Determining Acceptable Value of Inherited Real Estate?

[Sigarms]

Dad kind of foresaw a little of this...

When he was fighting cancer but very sharp of mind he was going to gift a property to my siblings...

One brother asked how soon would it happen and that ticked dad off when he heard he was planning on selling it.

That story kind of tells you a lot...

 

[plowhog]

I'm ok with listing with right to match

In my opinion, not a good idea. You can easily pollute the pool of buyers.

You are not selling in a hot market. It is not a pristine property. Interest rates make purchasing expensive. And ... drum roll ... there was a recent inheritance, now three siblings are involved, and they don't agree.

Just with those factors, many buyers and buyer's agents will flee. Ownership by multiple parties who don't agree is a proven, time-wasting mess to get tangled into. On top of that, if a buyer learns one of the siblings wants to buy the property-- plus has reserved a first right of refusal to match any offer-- yikes. Why would a buyer even waste their time preparing an offer with an expectation the sibling, in a superior position, will use their offer to effect a sale to them instead?

Your first right of refusal must be disclosed in the MLS listing. You can't avoid that. If I were an agent representing the buyer, once I saw one of the siblings was reserving such a right, I'd say: "let's find something else."

I would like to be helpful, but just feel that this approach is not a good idea.

 

[ultrarunner]

There may be some positive movement in the works…

Im aware of 3 right of refusal situations to arrive at Fair Market Value and in all cases it was successful in selling.

One involved a group of Investors that pooled to purchase the California Landmark property The Nut Tree for those familiar.

The municipality had the right to match but dragged its feet for years and the heirs were more than impatient.

The heirs forced the hand by listing the property forcing the city to put up or shut up when a top offer with proper funds deposited in escrow was accepted.

The city closed the deal and took ownership…

 

[newbury]

Well hang in there.
It's nice to read of the 3 grandaughters visiting her in hospice.
But remember advice given freely is worth what you paid.

 

[plowhog]

Stepping back a little, my opinion is you already have the thing of greatest value.

You took loving care of your mom, being generous of your time. The other siblings did not. And so my point is-- the value, and memory, of knowing how you took care of your family, over time, is more important than squeezing another 10% out of a piece of real estate. For some people, at least.

I would bet the nieces and nephews know very well what you have done, and how caring and generous you were of your time and energy. And they also know what the others did not do.

Maybe the purchase offer you made is a microcosm of the family dynamic. You suggested a solution to a problem, and made a generous and clean offer on how to proceed. And what you got in return was to be asked by the siblings: "how could we make even more money than what has been offered?"

 

[paulsharvey]

Err, I really think of this as a business and money issue; and family doesn't mix well with business. One day, mom and her husband will pass, hopefully a long ways from now, but it will happen. I have two sisters, and a brother; as well as her husband has a daughter and son; so that's splitting everything 6 ways. Noone knows exactly what their assets are, but as in many cases, it's primarily the home/land. I know they have floated the idea od basically forcing the home and property to stay in some kinda trust, that acts a lot like a Timeshare; in their mind, it all stays together, and everyone can use it... The issue is, we are spread between 5 states, and only me and 1 sister live close by. That particular sister really likes the idea of a timeshare kinda deal; until you start sending out property tax, maintenance, power bill and repair bills; and 4 out of 6 live over a 1000 miles away. I live the closest, and me and wife have briefly discussed; and I know what everyone is thinking. They Assume Paul will mow the yard, keep up with the house, ect, and all is good. Sorry, not doing that. Also, you live 1000 miles away, how are you gonna feel when you get the $2500/year bill for taxes, power, insurance, mowing, ect.

Every family has its own dynamic; But I feel I have an obligation to My family (my wife, my kids), and part of that obligation is to not put myself in bad financial situations over some random extended family (siblings, and 2 step siblings I've met like 2 in my life). That's Not to say I would be blood thirsty or greedy, but im not gonna pay $2500/year to keep some kinda extended family peace, I'd much rather use my money to set my own family up. That's not even taking into account step siblings, or random people you don't consider family; no I'll will to them, but no good will either.

So, I get the OPs siblings situation, it might seem greedy, but they owe our OP nothing, and their families everything, and if that means you don't see the aunts/uncles at holidays, so be it.

