My brother, sister and I inherited equal shares of our parents house. My brother wants to buy the house from my sister an me. There will be no real

Asked by Rossma, Seal Beach, CA Wed Nov 18, 2009

estate agent involved. My brother has proposed basing the sale price on an appraisal and deducting the 6% commission cost and an addition 2% for closing costs then dividing the remainder by three to determine how much to pay us. My sister and I have no particular need to cash out of the house but are willing to accommodate our brother’s request. We think we should share in the benefit of not having to pay a sales commission, Is there a customary or common approach to his type of transaction?

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11
Guy Gimenez, Agent, Austin, TX
Wed Nov 18, 2009
Actually, I just went through this with some acreage we inherited and just as in your case, it was an undivided interest. I wanted to cash out and the other two wanted to hold the property.

If your brother is the one who wishes to cash you guys out, the expenses are his, not yours. Obviously, you can agree to some of the customary seller expenses such as title fees, etc. but again, you're accomodating his wishes, not yours. You absolutely should not agree to include non-applicable fees such as sales commissions that do not exist. If all parties wanted to sell in a arm's length transaction (non-family member), then you would have to split expenses including any sales commissions.

In your case, these fees do not apply.

I am not an attorney and these comments do not constitute legal or financial advice, they are merely opinion.
Web Reference:  http://www.phgbrokers.com
2 votes
Guy Gimenez, Agent, Austin, TX
Wed Nov 18, 2009
I strongly agree with Danny Kim. I've watch just this type of thing damage family relationships permanently. Remember, in some states attorney's are involved in the purchase/sale of every property...in others, attorney's are seldom involved. Sit down and talk it out and put your discussion in writing or record it so there is misunderstanding of what each party's wishes are at that time. If you can't reach an agreement, you can hire a mediator to help settle things before one party or the other files a suit for partition. That's when things can get ugly. Bottom line is this. This is not a complicated transaction...done this several times on my own by sitting down and working things out with the other family members.

Best of luck.
Web Reference:  http://www.phgbrokers.com
1 vote
Bentley Advi…, , San Mateo, CA
Wed Nov 18, 2009
p.s. - I'd encourage you to keep it simple and amicable vs a hard line by the book legalese approach. Remember that you're family and the last thing you want to do is damage relationships. Also, as attorneys get involved, the process becomes much more impersonal and much more costly. Good luck.
1 vote
Bob Phillips, Agent, Rancho Santa Margarita, CA
Wed Nov 18, 2009
Hello Rossma,

You should ignore the first answer you've received, as the agent obviously didn't understand your question.

You all should submit this situation to either one attorney representing all of you, to facilitate such a transaction, OR, one attorney for the brother, and one attorney for you and your sister.

You also need to establish a present day value. One way to determine the value would be to hire an independant appraiser, or for you each to hire an appraiser and average the values they've arrived at.

The numbers you show - 6% and 2% are probably a tad too high, but there will probably still be transfer costs, which will include preferably an escrow, and a title policy.

In addition to an attorney(s) you should consult with a tax advisor, as the two of you may be exposing yourselves to a taxable short term gain.

Good luck in sorting things out to your mutual satisfaction.
1 vote
Hazel.cunnin…, Home Buyer, Seal Beach, CA
Fri Sep 23, 2016
IF A FAMILY MEMBER BUYS SHARED PROPERTY FROM FOUR OTHER FAMILY MEMBERS, WHEN THE FUNDS ARE DIVIDED DOES THE BUYER REAP A SHARE FROM THE SALE.

ALSO IS IT ALLOWABLE IN LAND DISPUTES WHERE THEY IS A FORCED SALE FOR THE
FORCER TO PAY FOR THE OTHER PARTY ATTORNEY FEES?
0 votes
Greg Copland, , Orange County, CA
Thu Dec 22, 2011
Rossma,
Bob Phillips advice is right on. You need to bring in an attorney...either one that will handle it for all or each their own. I've seen in family based transactions that often things of importance can get overlooked because you are dealing with familiar family people.
Don't let this be a means of causing strife within your family...get a good real estate attoney involved and keep the family happy :)
Happy Holidays and good luck.
Greg
Web Reference:  http://www.gregcopland.com
0 votes
Bob Davis, Agent, Long Beach, CA
Tue Dec 13, 2011
1 other thing - if you need a 3rd party valuation from an agent stand point please contact me. I would be happy to run some comps for you free of charge.
0 votes
Paula Wright, Agent,
Wed Sep 7, 2011
Rossma,
First off, how close are you and your siblings? I have found when it comes to money, homesteads and what was "Mama's and Daddy's" can destroy a family of siblings. Unless all of you are in one accord I would strongly urge you to get a realtor that you all 3 like that will sit down with all of you and discuss this situation. The agent can prepare a CMA for all of you and give you their opinion of what the statistics say the property is worth and what they feel it will sell for. What is 6% if you can sell it for more? And the appraisal you have may not be accurate. Just think about it and talk together. Just remember that money, houses, land and your parents belongings can bring up a lot of hurt if one feels shorted.
Good luck and if you have any questions please feel free to contact me.
0 votes
Alma Kee, Agent, Tampa, FL
Fri Jul 9, 2010
Hi Rossma,

Because appraisals can be very subjective and if the appraiser doesn't know Seal Beach well, they can make errors in valuing the property.

The three of you should split the cost of 2 separate appraisals (one appraisal ordered by your brother and one by you and your sister) to make sure you're all comfortable with price.

Because we're in a Buyer's market, it may not be unreasonable to give your brother a discount of 8%. You may have been able to sell the property with a 4% commission pretty easily, though. Also I believe your brother will get to keep your parent's discounted property tax as a "family transfer" so he will benefit by buying your Parent's house versus a similar home.

Main thing is to make it "fair" and even be somewhat generous to your brother. It's nice when a family property can stay with the family.

My parents owned the house at Tenth & Electric and although the current owners did a complete remodel they kept a very similar exterior look. Whenever I go back to visit family and friends in Seal it's nice to see the house I grew up in. WIsh I could buy it now.. I think it's listed for about 2.75 mil.
0 votes
Bentley Advi…, , San Mateo, CA
Wed Nov 18, 2009
I believe the fairest way to approach it is to have at least one appraisal done. Then, simply back any "actual" expenses (e.g. appraisal fee, county recording fee, title fees, etc) out off the top. Note that the commissions and most of the closing costs your brother is suggesting are not "actual" expenses since most are not actually being incurred. Finally, after all expenses are backed out from the agreed upon appraised value/purchase price, split it 3 ways. Then, you and your sister are each due your 1/3. In taking expenses off the top, you all share in the cost of the "actual" expenses.
0 votes
John Villaes…, , California
Wed Nov 18, 2009
If any real estate agent is going to be involved in the transaction they will want to be payed a 3% commission to the transaction. No Realtor will want to show your house if you do not pay this fee. You do not have to hire an agent to list your house but if potential buyers come to your house with an agent, their agent will more than likely expect a 3% commission for selling your home. Many home owner that try to go this route of selling the home themselves find themselves in more trouble and headache than what the commission is really worth. There are many complications and legal attributes for selling your home and that is what a Realtor is for. If you would like I could do a free market analysis on your home and explain all the steps involved with trying to sell you home on your own with no obligation to me. To get some more insight please refer to my website here http://www.vgrouphomes.com/atj/user/CMAFormGetAction.do

John & Sarena Villaescusa
Owner/Realtor/Broker
Keller Williams Realty
Cell: 562-818-2671
Email: Johnv@kw.com
Website: http://www.VGroupHomes.com
Web Reference:  http://www.VGroupHomes.com
0 votes
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