A father’s will divides his modest estate equally among his three children. The estate includes a house.
If one of the children wants to buy the house, what’s the correct procedure to determine the house’s market value, hence a fair sales price?
It would seem that ideally, offers from several different potential buyers would establish a price range; the heir could choose whether to match the highest offer. This seems fairest for both the estate [the three heirs], and the heir who’s buying.
However, to put the house on the market only to receive offers that might be rejected, only because they’re exceeded by a token amount from the heir, would be unethical, maybe illegal, correct?–ie, the seller might not be acting in “good faith”?
So, would the estate simply get an appraisal, and use the appraisal to establish the selling price for the heir?
I suspect there’s an applicable body of real-estate law for this, since this must be a common dilemma, but I’m completely new to this.
An appraisal has to be done as of the date of death in any event, for determining the value of the estate.
If everyone agrees, the value from that appraisal can be used to allow Joe to buy out Bob and Susie’s shares.
That answers the simplified question, but because there’s a transfer of real estate, the estate must be probated (or at least that’s the case in Nevada), so your local probate court’s rules of procedure come into play as well.
This happened when my mother died; her will stipulated that her estate was to be divided evenly among her five children. This included the house in which we were all raised (which, IIRC was fully paid for). We had the house appraised and my sister bought it from the estate, using her twenty percent share as the down payment and financing the rest, which was then divided among the other four of us.