For our OP, I really think you need to do a deep think in what the property is worth to You, and don't over extend yourself. If $900k is what it's worth, don't pay more; if 1.2m makes sense, you it works for you, do it. This isn't Really about feelings, it's about Math.

 

[paulsharvey]

Don't know if that end part conveyed what I really meant; people end up stuck on "what would mom/dad want me to do"; sorry to be blunt, but they are dead, and they would want (I assume) you to make Smart decisions and not put yourself in a bad situation.

It also is frequently a weird point, when you end up with parents home, you got to stop thinking of moms/dads house, and (if the money/family works out) make it your own. Change what you want, remove what you don't,

 

[ultrarunner]

All good points...

Their trust from 35 years ago is clear as to instructions and wishes but the devil is in the details.

I use to wonder why many trusts have clear instructions to liquidate and I can appreciate if it's done by a third party the individuals are not so focused on each other.

The farmer side of my family lives on land handed down from generation to generation with one back to the 1700's.

This is my first time at bat so I'm certain someone that's been around the block would have have the experience to streamline.

One of my older friends is a retired CPA... he ended up settling many estates in his extended family and said by the third one he had it down cold...

I did ask him if that's why he only had one child and he laughed... no but it makes things incredibly simple.

I've been reading about all the family disputes of Senator Feinstein and it shows even a very well to do connected family of lawyers and judges have bitter battles over property and expenses.

 

[4570Man]

Most of this thread has been about taking the high road but your siblings pretty clearly intend to screw you. What if you reversed the roles and just kept living there? California law protects the residents right or not and having 1/3 ownership puts things even more in your favor. They’d almost definitely not be able to throw you out.

 

[ultrarunner]

There is recently passed legislation giving more rights when it comes to not being forced out…

I was never a circle the wagons type… more of hold down the fort.

 

[Sigarms]

There may be some positive movement in the works…

Im aware of 3 right of refusal situations to arrive at Fair Market Value and in all cases it was successful in selling.

One involved a group of Investors that pooled to purchase the California Landmark property The Nut Tree for those familiar.

The municipality had the right to match but dragged its feet for years and the heirs were more than impatient.

The heirs forced the hand by listing the property forcing the city to put up or shut up when a top offer with proper funds deposited in escrow was accepted.

The city closed the deal and took ownership…

This may be a very dumb question, but couldn't you just buy the property outright without having to list it for sale?

What my feeble mind is trying to comprehend is why don't your siblings just allow you to buy it outright for the market value other than trying to "maximize" their profit?

How much older are you from your siblings?

You stated that basically everything you own including all assets are going to your family when you're gone. When you buy the house, won't the same house be willed to the same family again?

You buy it at $975k, two siblings split the $650k (325K each) and then say you live another 20 years and pass, the siblings (or their offspring) still get the house so they can make money all over again.

What I'm failing to understand is why that isn't a "win win" for everyone?

 

[2manyrocks]

UR got the property appraised for FMV and made an offer to buy them outright. Problem is they are in the real estate business and said they wanted UR to invade the principal of the family trust to improve the property so it would sell for more. They are also saying appraisals are useless because it is impossible to determine what some buyer will actually pay without listing it on the market.

The significant legal problem for them is UR has no legal duty as co-tenant to make any improvements and list his interest for sale. An independent lawyer would have already brought this to UR's attention.

There are other significant legal issues for them to overcome as well. What they want and what they can achieve are two distinctly different things. Just takes an attorney with some backbone to bring them to that realization, IMO.

 

[Sigarms]

UR got the property appraised for FMV and made an offer to buy them outright. Problem is they are in the real estate business and said they wanted UR to invade the principal of the family trust to improve the property so it would sell for more. They are also saying appraisals are useless because it is impossible to determine what some buyer will actually pay without listing it on the market.

The significant legal problem for them is UR has no legal duty as co-tenant to make any improvements and list his interest for sale. An independent lawyer would have already brought this to UR's attention.

There are other significant legal issues for them to overcome as well. What they want and what they can achieve are two distinctly different things. Just takes an attorney with some backbone to bring them to that realization, IMO.

UR = OP of this thread?
FMV = Fair Market Value"

Assuming yes to both above.

