Determining Acceptable Value of Inherited Real Estate?

[ultrarunner]

Upon the dirrction of the Estate Lawyer I hired a recommended Real Estate Appraiser to value Moms home.

The home is very much 1950’s and the appraisal was very detailed over 43 pages.

I offered my siblings the appraised price as-is with no sales costs… in other words a clean deal with a max 30 day close.

This would allow me time to go through things at my own pace and avoid the rushed dump runs the family wants to do.

I’m there every day and the only one there since last May except for the appraiser.

The conundrum is the siblings flat out reject the appraised valuation and they are both career Real Estate and I’m an Engineer.

Siblings say hire someone to clear out the property, spend $100,000 fixing it up over 3-4 months will increase the value from 975k appraised as is to maybe 1.3m California values.

So this would achieve a hypothetical 1.1m net or a 125k above the appeal price.

200k is estimated fixing, commissions, etc.

The wildcard is with the right spring time buyer siblings say home could bring even more but only by listing a turn key property can true Fair Market Value be determined.

This hit me from left field since from 2015 I moved back to my childhood bedroom so mom would be able to remain in her home as was her wish…

Siblings urged selling back in 2017 to fund moms placement in a facility which mom was very much against.

 

[plowhog]

Very sorry to learn this and I've worked with others who traveled down a similar miserable road.

How qualified are the siblings with real estate? New to the business, lots of years of experience, salesperson vs broker, etc?

Obviously this triggers questions about who fronts the $100k (which will become more than $100k) for improving the property, then the carrying costs until sale. Not insignificant.

Also, are they remote and you are local? So they expect you to do the local legwork while they comment and critique from afar? Yikes ...

Also, appraisers develop reputations ... do you know if this appraiser has a reputation of "down the middle," on the low side, or ???

I have some thoughts but will wait for more to come out before commenting further.

 

[plowhog]

I hired a recommended Real Estate Appraiser to value Moms home.

btw that was a very smart thing to do, as you want to establish current market value for several reasons, including identification of the stepped up basis amount.

 

[MossRoad]

...

Siblings say hire someone to clear out the property, spend $100,000 fixing it up over 3-4 months will increase the value from 975k appraised as is to maybe 1.3m California values.

So this would achieve a hypothetical 1.1m net or a 125k above the appeal price.

200k is estimated fixing, commissions, etc.

The kicker is with the right spring time buyer siblings say home could bring even more but only by listing a turn key property can true Fair Market Value be determined.

This came at me from left field since from 2015 I moved back to my childhood bedroom so mom could remain in her home as was her wish…

Siblings urged selling back in 2017 to fund moms placement in a facility which mom was very much against.

Man...

975,000 + 200,000 = 1,175,000

1,300,000 - 1,175,000 = 125,000

Subtract property taxes, insurance, utilities for the time it's on the market as well.

Then figure in your time as project manager....

Then divide what's left, say 100K (i'm just guessing) by the number of siblings (let's say 3) and that's only $33K additional for each sibling. $25K additional if there are 4 siblings. etc...

Tell the siblings to do the work!


When my father died, my siblings were convinced they could get quite a bit more than the house appraised for because it was beautiful and in a beautiful setting. Over a year later, and with ZERO bites at anything near what they thought the house was worth (sentiment to you does not mean additional $$ to buyer), and after a year of taxes, insurance, utilities, etc... and finally selling right around appraised price, we lost about 10% of what we would have gotten if they'd have sold it at what it appraised at in the first place.

I realize your market is much different than here, as we've talked about this several times over the year.

But sometimes a bird in the hand is worth two in the bush.

So I ask you....

Is it worth the time and effort to squeeze maybe 3% additional profit for each sibling?

 

[MossRoad]

Also, don't know if it applies to you or not, but with my dad's house, once the insurance company found out it was vacant, they refused to extend the policy once it expired, and we were forced to purchase high risk insurance every 6 months until the house sold. Didn't help there was a 90' escarpment in the back yard. We almost has to pay several thousand to fence it off.

 

[Yander]

Naively and on the advice of the Estate Lawyer I hired a recommended Real Estate Appraiser to value Moms home.

The home is very much 1950’s and the appraisal was very detailed over 43 pages.

I offered my siblings the appraised price as-is with no sales costs… in other words a clean deal with a max 30 day close.

This would allow me time to go through things at my own pace and avoid the rushed dump runs the family wants to do.

I’m there every day and the only one there since last May except for the appraiser.

The conundrum is the siblings flat out reject the appraised valuation and they are both career Real Estate and I’m an Engineer.

Siblings say hire someone to clear out the property, spend $100,000 fixing it up over 3-4 months will increase the value from 975k appraised as is to maybe 1.3m California values.

So this would achieve a hypothetical 1.1m net or a 125k above the appeal price.

200k is estimated fixing, commissions, etc.

The kicker is with the right spring time buyer siblings say home could bring even more but only by listing a turn key property can true Fair Market Value be determined.

This came at me from left field since from 2015 I moved back to my childhood bedroom so mom could remain in her home as was her wish…

Siblings urged selling back in 2017 to fund moms placement in a facility which mom was very much against.

Unless you are wanting the property, I wouldn't fight with them over it. I also wouldn't put up any money to support their plan. Tell them if they want to put money into it to show receipts and they get paid back out of the proceeds of the sale.

It is possible they are right! Probably not worth your relationship with the siblings.

 

[CloverKnollFarms]

It seems that in most of these cases, someone thinks there is more money to be made, and relationships go south over a dollar.

I wouldnt put up any money, agree on my share, theirs may be higher if they do sell for a higher price.

 

[EarPlug]

Have them buy you out today at your percentage of the current appraised value. Then they can do whatever they want with it. No future battles or hard feelings.

 

[ultrarunner]

Very sorry to learn this and I've worked with others who traveled down a similar miserable road.

How qualified are the siblings with real estate? New to the business, lots of years of experience, salesperson vs broker, etc?

Obviously this triggers questions about who fronts the $100k (which will become more than $100k) for improving the property, then the carrying costs until sale. Not insignificant.

Also, are they remote and you are local? So they expect you to do the local legwork while they comment and critique from afar? Yikes ...

Also, appraisers develop reputations ... do you know if this appraiser has a reputation of "down the middle," on the low side, or ???

I have some thoughts but will wait for more to come out before commenting further.

40 years with 35 as top producing agent… I use to hold open houses and sent lots of referrals from my friends and hospital co-workers and doctors.

The other is 35 years commercial, hospitality, industrial and government managing Senior VP of the firm with a billion portfolio… the scope where travel by private jet makes sense for 4 to 6 principals to visit property in 5 or 6 states in a long day.

The 100k typically fronted from the listing agent sibling as does bridge loans, etc.

Neither put any value on appraisals other than a marker or necessary expense requirement when lending.

The surprise is this all comes up now when I said I’m interested but need to act so as to preserve prop 13.

 

[rswyan]

Are you the executor of the estate ?

What are the terms of the will as to how the assets of the estate are to be disposed of, in terms who gets what ?