I am my mom's successor trustee and an heir who may divide any remaining proceeds with 2 siblings.
At some point my parents home will be sold, I may also chose to purchase it after a fair market value appraisal agreed to by siblings. My mom who is pretty savvy suggested that if I was to buy the home there would be a savings since no realtor would be involved and the fees a realtor would have been paid should be deducted from my purchase price basically reducing the purchase price by subtracting commission fees. She says that all heirs still receive the same amount of money regardless if that were to happen and I understand her point. However, as I am the successor trustee my position is likely to be scrutinized by my siblings.
Is this legal and I wonder what someone else who's been in this situation was faced with?
Thanks
I'm a bit confused though. If you purchase while your mother is still alive, would the proceeds be distributed at closing to your siblings?
As to equal shares, if you do purchase the house, it may or may not increase in value, a benefit which would accrue to you as purchaser, but not to your other siblings who are heirs. That would make the amount that the heirs receive differ from what you receive. I'm not including taxes, insurance and maintenance though, so those could also affect the value to the heirs.
If I were to purchase the house it would be after a fair market value appraisal and once a price was determined it would be sold for that price after it was agreed to. So what if the price were to go up or down, it's a transaction and no one knows the future. A transaction would be for value at the time of the appraisal, not a speculative appraisal for which it could be valued at in 1-4 years that no one could predict, seriously??? If I buy the house I assume the risk, not my siblings, why would or should they profit from my purchase if it is at fair market value?
Leaving a home vacant may be a violation of CC&R's if not occupied there may be legal repercussions due to abandonment. I do not have the time to maintain 2 homes, nor rent it out. Neither siblings want to buy the home, they've made that clear. If I were to buy it we all have to agree on the terms. If I weren't buying the home and one of the siblings did and the amount that goes to the trust is the same if they purchase it or an RE agent sold it then makes no difference. Why should I receive extra for doing nothing if they did the work and the trust receives the same amount? Whoever did all the work should be compensated for their efforts and those doing nothing should not see extra if they are not part of the transaction and their possible gain from a distribution later remains the same?
Not quite true.
Say the house is worth $100,000. If you bought it using the help of a real estate agent who charges 5% which would be $5000, then the net sale proceed would be $95,000. For simplicity, we won't include any other fees in selling/buying a house. You would pay $100,000. All the heirs would share the $95,000 proceeds.
If your mom sold you the house directly without a real estate agent and without having to pay a commision, she would deduct the $5000 commission from the sales price, you would pay $95,000. All the heirs would share the $95,000 proceeds.
All the heirs would get to share the same amount of $95,000 in both scenarios. However, in the second scenario, you as an heir get a $5000 discount. Would the other sibs have a problem with you getting the extra $5000 from the sale?
What if the value of the house is a lot higher, and commision is a lot higher too. Say $20,000 in commission. You would save $20000. Why should the other sibs not benefit from that?
That only adds costs to the transaction and I've already checked with an attorney who notes these are very normal transactions. If you take a left turn as you have to use a RE agent, of course, that changes everything. If I decide to purchase, I save all of the paperwork and costs, my efforts are worth something and the siblings should not benefit from my efforts where I do all the work and they all reap equal rewards. My efforts will be tracked, itemized, and deducted as expenses to manage the trust, this is legal and normal. Now as to the sale of the home. If I enlisted a RE agent to sell the home whatever the negotiated fees are they are entitled to. The trust receives the proceeds whatever the sale amount is less fees. If I purchase the house there are no RE fees, I have to pay an attorney and the RE fees as my mom wishes would come to me for the transaction and the trust receives the same amount as it would have if listed and sold via a RE agent. I may also decide to forgo a RE agent altogether and go FSBO, again my mom suggested if I were to do that I should receive those fees if I listed, marketed and sold it, and the amount the property sold for goes to the trust just as it did in the other sections. Any direction will need approval from all parties and be done legally with the help and protection of an attorney. Don't make this more than it needs to be.
My FIL died and my BIL sold 2 properties and took the commission, although it should have gone into the trust and then divided.
My DH and I, on the other hand, were told by same BIL that we better not take a cent for the work we did on dad's behalf. My DH was executor and I was the 'goat girl' cleaning and renovating his condo so it would sell quickly. I was not 'allowed' to take a dime for my time. Had to keep all receipts and show total transparency to BIL.
BIL had cleaned the condo out, taking all the furniture of any value and the car, and everything he wanted.
DH never said a word, and I was so mad at BIL. HE was not the executor and had zero 'rights'. DH wouldn't stand up for himself or for me.
In the end, it was OK. I won't trust BIL with anything ever again. Was it worth $20K to him to lose a good relationship between our families? Must have been.
Please don't do anything like this to your sibs. It is not worth the relationship being tainted forever.
In this case I would not be paid a fee. Mom would suggest a drop in price and the trust gets the same amount as it would if sold to a private party buyer. I believe the seller has the right to adjust the price and net/net there is no difference is there? This also would be done with proper legal help and approval from siblings who do not want to buy the home.
If I were you, I'd interview three Realtors to see how they'd market and price the house along with what repairs they think would be needed before listing it. Get it inspected by a licensed home inspector, too, so you're fully aware of what the house's negatives are.
Use the information to decide what the asking price should be, negotiate credits for the repairs (roof, termite tenting, etc. but usually not carpet and paint), then deduct 5%-6% of that price, and two-thirds of that is your price to buy it.
I'm interviewing agents for my mom's house now, and the commissions have been either 5% or 5.5%, with 2% going to the buyer's agent. They've also recommended about $60k in improvements (apparently a 1969 kitchen isn't cool anymore) with the expectation that it'd return about $180,000 in the asking price. Homes are selling fast and well over asking price here in Southern California, so if it's like that where you are, you and your siblings might be losing out on significant money if you buy the house yourself, in spite of saving on Realtor commissions.