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If your relative passes away, there may be hospital/medical bills that must be paid. In California, Medi-Cal can place a lien on real property.
Prior to agreeing to 'take over' this home, make sure that all final expenses of your relative have or will be paid. Find out the balance today for the back taxes, any mortgages or other liens. Talk to a Realtor or appraiser for a realistic value of the home in its 'as is' condition.
I'd get an appraisal and sell it "as is". Depending on where the home is located you may walk away with 100K. The home belongs to an individual who died so there is no disclosure.
Just come to grips with the fact you will NOT get 320K. You can probably count on 50K for sure.
Staying with reverse mortgage for now. Here's why.
One day grandma didn't have to make any more payments. She may have believed the mortgage was "cancelled" or may have expressed it that way. In NY over 70 years of age...no more payments on a reverse mortgage so it would appear the old mortgage was cancelled. Yes...more specifics, etc but generally the idea especiallyn of an older person not totally into this stuff. (and, no, I don't think 70 is old at all)
Next thing, when there is a default such as with taxes, a lender must allow the borrower to cure any default.
Brings us to the next thing. The taxes.
I believe this is regarding a home in NYC. If that is so, here's what I most recently about tax liens in NYC and how quickly they work.
For a single family home, taxes and realated charges must be at least 3 years past due. Yeah.
Then there's the notice.
Then 8 weeks or more later the city files for foreclosure.
2 weeks after filing or more there is the "Notice of Foreclosure" sent out.
At least 10 weeks or more after filing there is the Final Judgement.
The city will not auction a property for at least four more months...at least...after the Final Judgement.
If the city has not sold the property you can still get it back for two MORE years with a release fee and all taxes and charges or by partipating in an installment plan.
Seems like even up the Final Judgement it could be 4 years or so.
Now, about the amount...$30,000. That can easily acrue in four years in NYC. Or three years with additional fees.
So a relative who sadly is going through a health crisis owns a house that ACCORDING to Zillow is worth about $320k. Homes in the neighborhood generally range from $200k-$400k.
However, the house has some MAJOR issues:
- The house owes $30,000 in backtaxes (our region has sky-high taxes)
- The school district has declined and is mediocre/well below-average.
- This neighborhood has slightly-declined and borders a really bad area
+One good thing is that the mortgage has been cancelled on it since the homeowner was elderly.
The house also:
- Needs new (large) driveway, new (large) garage door and overall updating/facelift.
- Needs new roof (raccoons in ceiling of both floors)
- Floors are uneven at various parts throughout the house
- Porch leaks
- The ceiling of the family room, garage and lower bathroom leaks
- Both kitchens need serious updating (the home's a 2-family home)
- Needs electrical work b/c several lights don't turn on (probably either due to raccoons biting wire or water damage)
This cost to fix this home would probably EASILY exceed $100k+. We like some things about this home b/c it is a very large home and when it's fixed up, it could EASILY be the nicest home on the block; and we spent the last 15/yrs in this home.
We just don't know if we should take ALL this on!? (or just somehow walk away)
And we don't know if it'll be a good long-term investment!?
You're asking if you should be given a house? Good grief, Charlie Brown! SELL THE HOUSE for whatever you can get out of it and that's your gift. Let's assume that everything you said is true. $100K+ for repairs and $30K for taxes. Perhaps a good estimate of what the house will cost, to bring up to "good salable condition" for any ordinary family, would be $150,000. If it's worth $320,000, let's reduce that by a bit for what you said about the neighborhood and call it $300,000. Subtract from that the costs and call it $150,000. List it for $130,000 and see what happens. You'll probably get a home flipper or investor to buy it, and heck, if you can't sell it for $130K, keep dropping the price until you do sell it. If you price it right and list it with a realtor who is part of the MLS, it will sell overnight. Any money in your pocket from the sale of that house is gravy... and furthermore, you won't have to pay estate or inheritance tax on that $320K Zestimate - only the actual amount of money you were able to get out of the sale of the house. Even if you only net $80-90K from the sale, heck, I'd take that gift in a heartbeat!
Why do people give any credence to a Zillow estimate? Last time Ive looked, Ive never known Zillow to physically look at a single house on their website.
+1. Zillow is the most useless real estate site there is. .
I look at Zillow a lot because it has much larger pictures than realtor.com or trulia. Not to mention that sometimes they will have more pictures. I also like the feature of being able to move the map around and zoom in on a particular area to see only what is available in that area. It also lists homes sometimes that are not listed on realtor.com. (so does trulia) I pay no attention to the Zestimates.
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