Selling a home in probate - Mortgage question

[Zenniezou]

Minnesota. Not sure if this should go in the Probate forum or here. I am the executor of my dad's estate, 6 kids total. My dad left his estate with 13.4% to five of us and 33% to my youngest brother. Younger brother is applying for a mortgage to buy the rest of us out of the home. Home sale price to my brother is $145k. The mortgage appraisal came back at $300,000 (based solely on comps, my real estate agent said she would list at $220,000 but I should expect to sell around $200k).

The mortgage broker is saying that I need to get a court order to sell the home to my brother under the appraised price. All siblings agree on the $145k. Estate lawyer says we can sell at any price if we all agree. I am paying all lawyer fees out of my pocket (no cash in the estate) so I don't want to ask my lawyer to prepare anything that is not needed. Do I need something from the court to sell under the appraised value?

 

[Zigner]

Minnesota. Not sure if this should go in the Probate forum or here. I am the executor of my dad's estate, 6 kids total. My dad left his estate with 13.4% to five of us and 33% to my youngest brother. Younger brother is applying for a mortgage to buy the rest of us out of the home. Home sale price to my brother is $145k. The mortgage appraisal came back at $300,000 (based solely on comps, my real estate agent said she would list at $220,000 but I should expect to sell around $200k).

The mortgage broker is saying that I need to get a court order to sell the home to my brother under the appraised price. All siblings agree on the $145k. Estate lawyer says we can sell at any price if we all agree. I am paying all lawyer fees out of my pocket (no cash in the estate) so I don't want to ask my lawyer to prepare anything that is not needed. Do I need something from the court to sell under the appraised value?

Why do you not believe your attorney? Have you asked your attorney to communicate with the broker?

 

[zddoodah]

I am the executor of my dad's estate

To be clear, were you actually appointed by the court to serve in this capacity, or are you simply nominated in your father's will to do this? Do you have an attorney representing you in this capacity? You referred to an "estate attorney," but I'm never comfortable with that terminology. Is the "estate attorney" a lawyer you hired to represent you in your capacity as executor?

a mortgage to buy the rest of us out of the home.

So...is he seeking to buy the home from the estate? Or is he seeking to buy your interests in the estate?

Home sale price to my brother is $145k. The mortgage appraisal came back at $300,000 (based solely on comps, my real estate agent said she would list at $220,000 but I should expect to sell around $200k).

If the fair market value is somewhere between $200-300k, why would the sale price to your brother be only $145k? Is it simply a matter that all beneficiaries under the will have agreed to cut him a deal? Or does your father's will call for your brother to get a below-market value deal?

The mortgage broker is saying that I need to get a court order to sell the home to my brother under the appraised price.

If you have been appointed by the probate court to serve as executor and have letters testamentary (or letters of administration), then you may not need a separate court order (however, your attorney should confirm this). However, if you are merely the nominated executor under the will, then you have no authority to do anything and will need an appropriate order from the court. To be clear, since the property is presumably titled in your father's name, you have no ability to convey marketable title without an appropriate court order giving you authority to do so.

I am paying all lawyer fees out of my pocket (no cash in the estate) so I don't want to ask my lawyer to prepare anything that is not needed.

You understand that you'll be entitled to reimbursement from the estate for any expenses you pay, right? Also, have you considered asking the lawyer if he'll defer his compensation until the estate is closed?

Do I need something from the court to sell under the appraised value?

There's no nice way to say this: relying on anonymous strangers on an internet message board (none of whom, AFAIK, are probate attorneys in Minnesota) instead of seeking advice from your attorney would be downright stupid.

 

[Zenniezou]

To be clear, were you actually appointed by the court to serve in this capacity, or are you simply nominated in your father's will to do this? Do you have an attorney representing you in this capacity? You referred to an "estate attorney," but I'm never comfortable with that terminology. Is the "estate attorney" a lawyer you hired to represent you in your capacity as executor?

Probate was opened over a year ago and I have been appointed as executor by the court. I have hired an attorney to represent me in the probate process.


So...is he seeking to buy the home from the estate? Or is he seeking to buy your interests in the estate?

He is seeking to buy the home from the estate. However, the title company has said the home first needs to be transferred to heirs and then the heirs need to sell it to him.


If the fair market value is somewhere between $200-300k, why would the sale price to your brother be only $145k? Is it simply a matter that all beneficiaries under the will have agreed to cut him a deal? Or does your father's will call for your brother to get a below-market value deal?

The price of $145k was decided based on a total value of $215,000. Brother has 33% interest of the $215k, so buy out would be 145k. We have all agreed to the price based on the fact that my dad made it clear to us all that his main wish was to make sure my brother is taken care of and always has a place to live. He would have a difficult time finding another place in his price range that is both wheelchair accessible (for his partner) and that would accept 3 dogs.


If you have been appointed by the probate court to serve as executor and have letters testamentary (or letters of administration), then you may not need a separate court order (however, your attorney should confirm this). However, if you are merely the nominated executor under the will, then you have no authority to do anything and will need an appropriate order from the court. To be clear, since the property is presumably titled in your father's name, you have no ability to convey marketable title without an appropriate court order giving you authority to do so.

Got it.


You understand that you'll be entitled to reimbursement from the estate for any expenses you pay, right? Also, have you considered asking the lawyer if he'll defer his compensation until the estate is closed?

Yes, I will be reimbursed. Trying to pay as we go.


There's no nice way to say this: relying on anonymous strangers on an internet message board (none of whom, AFAIK, are probate attorneys in Minnesota) instead of seeking advice from your attorney would be downright stupid.

Totally understand and agree. This has just been such a long exhausting process. I don't even know what I'm doing anymore.

 

[Zenniezou]

Why do you not believe your attorney? Have you asked your attorney to communicate with the broker?

Thank you. I will connect the attorney and broker to figure out what exactly is needed.

 

[LdiJ]

Thank you. I will connect the attorney and broker to figure out what exactly is needed.

If you are selling to your brother at 145k because that is the amount value of your shares after his 33% then you (or your brother) may be presenting it to the mortgage broker wrong. You are selling it for approximately $220,000 with him having 33% equity already. Therefore the balance he has to finance is $145,000 rather than $145,000 being the sales price. Trying explaining it that way to the mortgage broker. It is the same result as if your brother was buying from a stranger and putting down a 33% down payment.

 

[Zenniezou]

If you are selling to your brother at 145k because that is the amount value of your shares after his 33% then you (or your brother) may be presenting it to the mortgage broker wrong. You are selling it for approximately $220,000 with him having 33% equity already. Therefore the balance he has to finance is $145,000 rather than $145,000 being the sales price. Trying explaining it that way to the mortgage broker. It is the same result as if your brother was buying from a stranger and putting down a 33% down payment.

Thank you!!!