I’ll try to make this short. 4 of us children. Father passed away in November. Our 81yr old mother will be moving in with our eldest sister this spring. Our youngest sister and her husband let it be known at our family Christmas party they would be very interested in purchasing our parents home for “market value”. It’s a nice home on a lake in northern Michigan. Desired side of the lake. They already own a “cottage” on the other side of the lake. Is three other kids are always leery because the youngest has always been a bit wacko. Especially during our fathers decline (doesn’t believe in western medicine, vegan, water diets, blah blah blah). They’re always looking for a deal. My contention is market value is what the home would sell for if put up for sale. Not what it’s appraised for or would be listed for. It will sell quickly with multiple buyers interested. Potentially a bidding scenario. Any advice on how to approach this? I have no issues being the “bad guy”. But this is our mother’s retirement. And eventually passed down to us at some point. I say we bite the bullet. List it through an agent and let the chips fall where they may. Not a fan of the realtor game but it is what it is.
Sister wants to buy parents house at “market value”
byu/VacationConstant8980 inRealEstate
Posted by VacationConstant8980
37 Comments
Talk to a local realtor, maybe a couple. See what they think it would sell for in your area with the current climate. Gather all data and then make a decision. Treat younger sibling like any other interested party. Explain to them that this money is to sustain your mother, and so YOU are looking for the best deal for HER.
Get an appraisal – that’s exactly what they are for and market value
Get it appraised and sell for that amount. It’s your sibling after all. If you list with a realtor you will pay the 5-6% commission, transfer tax and possible concessions for inspection or maintenance items.
You should be able to get a good estimate of market value from a few local real estate agents, and it should be close to the appraised value (which also uses recent sold comps.) You as the family of sellers stand to save 6-10% in fees/costs/repairs by selling to your sister.
I would jump to sell it to her at the appraised value with no fees/no repairs and if that falls through then list it. But you are taking a really optimistic approach on the ease of selling (particularly if it is staged and decorated to the style of an 80 yo.)
ETA: selling for the appraised value also means it holds up in the case of a clawbacks for future care. The appraised value really is a good compromise here.
I don’t agree with the market value not being appraised value. Are you saying that the list price of the house is what it would go for? It could be that the arra you’re talking about is so desirable that would drive a bidding war and if that’s the case then it probably is better to pay realtors fee’s and let the marker decide. If not, the trust or family may end up with more by providing a slight adjustment from market list price, but close enough to it where the family still ends up ahead compared to fee’s.
Is anyone else in the family in a financial position to buy it? Does anyone else object to her buying it?
It seems that maybe you don’t believe they actually want to buy it at market price, but are looking for a sweetheart deal?
Yes… put it up for sale and write them in as an “exclusion” to your listing contract i.e. … You can sell to them if they can match the price or net price you would receive on the open market. This give you both an advantage – You ensure at least market price and they can buy for 0-5% ( or whatever your commission % is ) under that price while you still net the same or more.
Just want to say it’s funny as hell to equate veganism and not believing in medicine.
Avoiding a broker fee and the time and effort for a non family buyer is significant. Get an appraisal and see the comps and let her buy it at market price.
You think you might get a bidding war? What does your mother think? My mother essentially bribed me to buy her home, cause she felt better selling it to one of her kids. I’m not saying give her a deal on it, but selling it to her for what you would get for it from anyone else is the right thing to do imo.
I’d figure out a way to get it appraised at what it would likely list/sell for and that would be the price. Even if you miss out on a bidding war and the price going a bit higher you will save 5 or 6 percent if you don’t have a realtor to pay.
If you want to go the realtor route then give them the opportunity to match the best offer.
Or you could skip agents and agree on a price that everyone thinks is fair. Saving your sister $10k might be worth it to have a smooth transaction. As in someone might have a higher offer and then try to beat you up on inspection negotiations. So you could hire a lawyer, save realtor fees and give her a little deal.
>My contention is market value is what the home would sell for if put up for sale.
