Selling an inherited property

First: how was it held?

Almost everything downstream depends on this, and families often do not know the answer until they look.

• In a living trust. The successor trustee can generally act without going through probate. This is much faster, and it is why people set trusts up.
• In the deceased person's name alone. Probate is usually required — a court-supervised process to confirm who inherits and who may sell.
• Joint tenancy or community property with right of survivorship. Ownership typically passes to the survivor directly.
• Transfer-on-death deed. California allows a revocable TOD deed for certain residential property, which can pass it outside probate.

A title company can tell you how the property is actually vested. That is the first call, and it is free.

If it goes through probate

Probate is a court process with its own timetable, and it is slower than families expect — commonly many months. An executor or administrator is appointed, assets are inventoried and appraised (in California by a Probate Referee), creditors are given notice, and the court authorizes distribution or sale.

Selling during probate has particular quirks. Depending on the authority granted, a sale may need court confirmation, and in some cases the court hearing allows overbidding — other buyers can bid against an accepted offer in open court. That materially changes how a property should be marketed and how you should set expectations with a buyer.

There are simplified procedures, and the thresholds changed recently. California now has a streamlined court petition to transfer a decedent's primary residence valued up to $750,000 - effective 1 April 2025 and fixed until 31 March 2028, after which it adjusts. Separately, the small-estate affidavit for personal property sits at $208,850 for deaths in the current window.

Note the streamlined residence petition is still a court petition and carries a six-month waiting period - faster than full probate, not instant. Whether an estate qualifies is a question for the court's self-help resources or an attorney.

What probate costs, which families rarely factor in

California sets attorney and executor compensation for ordinary probate services as a statutory percentage of the estate's gross value - gross, not net of the mortgage. On a home with substantial debt against it, the fee is calculated on the full value regardless.

That is a real number and it belongs in the keep-or-sell decision from the start, not as a surprise at the end.

The tax part that usually surprises people pleasantly

Inherited property generally receives a stepped-up basis: for capital gains purposes the starting point is normally the fair market value at the date of death, not what the deceased originally paid.

In practice this often means a home held for decades, with an enormous paper gain, can be sold by heirs with comparatively little capital gains exposure — because the gain that accrued during the owner's lifetime is not what is being measured.

If the home was held as community property, this gets better. Where a married couple held it that way, both halves generally step up at the first spouse's death - not just the deceased spouse's half. For a surviving spouse that can eliminate decades of gain entirely.

Property held in joint tenancy generally steps up only the decedent's half. How title was taken therefore matters a great deal, and it is worth confirming what it actually says rather than what everyone assumes.

This is why a date-of-death valuation matters. It sets the number everything else is measured against.

We can prepare a broker's opinion of value as of a past date to help you and your CPA think it through. For tax basis, though, the authoritative figure is a qualified appraisal - or, in a probate, the Probate Referee's appraisal. A broker's opinion is not a substitute for either, and any agent who tells you otherwise is overstating what they are able to give you.

The property tax question — and this is the one that decides things

Separately from capital gains, there is the ongoing property tax bill. Proposition 19 changed this substantially in 2021, and it is where families most often get a shock.

Broadly: a family home passing to a child can keep much of its low assessed value only if the child makes it their own principal residence, and even then only up to a cap. A child who keeps their own home and rents this one out will generally see it reassessed at market value — and on a house held for thirty years, the new bill can be several times the old one.

That single fact frequently decides whether a family keeps a property or sells it, and it is worth understanding before anyone gets attached to a plan. The full Prop 19 explanation →

When several people inherit together

The most common real difficulty is not legal or financial. It is that three siblings want three different things — one wants to sell, one wants to keep it, one wants to rent it out — and the property cannot do all three.

Some practical observations from having sat in a number of these conversations:

• Get an independent valuation early. Much of the disagreement is really disagreement about what the house is worth. A neutral number removes that argument before it becomes personal.
• Price the buyout properly. A sibling buying the others out is a purchase, and it should account for the costs a sale would have carried. Comparing a buyout to a hypothetical gross sale price is not comparing like with like.
• Carrying costs run the whole time. Taxes, insurance, utilities and maintenance continue through probate, and an empty house deteriorates faster than an occupied one. Insurers also treat vacant property differently — check the policy still covers it.
• Decide about contents before listing. Clearing a family home is emotionally slow, and it is the thing that most often delays a sale by months.

Selling it: what is different

• Disclosure. California's transfer disclosure requirements have exemptions for certain probate and trust transfers, but exemption from a form is not permission to conceal a known defect. The honest and safer path is to disclose what is known and let the buyer inspect. Confirm the specific position with your attorney.
• Condition. These properties are often decades into deferred maintenance. Selling as-is is entirely legitimate and often right — it just needs pricing that reflects it rather than hoping a buyer will not notice.
• Buyer pool. Court confirmation and overbid procedures put some buyers off and attract others. It changes who you should be marketing to.
• Death on the property is disclosable. California requires disclosure of a death on the property occurring within three years of the buyer's offer. There is a specific carve-out relating to HIV/AIDS, and in all cases you may not lie if asked directly. On an inherited property this comes up more often than on any other kind of sale, and it is better handled deliberately than improvised.

One further point on authority: how the sale runs depends on whether the representative has full or limited authority under the Independent Administration of Estates Act. With full authority, a sale generally proceeds without court confirmation or overbidding. With limited authority, it goes to a confirmation hearing where the court can take overbids, and the statute sets a minimum first overbid above the accepted price. Find out which applies before you decide how to market it.

What we do, and what we do not

We are brokers. We can tell you what the property is worth today and what it was worth at a date in the past, advise on whether to clear and repair or sell as-is, market it appropriately for the process it is in, and handle the sale. Between the three of us we have been through a lot of these, and there is a rhythm to them.

We are not attorneys or accountants, and the decisions that matter most here — probate procedure, trust interpretation, tax elections — belong with people who are. We work alongside them rather than around them, and if you do not have either yet, that is the first thing to sort out, before you decide anything about the house.

There is no hurry from our side. Families that decide well tend to be the ones who got the information early and then took their time.