Estate property/Sibling buyout

[nudaveritas]

What is the name of your state? FL

My mother passed away in March of 2006 (my father passed away years prior). I have been living in the home since shortly before that time. A will was not left; however, my sister and I are currently going through probate to which we are both inheriting equal shares in the home. I have been paying the mortgage for the past 13 months and do plan on staying here indefinitely. My sister wants me to buy her out and I have no objections to this naturally, my only concern is proceeding in a legal, fair, and effective way. The house itself is a far cry from fair condition and needs at minimum 20k in repairs, and at current market value seems comparative to homes in the area at a 80k-90k range (generously speaking). We seem to have a different opinion on value, her estimate exceeding 110k. Here's where it gets tricky. I recommended that we get the property appraised, but she refuses to take any part in the process and will likely dispute. (Bear in mind that no changes have been made to the home since my mothers passing.) She instead is asking that we have a friend of hers, who is in real estate, perform a CMA to estimate value, and according to our attorney she has the upper hand to choose this route. I feel that a CMA is too subjective, particularly because this person may be biased due to her relationship with my sister. More so, wouldn't an appraisal be more accurate? Am I wrong in thinking this?

How should/can we proceed with the above in mind? (Fairly on both ends.)
Do we need to account for a 5-6% share that would normally go to a real estate agent selling a home? If so, to where or whom does this 5-6% go?
Or, do we simply say: Fair Market Value of home = X, outstanding mortgage principle = Y then X-Y divided by two = the dollar amount owed to her? Is it that simple?

I plan on using the equity in the home to refinance and buy her out, and also take out an additional amount to pay for repairs. Will this affect the above formula?

I truly appreciate any advice and thoughts offered. If additional details are needed I will respond as soon as I can.

Thank you!

 

[divgradcurl]

A completely neutral party would probably find that the current fair market value, less any encumbrances (mortgage, other liens, etc.), divided by two, would be the most correct "buy out" price.

That said, this is a negotiation. You want to keep the place, she wants to sell. If you can't come to an agreement, she can force the sale through the courts, although that is expensive and time-consuming; of course, if her buy-out price is too high, you don't have to sell either, and once she finds out how expensive and how much trouble a partition action is, she may be more amenable to negotiation.

You might want to start with getting an estimate from her friend, if that will make her happy -- and maybe you could pay for you own estimate as well, then you will each have an estimate from which to begin the bargaining.

 

[seniorjudge]

A completely neutral party would probably find that the current fair market value, less any encumbrances (mortgage, other liens, etc.), divided by two, would be the most correct "buy out" price.

That said, this is a negotiation. You want to keep the place, she wants to sell. If you can't come to an agreement, she can force the sale through the courts, although that is expensive and time-consuming; of course, if her buy-out price is too high, you don't have to sell either, and once she finds out how expensive and how much trouble a partition action is, she may be more amenable to negotiation.

You might want to start with getting an estimate from her friend, if that will make her happy -- and maybe you could pay for you own estimate as well, then you will each have an estimate from which to begin the bargaining.

Eminently reasonable.

That's why the parties won't use this solution.

I've seen many an estate eaten up by folks wanting to rehash old wounds.

Of course, as soon as the money is gone, the lawyers disappear!!!

 

[nextwife]

Or, do we simply say: Fair Market Value of home = X, outstanding mortgage principle = Y then X-Y divided by two = the dollar amount owed to her? Is it that simple?

I plan on using the equity in the home to refinance and buy her out, and also take out an additional amount to pay for repairs. Will this affect the above formula?

If you aren't paying a broker, there is no broker expense.

It should be:

agreed market value - mortgage and any prepayment penalty - standard closing costs, such as recording mortgage sat, title update, transfer tax that may be due from seller, municipal compliance certificates that may be required at sale, prorated share of property taxes AND hoa FEES, etc. , then the remainder divided in half. If you are living there, water and sewer proration should not be done, all should be your responsibility