Selling Parents Home To Pay For Care In Texas
Taking care of your mom and dad is one of your biggest priorities. However, high-quality senior care can be very expensive, and you may not have the time, space, or facilities to personally look after the senior in your life. For this reason, you have likely started to look for a suitable retirement community for your favorite senior.
Unfortunately, the best senior housing facilities have to charge high prices in order to retain qualified nursing staff and comfortable facilities. Without good senior care at a reputable senior living facility, your loved one may experience neglect, discomfort, health problems, and related possible risks. You don’t want to let the senior in your life suffer in a subpar nursing home, but paying for a high-quality facility might not be financially feasible for your family. To solve this problem, you may have to consider selling your senior parent’s home. Selling your senior loved one’s house will allow you to afford the best senior care for them, so you need to check out this guide on everything related to selling a senior parent’s home to afford costly long-term care.
Table Of Contents
The Process of Selling Your Senior Parent’s Home To Pay for Assisted Living in Texas
Get Authority To Sell
In most cases, the homeowner has to be the one to sell their house. Selling your senior loved one’s home is impossible if you don’t have the proper authority to represent your parent in a real estate transaction or make financial decisions on their behalf. If your senior parent is still mentally fit to make decisions for themselves, then they can draft an authorization letter to sell their property.
This letter will grant your senior family member’s chosen party to handle matters pertaining to the sale of their home. Such letters are especially useful if your senior parent lives far away from their property or is too frail to comfortably go through all of the minutiae involved in selling a home. You and your senior relative should meet with a lawyer to write an authorization letter that suits everyone’s individual and collective needs.
Your loved one can also compose a living will with provisions for the sale of their home if they lose their mental faculties. You and your senior parents should reach out to an estate planning lawyer for help drafting such important documents. If your loved has dementia, then you will have to appeal to the proper civil court to gain guardianship over them.
Find the Equity Value
To find the equity value of a home, you must first determine its market value. The housing market constantly changes, so you may not want to rely on a recent tax assessment. To avoid any surprises when you try to sell your loved one’s home, you should seriously consider hiring an appraiser to get an accurate assessment of the house’s value. Once you know how much the home is worth, you must simply subtract any outstanding debts on the house from its market value to determine the equity value. The most common debt on a house is the remaining mortgage balance.
To better understand how this equation works, consider the following example. If the house is worth $300,000, but your senior parent still owes $180,000 on the mortgage, then the house has an equity value of $120,000. No matter what price you plan on selling the house for, you’ll have to pay the remaining mortgage balance.
Determine How To Sell
There are three primary ways to sell a home. The most popular method of selling a home is to use a realtor. Realtors organize open houses and handle all of the small details and heavy lifting involved in selling a house. However, they typically take a hefty commission, and there is no guarantee that an interested buyer will find the house within a reasonable timeframe.
Selling your home to someone whom you already know is easier than selling with a realtor. Nonetheless, they still need to have enough money to afford the home, and there’s no guarantee that the bank will give them a mortgage. To make matters worse, you still have to worry about expensive closing costs in a private sale.
You may also want to think about selling your senior loved one’s home to a reputable homebuyer. Selling a house home to a cash homebuyer is a quick and easy process, making it one of the best options available to family members who need money as soon as possible. You just have to call them to schedule a simple inspection. After that, they’ll make you a fair offer. If you’re happy with their offer, then you can proceed with selling the home. Most sellers receive their payments within a couple of weeks.
When Should a Senior Think About Selling Their Home in Texas?
Selling a home is a big decision, and a senior’s children may have sharply differing opinions on the matter. Thus, a senior should start seriously considering the pros and cons of selling their house as soon as they start thinking about the prospect of long term care. There is no one-size-fits-all solution for every family, but by thinking about the implications of selling their home before they desperately need the money, a senior and their family members can make a decision that better suits their needs. The following lists detail some of the biggest benefits of selling a senior’s home at different points in time.
Benefits of Selling Before Moving Into Assisted Living
Savings on Maintenance
Residential properties cost a lot to maintain. Between landscaping, routine repairs, and any unexpected damage from natural disasters, an unoccupied house can be a huge money pit. When nobody is living in the house, small problems such as water damage or foundation cracks can also spiral out of control before anyone notices them. By selling your senior parent’s home before they move into a care facility, you can cut a massive monthly maintenance expense out of your budget.
Larger Budget for Higher-Quality Residential Care Facilities
While looking after your loved one is your top priority, the price of a good nursing home may prevent you from enrolling them in a long or medium term care facility. Selling your home can help you afford great care for your loved one at a facility with talented and motivated caregivers. After selling your loved one’s house, you will also have more money to store their valuable items, afford healthcare procedures, and move their favorite possessions to their new home at a senior care facility.