There are different types of values that an Appraisal can be performed for. But ‘Market Value” is typically most common and what you wrote is a good description of the value determination.
Not sure what you think Appraisals determine but that is what you want. Not a CMA performed by a Realtor, but an appraisal but a Licensed Appraiser.
*Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale with, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:*
* *buyer and seller are typically motivated;*
* *both parties are well informed or well advised, and each acting in what they consider to be in their own best interest;*
* *a reasonable time is allowed for exposure in the open market;*
* *payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and*
* *the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.*
3 appraisals & choose the middle one. Probably gonna be $600 or so for each appraisal. DON”T get comps from Real Estate agents if you don’t plan to list the property. They can give you a comparable market analysis, but that is not the same as an appraisal, which would hold up in court if there were a future dispute.
I would propose that the owner of the asset decide how she wishes to dispose of it, instead of the circling children.
I’m always amazed at how quickly people will bail on family members over silly nonsense. What difference does it make if he pays market value? That’s all you’ll get out of stranger who buys it anyway. In this economy, I’m not sure there are any bidding wars happening anywhere.
Your mom will avoid a hefty commission. Appraisal is market value … assuming “bidding war” is speculation. Even if true, difference wouldn’t equal RE commission etc, plus stress of inspection negotiations, blah blah blah. If sis will just take house as is, everyone wins. And she sounds like she’ll convey some “good energy” to all.
Get it appraised, look at some comps to see if it is a reasonable number and sell for that. Mom gets money, house stays in the family, you don’t have to mess with any repairs, open houses, showings, or agent fees. 5-6% below is realistic even, since agent fees won’t be taken out of the proceeds.
There is a lot here. I am not really sure why you brought up your sister having different values than you as they really don’t matter in a real estate transaction. Determine the “market value” of the property and sell it to her. This can be via a formal appraisal, or several realtors market analysis. If you sell to her you definitely gain as your mother wouldn’t have to pay realtor fees and would net more from the transaction.
lol its not 2022 anymore. There are no bidding wars. It’s an incredibly strong buyers market right now. More sellers : buyers than ever recorded before in history. Record average time on market for home sales. The home is likely worth what it appraises for.
Well hold a vote with your siblings about the estate and let the vote decide.
You will want to wash your hands of this as soon as you can. Families can be pretty terrible when individuals start getting greedy…
Honestly, you should be able to look at comps and figure out market value easily. You’d save 5% ish by not using a realtor, so the odds of a bidding war getting you more than you’d save is probably unlikely. You’d also have to deal with a stranger who is likely asking for repairs. I would just be vigilant in finding market value.
Option B- If you can get a realtor to list it and give your sister a carve out so you don’t have to pay the agent if she buys it, or pay them a small fee to cover their expenses. You then lit it and your sister has the option to match the highest offer.
I think keeping the house in the family is a lot better than the siblings eventually getting a few thousand extra each down the line (which isn’t guaranteed). The saved headaches of selling are also valuable. See what your sister believes market value and go from there. You can also call realtors and get their opinion on price.
I don’t understand why you would prefer a stranger purchasing it to your sibling purchasing it. Putting it on the market will be a headache for your mother and she will have to pay commissions. Is the issue that the other siblings are resentful at the idea of missing out on inheriting a share of this property? If so, address that directly.
I would start by asking the owner of the house her thoughts and plans, and what assistance (if any) she would like from you.
Not sure what you’re looking for other than trashing the sister you clearly have disdain for due to her wacko beliefs and some paranoia about potential being ripped off by her. I do find the use of quotes: “market value”, “cottage”, and “bad guy” entertaining. Best of luck on this though.
Put it on the market. Give your sibling the first right of refusal.
Are you factoring in 6% realtor fees for listing it?
I’d offer the same thing to all children, right of first refusal. List it in the market. Anyone can make an offer including children, but any child also gets the opportunity to match the best offer that must be accepted by seller.
When listing add children to exclusion list to avoid realtor fees. As simple as that.
