Q: My sister and I recently inherited our mother’s home in California. It is an old house with all the value in the location. We want to sell it “as is” with no contingencies.

Developers have built on both sides of property and sold those properties for $1.5 to $2.5 million. We are thinking about selling the home at an auction vs. listing with a real estate agent.

What’s your recommendation? And what would the tax ramifications be?

A: You have a valuable property on your hands. Whether you decide to sell at an auction or by using a real estate agent will be up to you. But certainly you should investigate further to determine whether you might get a higher price by using an auction or a real estate agent. If you’re thinking you’ll net out more by using an auction over an agent, you might be surprised by the outcome. Auctions aren’t cheap.

But there are some reasons to use an auction. Depending on the type of property and its location, the auction route can be quick and yield good results. But you really need to make that determination after you talk to various knowledgeable real estate agents who really know and work in the area where the home is located as well as talking to the most experienced auction houses that have dealt with properties like yours.

Keep in mind that auction house sales often have high transaction costs. Those costs can be greater than what some real estate brokers charge. Then again, what if it takes 6 months to a year to sell the property with a broker? A quick sale at auction with higher costs might be better than getting the same price for the home but having to pay the costs to own the home for an extra year.

The first thing to do is consult with several local real estate agents to get their take on the real estate market in that area. You might even want to investigate how quickly new construction homes are selling for in that area. If the market is still rolling along where your mom’s home is located, you might even be able to call local builders and to see if they have any interest in buying your mom’s property.

Now let’s talk about taxes. If you recently inherited the property, the value for federal income tax purposes will generally be the price you sell it for. Therefore, you should not have to pay any federal income taxes on the sale of the property.

If you inherited the property a couple of years ago and just now are selling it, you’ll have to pay federal income taxes on the difference between the value of the property at the time your mother died and the price you get from the sale of the home, less expenses and other costs.

Don’t forget about state estate taxes. Depending on the state in which you live, you may owe state estate taxes even if your mom’s estate isn’t at the threshold for federal estate taxes. You’ll probably want to hire a real estate attorney to help with the sale. For details about state and federal estate taxes, talk to an estate attorney or your tax preparer.