotional costs associated with legal battles.

For optimal results, we recommend seeking the assistance of a mediator who has proven experience in estate matters and inheritance disputes.

Title Issues

In the state of Missouri, an inherited property cannot be legally sold until it has a clear title. However, many inherited homes have liens or unpaid taxes, which can further complicate and delay the sales process.

If you're dealing with a complex title issue and are unsure of the next steps, a knowledgeable real estate attorney could help make the process much easier.

Property in Disrepair

When homes are passed down through an inheritance, they often come with years of deferred maintenance. As people age or face increasing health challenges, keeping up with home repairs naturally becomes more difficult, leaving properties in various states of disrepair by the time they change hands.

Fixing up a property like this can easily cost thousands or even tens of thousands of dollars—money that would come directly from your pocket as the new owner. Meanwhile, ongoing expenses like property taxes, insurance, and utilities continue accumulating whether the home is occupied or not.

For many heirs, selling to a reputable cash buyer offers a quick and practical solution. These investors specialize in purchasing properties As-Is, meaning you won't need to invest time or money into repairs or updates before selling. In some cases, a property may be in such deplorable condition that banks won’t approve them for a mortgage, making a cash sale the only viable option.

An additional benefit of working with cash investors is their willingness to handle property cleanout. When faced with a home filled with years of accumulated belongings or hoarding situations, this can alleviate both a physical and emotional burden.

Avoiding Probate in Missouri

As mentioned in the beginning of this guide, in the state of Missouri, most inheritances must go through probate. This can be a time-consuming and costly process. Fortunately, there are a few ways to avoid this:

• Living Trust: A living trust allows homeowners to maintain full control of their property during their lifetime while ensuring it seamlessly transfers to their chosen beneficiaries after their passing, all while avoiding probate.
• Joint Tenancy with Right of Survivorship (JTWROS): This form of joint ownership ensures that when one co-owner passes away, their share of the property is automatically inherited by the surviving owner, eliminating the need for probate.
• Transfer on Death Deed (TODD): A TODD enables a homeowner to designate a beneficiary who will inherit the property upon their death, allowing ownership to transfer directly without going through probate.

For these measures to be effective, they must be completed before the property owner's passing. If you're exploring estate planning options to help your heirs avoid probate, consulting an attorney or a qualified financial advisor is strongly advised.