Potentially Avoid the Need for Guardianship or Power of Attorney
If your senior parent can still make decisions for themselves, then they should consider selling their home while they still have their faculties. Selling the house while they’re still healthy will allow them to recover cash for their home without making their relatives go through the process of attaining guardianship or durable financial of attorney. Of course, seniors shouldn’t make such a major decision without talking to their family members or a trusted caregiver and carefully weighing their options.
Benefits of Selling After Moving Into Assisted Living
More Money for Your Senior Loved One’s Home
Real estate markets can see huge ups and downs in very short periods. Because of this, you could end up missing out on tens or hundreds of thousands of dollars by selling your senior parent’s home at the wrong time. Waiting may be the best choice if you think that the local housing market will heat up in the next few years.
Extra Time To Make Major Financial and Legal Decisions
Selling a house, drafting a living will, and choosing a senior care facility all have massive implications for your senior parent’s future. Thus, you and your aging parents may not want to make such big decisions so hastily. Selling your senior loved one’s house after the big move will provide your family with the time that they need to figure out how to finance your senior family member’s care.
Less Stress for Your Senior Loved One
After selling their home, your loved one will need a place to live until they move into a long-term care facility. This can be very difficult for a family member if they have insufficient space or little time to take personal care of their senior relative. Temporary living conditions can also become stressful for a senior as they age, and they may have trouble getting situated in new places over and over again in a short period. Your loved one will enjoy more time in a familiar place if you wait until after they move into a senior housing facility to proceed with the sale, and this can make a massive difference in their mental health.
“It was such a pleasure working with Zach and his team. They were very professional and informative during the entire process. Everything went smoothly and the purchase of my property was fast. I would definitely recommend this company and I will use them in the future.”
Possible Financial Implications of Selling a Parent’s House
The government takes a person’s net worth into account to determine their eligibility for Medicaid programs. To cover benefits that have already been paid out, they can even take the proceeds from selling your loved one’s home if the sale or transfer occurred within five years before their Medicaid application. An estate and inheritance planning attorney may be able to help your loved one protect some of their assets in an irrevocable trust and decrease their taxable income.
After selling their home, your loved one will no longer have to pay property taxes. Your loved one’s tax residence will also change, which could have significant implications if they move to a senior care facility in another state. Their income tax rate will only change if their income changes following the sale of their home. Unlike some states, Texas doesn’t levy a capital gains tax on real estate transactions. Understanding your retired loved one’s tax situation is of great importance if you want to avoid any unpleasant surprises from the IRS.
Long-Term Capital Gains
While Texas may not make a person pay capital gains taxes after selling their home, the IRS does. Depending on their income, the government may require them to pay up to 15% in capital gains taxes after selling the home. They may be exempt if they make under $40,400 per year, lived at a senior living facility for at least one year in the five years leading up to the sale, or had a capital gain of under $250,000 and lived at the home for at least two years in the five years before the sale of the home.
Selling a Parent’s Home After a Dementia Diagnosis in Texas
Financial Power of Attorney
Financial power of attorney allows you to make financial decisions on your loved one’s behalf as long as they’re mentally sound. To get power of attorney, you have to have your parent’s permission and apply for it at a local civil court. A durable power of attorney gives you all of the powers of financial power of attorney, but these powers don’t expire if your loved one loses their capacity to make decisions for themselves.
Legal guardianship gives you full control over almost medical decisions, financial decisions, and other major decisions in your parent’s life. When you have guardianship, your parent essentially loses their rights to make these decisions. You can only apply for legal guardianship if your loved one has already lost their capacity to make decisions for themselves and has not written provisions for power of attorney in a living will. As your parent’s legal guardian, you must make decisions for them that you genuinely believe are in their best interests.
Alternatives to Selling Your Senior Parent’s Home in Texas
A reverse mortgage allows a person to borrow money on their home’s value with their property as collateral. The title remains in the borrower’s name, and they will continue to accrue interest as time passes. Borrowers must pay the loan back when they move out, so it may not be a great option for seniors who want to move into a retirement home.
You need money to afford your parent’s senior care or hospital visits, but selling a house can take a while. A bridge loan is a short-term loan that allows you greater financial flexibility while you’re in the process of selling your home or are waiting for other financing options. A bridge loan is typically a short-term solution with a very high-interest rate, which makes it a risky choice if you’re selling your senior parent’s house in a volatile market. Due to their flexibility and accessibility, many families have funded senior care and met their financial goals with bridge loans.
Home Equity Line of Credit
A home equity line of credit allows a person to continuously borrow money with their home’s equity as collateral. To determine the home’s equity, simply subtract the remaining mortgage balance from the value of the home. Home equity lines of credit tend to have low-interest rates, and they’re a quick and easy way for an owner with high equity and good credit to borrow tens or hundreds of thousands of dollars. Most home equity lines of credit have 15-year terms and allow borrowers to draw funds for 10 years.
