The Guide to Selling Inherited Property in Ohio

Selling an inherited property can be a complicated and confusing process. There are so many important things to consider, like probate and taxes, not to mention the emotional factor that comes with losing a loved one. If you recently inherited a home in Ohio and are considering selling, but aren’t sure where or how to begin, we’ve got you covered.

This article is designed to cover all the ins and outs of selling inherited property in Ohio to help you better prepare for a smooth transaction.

What is Inherited Property?

Inherited property refers to anything that is passed along from a deceased person to their heirs or beneficiaries. This can cover anything from personal belongings that are sentimental in nature to assets of value, such as cash, investments, vehicles, and homes.

In Ohio, inherited property usually goes through a legal process known as probate before it can officially be passed on to its new rightful owners. Probate is the court-supervised settlement of a deceased person’s estate, and it involves the payment of any outstanding debts and the distribution of any remaining assets to the appropriate parties.

If you plan on selling an inherited home in Ohio, it’s essential that you understand everything that’s involved in doing so. Specifically, you’ll want to make sure you know what steps to take, when, and in what order. Let’s explore each of these things below.

What to Do When You Inherit a Home in Ohio

Initiate the Probate Process

The first step after inheriting property in Ohio is to start the probate process. This is done by filing a petition, along with the will (if one exists) and death certificate, with the probate court in the county in which the decedent lived.

In Ohio, the probate process can take anywhere from six months to a year or more, depending on the complexity of the estate and other factors. During this time, it is crucial that you try to stay as organized as possible.

Have the Property Assessed

Once you’ve initiated the probate process, the next step is to have the property appraised. This should be done by an experienced professional. The result of the appraisal will serve two main purposes: determine the current market value so you’ll know how much you can sell it for and establish the property’s tax basis. (We’ll go into the latter in more detail below.)

Prepare the Property for Sale

Next, you’ll need to decide whether you plan on doing any repairs or renovations to the property before selling it or if you’d rather just sell it As-Is. Understand that if you choose to fix the home up, you will be responsible for the costs associated with that, as well as all expenses required to keep the property in good standing, like the mortgage, utilities, taxes, and insurance premiums.

Legal Aspects of Selling Inherited Property in Ohio

Transfer of Ownership and Title

In the state of Ohio, a property cannot legally be sold until the title is officially transferred into the name of the rightful new owner. This critical step is typically handled during the probate process.

Pay Off Mortgages and Clear Liens

It’s not uncommon for an inherited home to come with certain financial and legal obligations. For instance, the property may still have a mortgage, or it could have liens on it. These things must be cleared up prior to the property being sold. If you’re unsure whether any of these encumbrances exist, you may need to reach out to the lender and county clerk’s office to find out.

Disclosure

Ohio requires that sellers of residential property complete a Residential Property Disclosure Form inform potential buyers about any known issues that might negatively impact the value of the property, including but not limited to problems with the:

• Water supply
• Sewer system
• Electrical system
• Plumbing
• HVAC
• Roof
• Foundation
• Basement and/or crawl space
• Floors
• Interior and exterior walls
• Fireplace and chimney
• Built-in appliances
• Any oil, gas, or mineral right leases on the property
• Issues with boundary lines

Additionally, sellers must disclose the presence of:

• Lead-based paint
• Asbestos
• Urea-formaldehyde foam insulation
• Radon gas
• Underground storage tanks
• Wells
• Flood plains
• Erosion
• Zoning violations
• Termites and other wood-destroying insects

Finally, sellers are expected to mention any additional "material" defects that could be dangerous or cause a buyer to not purchase the property due to the anticipated costs to repair or replace. 

Financial Impact of Selling Inherited Property in Ohio

Taxes

• Property Tax: In Ohio, all property is taxed at an assessment rate of 35% of its full market value. The base property tax rate is set at 10 mills, which is equivalent to $10 for every $1,000 of assessed property value. This may vary slightly by county.
• Transfer Tax: Known in Ohio as a conveyance fee, this tax is assessed at $1.00 for each $1,000 of the property’s value, which is typically based on the purchase price.
• Estate Tax: While the state of Ohio does not levy an estate tax, the federal government might, depending on whether the value of the estate exceeds the exemption limit.
• Inheritance Tax: There are only a handful of states that impose an inheritance tax, and fortunately, Ohio isn’t one of them.
• Capital Gains Tax: If the property you inherited increases in value between the date of the previous owner’s death and the date of the sale, you will most likely be required to pay capital gains taxes. Fortunately, you will only be taxed on the appreciation amount.

Other Expenses

• Renovations/Repairs: If you decide to do any necessary repairs or renovate the property to make it more marketable, the responsibility for those costs will lie with you.
• Ongoing Maintenance: Until the property officially sells, the heir or beneficiary who inherited the home will be financially responsible for its upkeep, including paying the mortgage (if applicable), utilities, insurance, etc.
• Real Estate Commissions: Most real estate agents earn a commission for the work they do to help sell a home. In Ohio, the average real estate commission is 5-6% of the sale price.
• Closing Costs: Closing costs cover all the administrative duties associated with the sale of a home, such as attorneys’ fees, title insurance, loan origination fees, etc. In Ohio, closing costs are typically around 8-10% of the sale price.

