How Do You Sell an Inherited House in New Jersey?

To sell an inherited house in New Jersey, someone has to have legal authority to sign for the estate, and the sale closes once the estate has the state's inheritance tax waiver for the real estate. Usually that person is the executor named in the will or, when there's no will, an administrator appointed by the county Surrogate. Everything else, from the value to the clean-out to the marketing, can start while that paperwork moves.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. Before I sold homes, I built and remodeled them in New Jersey, and an inherited house is where that background earns its keep. Here's how the whole sale fits together, step by step, for a house in Monmouth or Ocean County.

Who has the authority to sell an inherited house in New Jersey?

The person the Surrogate appoints. According to the Monmouth County Surrogate, the executor named in the will files it with the Surrogate's Court in the county where the person lived, and once the will is accepted the Surrogate issues Letters Testamentary and short certificates. When there's no will, the Surrogate appoints an administrator and issues Letters of Administration.

Two things trip families up here:

• A power of attorney stops working at death. The Ocean County Surrogate's planning guide says a power of attorney "automatically ends at the death of the principal." The person who handled a parent's bills can't sign a listing or a deed with it afterward.
• Being an heir isn't the same as being in charge. Three siblings can each inherit a third and still have one executor who signs. New Jersey's fiduciary powers statute, N.J.S.A. 3B:14-23, includes the power to sell estate real property, unless the will, the appointment or a court order limits it, and it doesn't cover property the will leaves to a named person.

The estate's attorney confirms who holds the authority in your case.

Does the house even have to go through probate?

Pull the deed first, because it answers this. The Ocean County Surrogate's guide explains that probate is done when someone dies with assets in their name alone. A house owned by spouses as tenants by the entirety becomes the survivor's, and a house held as joint tenants with rights of survivorship passes to the surviving owner. If the house was in the person's name alone, the estate sells it.

What are the steps to sell an inherited house in NJ?

1. Get the death certificates and find the original will. The Surrogate needs the original will with any codicils and an original death certificate with a raised seal.
2. Get appointed. In Monmouth County the Surrogate can't issue Letters Testamentary or short certificates until the eleventh day after death. The Ocean County Surrogate issues certificates on the 11th day with a will and on the 6th day without one.
3. Secure and insure the house. Call the insurance company and keep the heat and utilities on.
4. Get a real value. A market evaluation backed by recent sales, not the tax assessment and not what a neighbor's house sold for years ago.
5. Handle the contents. Items the will leaves to someone get set aside first, then the estate sale, then the clean-out.
6. Decide on repairs. As-is, or a short list of updates that pay for themselves.
7. List and market it. The first two weeks on the market set the price, so the house goes live ready.
8. Close with the waiver in hand. The executor or administrator signs, and the estate's attorney handles the estate's side of the closing.

What does the house need before it goes on the market?

Most inherited homes in Monmouth and Ocean County come to me full. A lifetime of furniture, paperwork and things nobody has decided about yet. Buyers need to see the house, not the belongings, so in most cases I recommend emptying it before it's listed. I can line up the estate sale and the clean-out, so the family isn't sorting it room by room.

Estate homes have often gone years without updates. I walk the house the way a builder does, the roof, the mechanicals, the kitchen and baths, and anything a buyer's inspector will flag, and I bring two plans: sell as-is, or make a few targeted updates first, with what each one should bring. The estate decides. I got a guy for everything, so if the estate picks updates, the work gets done by trades I trust. Read which upgrades add value in New Jersey before anyone spends a dollar.

How do Monmouth and Ocean County handle the probate paperwork?

Each county has its own Surrogate, and the details differ:

• Monmouth County: the Surrogate's office is at the Hall of Records in Freehold. You can file through its online eFile portal, in person or by mail, and a probate clerk reviews the estate. Extra short certificates are $5 each, and you need one for each asset in the person's name alone (Monmouth Surrogate FAQs).
• Ocean County: the main office is at 118 Washington Street in Toms River, with no appointment needed to start, and a Southern Service Center in Manahawkin by appointment on Fridays. It takes cash, check or money order only.

More detail on what to bring is in my article on Letters Testamentary and short certificates in Monmouth and Ocean County.

What taxes come up when you sell an inherited house?

Two different things, and people mix them up:

• New Jersey inheritance tax depends mainly on each beneficiary's relationship to the person who died. The NJ Division of Taxation's executor guide says spouses, parents, children and grandchildren (Class A) are exempt, and that real estate transfers always require a Form 0-1 waiver. When every beneficiary is Class A and no tax or return is due, the executor or administrator can request the real estate waiver with Form L-9. See how the waiver works.
• Income tax on the sale. IRS Publication 551 says the basis of inherited property is generally its fair market value on the date of death, so the question is usually the change in value since then. More in capital gains on an inherited house.

Your tax professional makes the calls here. I can give them my market evaluation of the home.

What are the most common mistakes families make?

• Signing anything before the authority is confirmed. A listing agreement or a contract signed by the wrong person creates a problem nobody needs.
• Clearing the house before the will is read. Items left to a named person have to be set aside first.
• Letting the insurance or the heat lapse. An empty, unheated house in January is how a frozen pipe turns into ruined floors.
• Pricing from memory. What the house was worth to the family and what buyers pay today are two different numbers.
• Keeping some heirs in the dark. Everyone with a stake should get the same written update at every milestone.

Frequently Asked Questions

How long does it take to sell an inherited house in New Jersey?

There's no single answer. With a will, the Surrogate can appoint the executor from the 11th day after death, but the waiver and the estate's other steps take longer, and the NJ Division of Taxation says to plan for processing a return to take at least several months. Read how long probate takes in New Jersey for the dates that are fixed.

Can I sell an inherited house as-is?

Yes, and sometimes it's the right call. I'll show the estate both plans, as-is and with a few targeted updates, with what each one should bring, and the estate decides.

Do I have to pay off the mortgage before selling?

No. Any remaining loan is typically paid off at closing from the sale. Until then, ask the estate's attorney how the estate should handle the payments.

Can I sell my parent's house with the power of attorney I had?

No. A power of attorney ends at death. After that, authority comes from the Surrogate through Letters Testamentary or Letters of Administration.

This is general information, not legal, tax or lending advice. The estate's attorney confirms who has authority to sell, and a tax professional should advise on taxes.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. See how I handle estate and probate home sales or read more about Dennis Mark.

Keep reading

• The free Estate & Probate Guide
• Find out what the house is worth
• Can you sell a house before probate is finished in New Jersey?
• The paperwork you need to sell a home in New Jersey
• Have a question this didn't answer? Send it to Dennis Mark.