Talk to multiple realtors, pull comparable listings that have sold in the last couple of months, and come up with a list price just like you would if you were selling it to any other person. Then your sibling can buy it or not.
Appraisals are “Market value.” The number a home sells for includes commissions for the agents and title work. If a family member wants to buy it, and none of you want it, I don’t see the problem with getting a couple of appraisals, taking the middle number, and selling it for that price.
Market Value = What the market dictates i.e., what the highest bidder will pay.
If she says she wants to pay market value, then tell her you’ll get a realtor, put it on the market and give her the right to beat the best offer you get before you sell.
The advantage of selling the house to your sister is that you insist the sale is completely as is, with no representations, no warranties, and no implication about being responsible for undisclosed defects. She writes a check, she gets the keys.
She’s trying to get it for about 1/2 the real market value. A fucking con. Kick her out
This happened in my family several years ago. Four siblings, one wanted to buy it.
They agreed to list the home with a local realtor. The sibling was given right of first refusal. After several offers came in, the sibling that wanted the house was given the opportunity to match the highest offer minus whatever the savings were. The house got to stay in the family, the remaining siblings then divided the remainder of the estate, and the house got to stay in the family.
My advice would be to get a few numbers from different brokerages to get an idea of the price.
Counting on a potential bidding war might not be prudent. The market has shifted, quite dramatically in certain areas. “Lake front” is too broad. The area and lake will be the determining factors. I’m not saying that as a broad term- I’m in the area, am a re investor, agent, lake home owner and did estate planning back in the day.
Sounds like family dynamics will be at play, but what do the remaining siblings think?
Can your sister qualify for financing, or have the means to buy at full value in cash? (None of the “my share” nonsense, your mother may need every penny)
Is there a crystal clear/ iron clad mechanism for any one individual to make the decision? (Mom cognitively able to make financial decisions or trustee). If you can get 6-8% of consensus market value I’d definitely recommend doing it if, stressing if, your sister has the financial means to do it easily.
I’d strongly discourage any first rights of refusal, or anything that may scare off other potential buyers. If you decide to allow your sister to buy, give a very clear expectation of timelines and performance so you can market it in spring if needed.
The most important thing is to keep peace in the family and think about what your father would do. I have seen many families ripped apart by stuff like this. I was very lucky when we had to settle up the estate with my siblings, we did an even split, no nonsense, fighting or jealousy.
You don’t mention what your two other siblings want to do. Are they in favor of selling the house? Did you ask your Mom what she wants?
If there is a consensus to sell, get an appraisal and have your sister get an appraisal, average the two, there is no need to pay a realtor commission.
Put it on the market and give her first right of refusal to match the other offer.
Market value is likely
1. What is would sell for on the market (appraisal).
2. Subtract any real estate fees you can avoid by selling to family
3. Subtract any fix, updates, or “getting ready” effort or investment you can avoid.
You can easily avoid $25k to $50k+ in costs by selling to someone who will accept the home “As-is” and without a real estate agent on either side of the deal.
I did this math with my Sister and BIL when they purchased my parents family home.
We didn’t immediatley agree, but we found a middle ground. They (Sister and BIL) received a good deal, we avoided real estate agents, never had to list the property and BIL and family provided our family 6 months to remove anything of value for the “estate” (group effort) and they then took responsiblity for the rest of the clean up after we split up all the valuable items and stuff with sentimental value.
As an added benefit the property went to someone in the family who would appreciate it and we can keep the menories within the family. Hard to monetize, but I still see value in this.
We avoided any use of attoreny or agent, saving 3%-6% of the sale cost. However, you still want to make sure you use a valid, local buyer/seller agreement and have all the right legal wording. Make sure all risk flows to the buyers- THAT is why they get a deal. As-Is. No clean-up. You limit your effort You limit your fees. You have a fast, easy transaction.
If needed, use a low cost attorney for few hours to protect you and make sure the agreement is bulletproof. If the home is highly valuable as it will be way cheaper than an agent.