Documents Required for Selling Inherited Property in Ohio

To sell inherited property in Ohio, you’ll need the following documentation:

• Photo ID: Up-to-date photo identification will be required for various reasons throughout the selling process.
• Proof of Ownership: This documentation is usually provided to the heir or beneficiary during the probate process.
• Death Certificate: Most of the parties involved with the sale of inherited property will require a certified copy of the death certificate.
• Property Title Records: You’ll need to show proof that the property’s title has been transferred to your name, and that there are no liens, or other encumbrances associated with the property.
• Property Tax Records: You may also be required to show evidence that there are no municipal or other outstanding taxes associated with the home.

Options for Selling Inherited Property in Ohio

There are several options for selling inherited property in Ohio. The three most common ones include:

For Sale by Owner (FSBO)

One option is to sell the property on your own, without the assistance of a real estate agent. There are a few benefits and downsides to this option.

Pros:

• Avoid paying real estate commissions (5-6% of the sale price)
• Maintain greater control over the process

Cons:

• Can be a confusing and overwhelming process
• Lack of industry experience and access to resources
• Risk of potential legal and/or tax issues

Real Estate Agent

Another option for selling an inherited home in OH is to work with a real estate professional. Of course, this option also comes with its own advantages and disadvantages.

Pros:

• Industry experience and access to more resources
• Skilled negotiators could get you a higher sale price
• Proper documentation to ensure legal and tax compliance

Cons:

• Commission and other fees can reduce your profits
• Lack of control over the process
• Traditional home sales can be a long, drawn out process

Real Estate Investor/Cash Buyer

The third option is to sell to a real estate investor who is willing to purchase the property for a lump-sum payment of cash. Here are a few benefits and drawbacks to this option.

Pros:

• No commissions and, in some cases, zero closing costs
• Fast, easy transaction (close in as few as 7 days)
• Option to sell the property As-Is (no output of $$ on repairs/renovations)

Cons:

• Offer could be slightly below market rate
• Not as much room for negotiation
• Risk of fraud if you aren’t careful about choosing a reputable cash buyer

Challenges to Selling Inherited Property in Ohio

Sometimes selling inherited property in Ohio isn’t as straightforward as you’d like—especially if you find yourself dealing with one or more of the following scenarios.

Multiple Heirs

Inheriting property on your own is one thing, but what happens when there are multiple heirs or beneficiaries? Mixing in multiple opinions and personalities can be a recipe for disaster.

For instance, it’s not unheard of for one or more siblings to refuse to sign probate, or decide they don’t want to sell. There are, of course, legal remedies for these situations, but then you’ll be handing over control of the process to a judge.

Even in scenarios in which all of the beneficiaries agree to sell the home, then you’ll all have to agree on when and how to do so.

If you and your co-beneficiaries are having difficulty reaching an agreement, your best bet will probably be to enlist the help of a mediator. This can help avoid a long, expensive, and emotional legal battle.

Title Issues

As mentioned, a home cannot be legally sold in Ohio unless it has clear title. In many cases, there may be certain steps that must be taken in order to ensure this.

For instance, if there are any liens or outstanding taxes associated with the property, these things will need to be addressed before the title can be transferred and you can sell.

If you are dealing with an especially complicated situation or you’re just unsure of how to proceed, an experienced real estate attorney can provide some guidance.

Property in Disrepair

Another common issue with inherited property is that the home is in severe disrepair by the time it’s passed along to its new owner. This can happen for a number of reasons. For instance, the decedent may have been too old or sickly to properly maintain the home. Or, they could have fallen into a hoarding situation, making the property unlivable.

In any case, restoring a property like this to markable condition can cost thousands or even tens of thousands of dollars. Not only would that money come out of your pocket as the new owner, but you’ll also be on the hook for all the expenses associated with maintaining the property, such as utilities and property taxes.

In situations such as this, working with a cash buyer may be your best option. In fact, if the property is in severely bad condition, selling it As-Is to a real estate investor might actually be your only option. That’s because in some cases, a bank won’t even consider extending a mortgage loan.

When you sell to a cash buyer, you can simply collect your payment and walk away without having to invest any more time or money into the property. With the right investor, you might even be able to leave all the belongings in the house. This is a great option for hoarding situations.

Avoiding Probate in Ohio

In Ohio, most inherited property goes through probate, which takes time and can be costly. Thankfully, there are a few ways to get around this:

• Living Trust: A living trust allows the homeowner, aka the trustee, to maintain control over the property while alive and then have their named successor trustee distribute said property to its new owner upon death, without the need for probate.
• Joint Ownership with Right of Survivorship (JTWROS):  Individuals who co-own property together can set up a Joint Tenancy with Right of Survivorship (JTWROS). With this arrangement, when one owner dies, the surviving owner automatically inherits their share, bypassing probate.
• Transfer on Death Deed (TODD). A Transfer on Death Deed allows a homeowner to transfer ownership of the property directly to someone else upon their death without the property having to pass through probate first.
• Gift the Property: In the state of Ohio, you are allowed to gift real estate to someone else. It’s important to note, however, that this type of transaction involves significant tax and legal considerations.

All but one of these arrangements must be established prior to death. If you're in the process of planning your estate and are looking for ways to help your beneficiaries avoid probate, we recommend consulting with an experienced estate attorney and/or a qualified financial advisor for specific guidance.