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It's more complicated than that. I am power of attorney for a cousin who has Alzheimer's. She needs to go into memory care and I am supposed to sell her house to pay for it.
This is a tiny ranch house, no basement, not in top condition. It will need a new roof, it only has that wall to wall carpeting, tiny bathroom, three small bedrooms, and attached garage. Built about 1953. Nice big yard and amazing location in a nice, safe neighborhood in a town with good schools. Because it's in such a nice town and close to Boston, the value has gone from the $129,000 she paid 20 years ago to about $425,000.
The future buyer will probably either be a young family wanting to get their first house or a contractor who will knock it down or add a second story and flip it. I am waiting for the figures from the realtor who looked at it the other day. Meanwhile, there is a contractor living nearby who would give me $350,000 for it As Is.
Complications are that my cousin doesn't know her house is being sold and it would break her heart to know. The social workers want to whisk her away to assisted living, I would go to the house and pack up the few things she can have there, and then...?
1. She goes to assisted living memory care. The facility will do a loan to pay for probably two months. When the house is sold and the money becomes available, I start paying monthly. I would have to pay $1200 for a clean out of the house (some hoarding going on) and then it would go on the market.
2. I take cash from the contractor neighbor. Now, he and his wife have been extremely kind to my cousin over the last few years. They are a young couple with little kids. The wife has had guilt over doing this but the husband told her this may be the one chance they get to do something really good for their kids financially. He knows the house--it is identical to his. He has a builder friend. Last I heard the wife was on board.
So with the neighbor, no realtor commission, no clean out costs, no need for a loan from the assisted living because he will give me the money right away.
However, I know there will be things like capital gains and closing costs. Capital gains--she gets the $250,000 exemption because she is single. No major improvements were done to the house except some new windows probably 10 years ago. So I think she would pay quite a bit in capital gains.
Some questions I have come up with are--by selling it for only $350,000 instead of maybe $425,000 will it help much with the capital gains tax for her? I think if a realtor showed the house, she could deduct commission, selling costs and anything else?
Also, with the contractor neighbor, how would we do this? Just each get a RE lawyer and that's it?
With the realtor I think the house would sell fast. With the neighbor, it would sell immediately and I would save the cost of the bridge loan (for two months and an entry fee.)
If I could get an impartial answer, it would really help. I know I am speaking to realtors though. I like the realtor I have chosen but mostly I guess I need to be made aware of any pitfalls and glitches that could come up as well as which method would be more economical. This whole thing is a depressing nightmare and my poor cousin has no idea she will be removed from her beloved home which she will never see again.
Get an appraisal of market value. Pin down an opinion, and decide whether to try to max out in the market, or to go with the contractor/neighbor.
Their kindness over the years should not entitle them to a quid pro quo or anything other than reasonable consideration, but it certainly should be recognized.
Yes, you can make adjustments for the cash deal, easy-peasy, no commissions.
But $75,000?
Yes, both parties should have an attorney.
And, if selling to the contractor, you should know if you have a legal responsibility to make a documented effort to get the best price possible for the property. Usually, that would include listing it with an agent for broad advertising.
And, you should talk to a tax expert and get a grasp on the potential tax liability.
You are a good cousin, in a difficult time.
Good luck!
Last edited by MikeJaquish; 04-12-2018 at 12:32 PM..
Reason: quo, o
I just received a PDF from the realtor. He compared three similar houses in the neighborhood. One that went high --$450,000--had a swimming pool and a sun room. The $425,000 house was pretty nice too. The other was plain like my cousin's and went for $399,000. It said As Is and that's kind of what I will have. She is older, hasn't upgraded anything, and I think she said one time that the fireplace doesn't work.
Yes, MikeJaquish, $75,000 is a big difference, even $50,000. Maybe I am over thinking this. And, yes, I have to make a documented effort to get the best price for her, meaning probably listing it anyway. Even if I don't end up making much more than I would have by selling it to the neighbor, it certainly would look better.
