Determining Acceptable Value of Inherited Real Estate?

[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.