Which Value to Use For House--Appraised or Minus Realtor Fees?

[Clairik]

Jurisdiction

California

Hello,

My brother is the executor of my father's estate and is deducting realtor fees and repair costs from the appraised value of dad's home, even though it will not be sold. Is this appropriate? The move is suspicious to the rest of us because dad wanted the estate evenly divided among us, and the house is worth more than my brother's share. He is willing to "buy us out," but by deducting these costs, he is decreasing the amount he would owe us. Or is this perfectly legal and acceptable? Thank you.

 

[army judge]

How much will your brother's special accounting amount to in dollars?

 

[adjusterjack]

OK, your father passed away and you and your siblings inherited the property.

All of you own equal shares in it.

For one of you to buy out the others ANY agreement you make as to the money is perfectly legal.

It's up to you do decide what is acceptable. If you don't like his proposal, just say no, refuse to cooperate, and demand that he sell the property and split the proceeds evenly.

 

[txls]

If it will not be sold then there are no realtor fees. Repair costs should not be considered because the appraisal was as is. Brother is trying to skim a few extra dollars for himself. If it's only a few dollars then it may not be worth fighting over.

 

[zddoodah]

My brother is the executor of my father's estate and is deducting realtor fees and repair costs from the appraised value of dad's home

First, just to confirm, because many people get this wrong, has your brother actually been appointed by the probate court to serve as executor? Or is your brother merely nominated in your father's will to serve as executor? Until and unless the probate court appoints him as executor, he is not the executor.

Second, what does "deducting realtor fees and repair costs from the appraised value" mean? Deducting those things on what?

even though it will not be sold.

Why not?

Is this appropriate?

No way to answer this without answers to the questions I asked above. I'd also want to ask your brother to explain why these fees and costs are being incurred. Opining about the propriety of this without at least asking for an explanation would be foolish.

dad wanted the estate evenly divided among us

Did he have a will? If so, is this what his will provides for? If the answer to either of these questions is no, then what your father wanted (or your or anyone else's belief about what your father wanted) is meaningless.

Please also confirm that the administration of the estate is still ongoing in the probate court and that title to the property is still in your father's name.

 

[Clairik]

How much will your brother's special accounting amount to in dollars?

Approximately $70.000 difference between the appraised value and the "adjusted" value he believes is correct.

 

[Clairik]

OK, your father passed away and you and your siblings inherited the property.

All of you own equal shares in it.

For one of you to buy out the others ANY agreement you make as to the money is perfectly legal.

It's up to you do decide what is acceptable. If you don't like his proposal, just say no, refuse to cooperate, and demand that he sell the property and split the proceeds evenly.

Thank you. I wasn't aware that we all could agree on a value. I thought the value to be used might be codified in law somewhere.

 

[Clairik]

If it will not be sold then there are no realtor fees. Repair costs should not be considered because the appraisal was as is. Brother is trying to skim a few extra dollars for himself. If it's only a few dollars then it may not be worth fighting over.

Thank you. Other actions on his part seem to support that he is trying to save himself money. I'm not sure the rest of us will want to fight him over the house value. We might let it slide.

 

[Clairik]

First, just to confirm, because many people get this wrong, has your brother actually been appointed by the probate court to serve as executor? Or is your brother merely nominated in your father's will to serve as executor? Until and unless the probate court appoints him as executor, he is not the executor.

Second, what does "deducting realtor fees and repair costs from the appraised value" mean? Deducting those things on what?



Why not?



No way to answer this without answers to the questions I asked above. I'd also want to ask your brother to explain why these fees and costs are being incurred. Opining about the propriety of this without at least asking for an explanation would be foolish.



Did he have a will? If so, is this what his will provides for? If the answer to either of these questions is no, then what your father wanted (or your or anyone else's belief about what your father wanted) is meaningless.

Please also confirm that the administration of the estate is still ongoing in the probate court and that title to the property is still in your father's name.

Thank you for responding. To answer your questions:

1) Yes, he is the appointed executor
2) The appraised value for the house was $1 million. He is deducting a realtor's fee and the costs to make the house market-ready from that amount. He claim is that these costs need to be included in determining the true value of the house.
3) The house is not being sold because my brother wants it as his share of the inheritance.
4) Yes, Dad had a will and it did specified that the estate was to be divided evenly.
5) Yes, the administration of the estate is still ongoing. I'm not sure about the title of the house.