The home to begin with was never an investment to the OP or his siblings IMO. It was their parents home where everone was raised, and now that both parents are decesed, you need to do with the home IMO on what the parents wanted.

UR is the executor of the estate, house to be sold I'm guessing per parents wishes.

I have NO DOUBT that UR's parents would want the house to stay in the family if possible.

IF UR is willing to buy it per fair market value WITHOUT any work done on the house to increase the selling price, I HAVE NO DOUBT that UR's parents would want UR to buy the home for fair market value and the proceeds to do be distributed from the sale to the siblings.

The irony is UR's siblings would still make out like a bandit if UR buys the house, those proceeds are split by the children, and when UR dies, the house is still left in the family still to be split by the children.

I'm a pretty dumb guy, but I know the difference between right and wrong. Throw the legal issues out and do what is right.

 

[California]

A couple of thoughts:

An independent attorney will likely advise that UR can buy the property at appraised price if there exists some evidence that the parents intended this. (Appraised price might have to be based on several appraisals). The present attorney is affiliated with other heirs, so is not to be relied on for impartial advice.

If this process is done properly then the legal obligations of the executor (UR) have been met, and there are no grounds for claiming self-dealing to the detriment of the other heirs. This opinion is based on my own experience, BTDT.

The other heirs are real estate professionals and likely expected to earn sales commissions on the disposal of the property. UR may have to pay them an equivalent 'commission' to mute their objection to his purchase.

It seems to me that the other heirs expect UR to liquidate the estate then mail them a check with no work done on their part. This sounds selfish. UR might start working from the perspective that they are hostile competitors not deserving of free labor, rather than family working together.

 

[tradosaurus]

Death of elderly parents can usually bring the best or the worst out of siblings. I would have no problem ostracizing my siblings if they acted like this (I have 7).

Fortunately when my last parent died in 1998 the funeral and disbursement of proceeds according to the will was done smoothly.
What if you put the house one the market anyway, without your siblings knowledge? Once it sells disburse the proceeds.

 

[2manyrocks]

Easier to type UR than Ultrarunner. FMV is fair market value.

 

[Torvy]

If Ultrarunner ends up bowing to his siblings wishes so they get extra money in the near term:

I would definitely change my own will if I were him to give his estate to the Church (mom would have liked that, I would guess) or someone outside the family, another charity.
At the very least, I would specifically pull the delta between appraised value and sale value out of my estate and give it to someone. If I was feeling especially salty, I would give it to the opposite political party of my brothers or something along those lines.
In our case (4 of us) parents are both 91 (dad will be 92 in early March). He is I'll and she has a slow growing cancer. We already discussed everything and the consensus is that we are all fine financially and don't NEED anything. Everything will be divided equally except for a few items...I get the piano because I suffered through lessons the longest. If it were all up to me, any of the sentimental stuff would stay in the family. Say a sibling or niece/nephew gets something sentimental and decides a year or three later to sell it, I think it should be offered to the family (gratis) first. If nobody wants it, fine sell it. Too much of our family history has been sold off. Mom was 1 of 8 and 30+ cousins pillaged the estate (farm) that took generations to build up from Homestead Act (1862) and Timber Culture Act (1873) properties by my great (2x great) grandparents. Sad.

 

[4570Man]

Death of elderly parents can usually bring the best or the worst out of siblings. I would have no problem ostracizing my siblings if they acted like this (I have 7).

Fortunately when my last parent died in 1998 the funeral and disbursement of proceeds according to the will was done smoothly.
What if you put the house one the market anyway, without your siblings knowledge? Once it sells disburse the proceeds.

He doesn’t want to sell the house for starters. And he only has 1/3 ownership. He probably can’t move forward with the sell without their signatures but that would be a big mistake even if he could.

 

[MossRoad]

Easier to type UR than Ultrarunner. FMV is fair market value.

UR
FMV
XYZ
PDQ
ETC

 

[Torvy]

He doesn’t want to sell the house for starters. And he only has 1/3 ownership. He probably can’t move forward with the sell without their signatures but that would be a big mistake even if he could.

That really depends on how it works in CA and how the will was set up. The estate owns the house. He is the executor. They don't each own 1/3, technically. Sometimes, people leave distribution completely to the discretion of the executor. Sometimes it is very detailed.