Selling a house can be a stressful and complicated process, especially when multiple owners are involved. Whether you inherited the property with your siblings or purchased it with business partners, navigating the sale of a property with multiple owners can come with a unique set of challenges that can be turned into a much smoother process if you know some important way to handle it — ahead of time. Selling a property with multiple owners doesn’t have to be as tricky as some would believe but it does involve plenty of planning, a little bit of forethought, and specific considerations that can make or break the sale.
Maybe you and some friends purchased a vacation rental home years ago and now want to sell it. Maybe you and your siblings inherited your parents’ old home but no one wants to spend the time or money on maintenance and upkeep.
If you find yourself in this situation, it’s important to understand the key factors that can impact the sale of your property and how to navigate them effectively.
No matter the reason, selling a jointly owned property is a bit more involved than selling a single-ownership property. Working with an experienced realtor or investor-buyer can save time and money while reducing the stress associated with this type of transaction.
In this blog post, we’ll explore seven things you need to know about selling a house with multiple owners in Surprise. We’ll also discuss how working with a professional, direct buyer-investor can help simplify the process and ensure a successful sale for you and your fellow property owners.
1. Understand the Ownership Structure
The first thing you need to do when selling a house with multiple owners is to understand the ownership structure or how the property was originally purchased. This includes identifying all owners and determining the percentage of ownership that each person holds. If the property is owned jointly, each owner has an equal share. If the property is owned as tenants-in-common, each owner may have a different percentage of ownership. If the property is owned in an LLC or other entity, again, each owner may have a different percentage of ownership in addition to each owner being constrained by the directives of the LLC agreement.
Understanding the ownership structure is important because it can impact the decision-making process when it comes to selling the property. For example, if one owner wants to sell but the others do not, the sale cannot move forward without the consent of all owners.
2. Agree on a Sales Price
Agreeing on a sales price can be one of the most challenging aspects of selling a house with multiple owners. Each owner may have a different opinion on the value of the property, and reaching a consensus can be difficult especially if one or more of the owners is more emotional as well as opinionated about such things without having educated knowledge about it.
One option is to hire a professional appraiser who is well versed in the Surprise real estate environment to determine the fair market value of the property. This can provide a neutral, third-party opinion on the value of the property and help owners come to an agreement on the sales price. Such a professional will charge a fee for this, so all parties will need to be prepared to share in the cost of those fees usually up front. Therefore, you’ll also want to have an agreement regarding this ahead of time.
3. Develop a Sales Agreement
Once the sales price has been agreed upon, it’s important to develop a sales agreement that outlines the terms of the sale. This should include the sales price, the closing date, and any contingencies that need to be met before the sale can be finalized.
Developing a sales agreement can be complicated when multiple owners are involved. It’s important to work with an experienced real estate attorney and/or escrow professional who can help ensure that the agreement is legally sound and protects the interests of all owners.
4. Determine the Distribution of Proceeds
When the sale of a property is finalized, the proceeds must be distributed among the owners according to their percentage of ownership or according to the directives of an LLC agreement should the property be in such an entity. This can be complicated when there are multiple owners with different ownership percentages.
One option is to hire a professional escrow company to handle the distribution of proceeds. This is already normally done in Arizona. It can help ensure that the distribution is handled fairly and in accordance with the sales agreement.
5. Address Any Tax Implications
Selling a property can have tax implications for all owners involved especially if the property is free and clear of any mortgage notes and has accumulated quite an increase in value since the time it was originally purchased. It’s important to understand the tax implications and address them accordingly.
For example, if the property has appreciated in value since it was acquired, each owner may be subject to capital gains tax on their portion of the sale. It’s important to work with a tax professional who can help you understand the tax implications and develop a strategy to minimize your tax liability prior to completing the escrow and closing process.
6. Consider Working with a Professional, Direct Buyer
Navigating the sale of a property with multiple owners can be complicated and time-consuming not just for the items already discussed, but simply gathering all of the professionals together in a timely manner and ensuring everyone is on the same page as well as competent to complete the sale, contingency and complicated distribution process. One way to simplify the process is to work with a professional, direct buyer.
A direct buyer can purchase the property directly from the owners, eliminating the need for a traditional real estate agent, their associated fees and several other selling factors that include hefty fees. This can help simplify the sales process and ensure a quick and efficient sale and proper distribution to all owners. At Fresh Start Homes AZ, we work with owners throughout Surprise to help them determine a fair and successful way to sell their properties, no matter how many owners are involved!
7. Choose a Reputable Investor-Buyer
If you decide to work with a direct buyer, it’s important to choose a reputable expert investor-buyer with a proven track record of success as well as competency at navigating complex selling situations. Look for a buyer who has experience working with properties with multiple owners and who can provide references from satisfied clients. Working with a reputable investor-buyer can help ensure a successful sale and provide peace of mind throughout the process.
Selling a house with multiple owners in Surprise can come with a unique set of challenges. As the end of the “baby boomer” era ages into retirement and the older baby boomers begin to pass, there may be an increasing amount of these multiple owner situations in Surprise and Phoenix, so being prepared for how to deal with this ahead of time is important.
By understanding the ownership structure, agreeing on a sales price, developing a sales agreement, determining the distribution of proceeds, addressing tax implications, and choosing a reputable buyer, you can navigate the sales process successfully. Working with a professional, direct buyer can help simplify the process and ensure a successful sale. If this sounds like an option you would be interested in, reach out to our team at (928) 421-2678 and (928) 239-7573 to learn more about the process!