Top-Rated Assisted Living Facilities in Texas
Texas has some of the finest nursing homes in the nation, so your senior parent will likely only be a short drive away if you reside in the state. Located in El Paso, Ambrosio Guillen Texas State Veterans Home offers long-term care to Alzheimer’s residents in a secure unit with a beautiful outdoor courtyard. The Birchwood provides a wide range of medical services as well as a neurological recovery and rehabilitation service at their state-of-the-art facility in Houston. Presbyterian Village North is among the few nursing homes in the state with a continuing care retirement community program, making it the perfect fit for seniors who want plenty of independence and great amenities.
The Emotional Impact of Selling a Senior Parent’s Home
People across the world sell their parents’ forever homes to pay for long-term care. However, even if it’s in your loved one’s best interests, the process of selling a place with so many memories can be difficult to process emotionally. If your loved one is struggling with this major life change, then they may benefit from sharing their thoughts with their family members or a skilled therapist. You should also communicate your feelings to your loved ones if you need support.
How To Pay for Senior Assisted Living Care
Your payment options depend on your loved one’s net worth and other family members’ finances. Your parent may be eligible for Medicaid if they make under $2,742 per month. You should visit a local Medicaid administration office for more information about their programs and other financial aid programs. Medicaid programs have helped countless families receive vital assistance in all situations across the U.S., so you cannot ignore this vital resource.
While your elderly parent may not be eligible for full coverage of nursing home expenses, Medicaid may still cover glasses, certain procedures, and other medical expenses, which can lower your overall financial burden. Nursing homes are also considerably more affordable if you divide the monthly expense among multiple family members. Family members may wish to set up formal family governance plans to better manage the financial costs of their loved one’s senior care and clear up any issue with trusts, inherited property, or estate assets. You should also take a close look at your parent’s health insurance policy to see if they offer coverage for senior care. An experienced lawyer will help you navigate the complexities of insurance policies and living trusts.
Selling a Senior Parent’s Home in Texas FAQs
Is Selling My Senior Parent’s House Possible if They Have Dementia?
Selling a parent’s home is possible if they have dementia. However, you must seek a power of attorney or guardianship to do this. Courts don’t just grant guardianship or power of attorney on a whim, so you may need to work with a skilled lawyer to devise a compelling case for any application for guardianship or power of attorney.
Can I Buy My Senior Parent’s House?
If your parent has the mental faculties to make decisions for themselves, then they can sell their house to whoever wants to buy it. Otherwise, you must negotiate the purchase with whoever has the power of attorney or guardianship over your parent. Buying your parent’s home will not exempt them from Medicaid’s five-year look-back period, and they may have to pay taxes on the sale.
Can I Buy My Senior Parent’s House for Less Than It’s Worth?
Your parent’s living will may have stipulations pertaining to the sale of the home. While you may be able to buy your parent’s home for less than it’s worth, it’s not a very sensible financial move if you’re trying to pay for their senior care. A full guardian must strive to act in the best interests of their ward, so other family members or advocates may legally contest your guardianship if they believe that you’re selling the home to yourself at a discounted price for personal gain.
What’s the Average Cost of Long-Term Care for a Senior?
The average rent at a senior care facility in Texas costs just under $4,000 per month. This is slightly less expensive than the national average of $4,300 per month. Many Alzheimer’s care facilities cost up to $5,500 per month in Texas.
“A friend referred us after my mother-in-law had passed away and we needed to sell her house quickly. We met at the house and he was completely transparent and honest about what his offer would be. I felt completely at ease working with Zach. He even offered to help us rehome my MIL’s dogs if we couldn’t find new homes for them. I would definitely use him again!”
Benefits of Selling a Senior Parent’s Texas House to an Investor
No Cleanup or Renovations
Cash home-buying companies don’t need your home to be in pristine condition. They’ll just get a general idea of the layout and look for any structural problems during their inspection. Since you don’t have to bring the property up to a high standard to market it to the general public, you can save a lot of money on expensive renovations when you contact an investor.
Quick Cash for Your Senior Parent’s House
Nursing homes are a big investment, and you may not be able to pay thousands of dollars per month while you wait for someone to buy your loved one’s vacant home. Cash investors don’t want to waste your time. They know that money is urgently needed, so they’re happy to make a cash offer within a couple of days after their inspection. You can receive cash in just a few weeks if you accept their offer.
No Agents or Fees
A real estate agent will take a big commission after closing. To make matters worse, you also have to pay all sorts of banking fees and other closing costs after selling your home. Cash homebuyers don’t take commissions, and they cover the majority of closing costs so that you can walk away with as much money as possible.
Finding Professional Help To Guide You Through the Sales Process
Older adults deserve to retire with dignity, but these days, good senior care costs a lot of money. Many homes remain listed for sale for years on end, but you don’t have that kind of time. These findings apply to all cities in Texas, including Dallas, Fort Worth, Austin, San Antonio, Houston, El Paso, and more. If you need any help or have questions about inherited property in the state of Texas, give us a call. We are always happy to help. You need money for your senior loved one’s care now, so you should reach out to A-List Properties today for guidance from a trusted homebuyer in your area.