 

[adjusterjack]

3) The house is not being sold because my brother wants it as his share of the inheritance

Bingo!

Your brother (the executor) has both a fiduciary and a statutory duty to act in the best interests of the estate (and all the heirs) and not in his own interests.

With $70,000 at stake I suggest that you and your siblings agree to spend a fraction of that amount to have an attorney intercede for you and explain to your brother (the executor) what the consequences are if he fails in that duty.

While negotiating a buy-out, in itself, might not be a violation, holding the property hostage could very well be misfeasance or malfeasance.

Or, you can (as you say) let it slide and have your brother have his way with you.

 

[zddoodah]

what does "deducting realtor fees and repair costs from the appraised value" mean? Deducting those things on what?

The appraised value for the house was $1 million. He is deducting a realtor's fee and the costs to make the house market-ready from that amount. He claim is that these costs need to be included in determining the true value of the house.

I think I understand this now. However, if the estate is not going to sell the property (other than in a potential "buy out" transaction with one of the beneficiaries), then it doesn't really matter (at least not for purposes of the probate process) what the value of the house is.

3) The house is not being sold because my brother wants it as his share of the inheritance.
4) Yes, Dad had a will and it did specified that the estate was to be divided evenly.

Unless your father's will specifically says that your brother gets the house, it's not up to him to decide this. If, in fact, your father's will simply says that the estate (not merely the house) is to be divided evenly between you and your brother and whoever the other beneficiaries are, then any distribution of estate assets (as opposed to liquidation) can happen only by approval of the probate court (which probably isn't going to happen without all of the beneficiaries of the estate agreeing to it).

Getting back to your original questions, I assume what your brother is doing is proposing to you and the other beneficiaries that he should get the house in lieu of a cash distribution of the estate. It also sounds like your brothers 1/Xth share of the estate is less than the value of the home. If that's correct, it sounds like maybe he is intending to pay the estate the difference between the home's value and his 1/Xth share and is trying to reduce that amount so that he doesn't have to pay as much. All correct?

It's certainly "appropriate," "legal" and "acceptable" for him to propose this, but he can't impose it on you and the other beneficiaries unilaterally. If you don't buy into what he's proposing, then simply tell him no. If he starts to push too hard, then you (either on your own or together with the other beneficiaries) can retain an attorney to ensure your interests are protected. I agree that your brother may be skirting a fine line between his fiduciary duties as the executor and his own self-interests.

 

[Clairik]

I think I understand this now. However, if the estate is not going to sell the property (other than in a potential "buy out" transaction with one of the beneficiaries), then it doesn't really matter (at least not for purposes of the probate process) what the value of the house is.



Unless your father's will specifically says that your brother gets the house, it's not up to him to decide this. If, in fact, your father's will simply says that the estate (not merely the house) is to be divided evenly between you and your brother and whoever the other beneficiaries are, then any distribution of estate assets (as opposed to liquidation) can happen only by approval of the probate court (which probably isn't going to happen without all of the beneficiaries of the estate agreeing to it).

Getting back to your original questions, I assume what your brother is doing is proposing to you and the other beneficiaries that he should get the house in lieu of a cash distribution of the estate. It also sounds like your brothers 1/Xth share of the estate is less than the value of the home. If that's correct, it sounds like maybe he is intending to pay the estate the difference between the home's value and his 1/Xth share and is trying to reduce that amount so that he doesn't have to pay as much. All correct?

It's certainly "appropriate," "legal" and "acceptable" for him to propose this, but he can't impose it on you and the other beneficiaries unilaterally. If you don't buy into what he's proposing, then simply tell him no. If he starts to push too hard, then you (either on your own or together with the other beneficiaries) can retain an attorney to ensure your interests are protected. I agree that your brother may be skirting a fine line between his fiduciary duties as the executor and his own self-interests.



Thank you for this. Yes, my brother is trying to reduce the amount so that he doesn't have to pay as much. He is, in his own words, "House rich and cash poor." My siblings and I are not entirely pleased with developments and will take all of the suggestions from this thread into consideration. Thank you for your time and advice.