And I have zero energy left for anything. I think I will go with the realtor. I am out of state so this means once my cousin has been taken away I will have to go out there and pack up some things and call movers to take them to her. THEN deal with a clean out place to come and do the rest. It will probably be more or less an As Is but I can discuss that with the realtor. (Should I have the clean out people take all the furniture out along with everything else or should I have them leave a pretty desk, the couch, curtains, to make it look better. The realtor will know.
Thank you again. I will give myself some time to digest this decision and probably call the realtor tomorrow.
You need to find a real estate agent who will go above and beyond to reduce your burden.
Yes, they're going to get nicely paid, but should earn it with some compassionate service.
One additional thought--call the contractor back and offer to sell it to him for $375,000. That will get you to the same place as a $400,000 offer minus a 6% commission. (and I bet they will help you with the clean out).
Tough issues for sure. Good answers so far. Good luck to you, it's a hard and probably thankless job you're doing. I do hope both you and your cousin, can have peace in the end.
Where is this house? Not a ton of slab ranches in the Boston area. Framingham or Natick? I can't imagine we're talking about Oak Hill Park in Newton because we'd be talking about a much higher price point. There are other enclaves of slab ranches in the Boston area but I'm guessing Natick probably the Whethersfield neighborhood. It would definitely help to know the location (at least roughly) because market conditions will be a factor in what you can/cannot do.
I wouldn't clean out the house. If it really is going to sell to a builder who will tear it down, i would just take anything I want out of the house (maybe even donate a few more things that are in good shape if I have the time) and then I would write in the listing that the contents of the house are included in the sale. This is going to sound a bit harsh but the truth of the matter is that the items you leave behind will just go in the dumpster along with the house itself. It's an incremental additional cost for the developer.
Also, if your hope is to get the highest price possible for your cousin then definitely don't sell it to the neighbor. Being that you believe it's likely she'll be paying cap gains on the sale paying a commission is really less of an issue. Plus, there's always one person who's willing to pay more for a house than anyone else. Your odds of finding that one person are low if you only offer the house to one person. Instead, offer it to everyone.
Quote:
Originally Posted by MikeJaquish
You need to find a real estate agent who will go above and beyond to reduce your burden.
Yes, they're going to get nicely paid, but should earn it with some compassionate service.
I couldn't agree more. The agent should be there to make things easier and take things off of your plate. They should have business partners who they can connect you with who will take care of the things you cannot because you are not local.
My brother and I just went thru this in December-February with selling our parents’ house in MA.
He lives 3+ hours’ drive away (NH) and I live 1600 miles away (CO).
I hired a real estate agent. She was great.
We sold to a contractor and the new ugly McMansion is underway. He started the scrape within 48 hours of closing.
I had 2 questions for the prospective agent:
1. How many sides have you done in the last 12 months? Answer=30
2. How far do you live from the house? Answer=5 miles
Would I have hired her if I lived close by?
No.
My brother actually found the buyer.
I “knew” what the price should be and her CMA merely confirmed it.
But, I do not.
I wrote her a very good Yelp review (https://www.yelp.com/biz/benoit-mizner-simon-weston) and am completely happy with the process.
Last edited by davebarnes; 04-13-2018 at 08:51 PM..
You might sell for 400,000. Take out 24k for commission and say another 2-3k for whatever your costs are as the seller you’re not looking at a lot over 375,000. That’s IF you get a 400,000 offer AND it all goes through with no buyer backing out. Because lots of buyers can start mess8ng with you once you’re under contract.
Imo your sister needs the money now. If the contractor is a cash buyer or at least has his ducks in a row and you can do a FSBO or use a lawyer to draw the contract I would go that route. I would however tell him that the 350 offer isn’t good enough. Offer to split the 350 and 375 and meet in the middle. This way he gets something and so do you. That would be a fair sale imo
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I will have to go out there and pack up some things and call movers to take them to her. THEN deal with a clean out place to come and do the rest. It will probably be more or less an As Is but I can discuss that with the realtor. (Should I have the clean out people take all the furniture out along with everything else or should I have them leave a pretty desk, the couch, curtains, to make it look better. The realtor will know. 
