What to offer on house (California) It was appraised for certain amount after Owner passed away

Question

Hopefully I will explain this clearly.

My mother passed away in 2013. She was married to my dad. She had a home in her name (she was the only one on the title)

There was no probate because there was no will.

House was appraised for a certain amount. Heirs were to receive portion of proceeds if sold.

Heirs quit claimed their share to father. (There were other properties as well they held in joint tenancy, this particular property was not changed to joint after they remarried)

He is only one on deed.

If house was appraised at certain amount at time of her death, does that mean the house has to be sold at that amount?

Trying to come up with a price to purchase this property from my father.

Do I need to come up with a new appraisal? And do I need to involve the title company/lawyer  at this point?

I'm going to present it as an owner finance, but I want to make sure I have the proper paperwork, and price.  If I were to refinance can I do this with the owner finance paperwork? Can you explain how I do this?

Do we just take the contract to the county to be recorded? And do I need to go through a title company to change the deed?

Im really trying not to stress about all this..since this will really be my first owner finance purchase.

Thank you so much for your advice!

Mary lou L. · Answer

I am so thankful for your advice! But This is getting complicated.

My dad is the only one on the deed. Can the contract have a provision on how the monies will be distributed? Example. Purchase price is 75000. I put down 10000. My sisters should get a share of that and any payments afterwards.

I told my dad that since they are not on the deed and there is nothing (asset) changing  hands legally between my sisters and I. It really will be up to  my dad to disburse the payments, unless I do and give him receipts. Will this be considered a gift on my part then? Or a gift on his part?

I think I would make the contract with my dad (he wants my sisters to agree on the terms as well, but truly it is ultimately up to him) Pay him the down, and make payments directly to him. I would add provision that the entire balance less payments will be paid in 6 months.

Jesse T. · Answer

Is your dad living in the home?  If he does he can sell at you for pretty much any price and not owe taxes(a combination of stepped up basis and 250K primary home exclusion).

If it is not his primary residence, he would owe capital gains on any amount the price exceeds the 2013 value.

If you go the seller financing route, make sure he charges the minimum interest rate for the mortgage.

Rick H. · Answer

It works like this:

You and Father agree to price and terms.

Down payment (if any) or equity from share  of Mom's estate

Balance is paid by Purchase Money Note (secured by Trust Deed or mortgage) payable to seller (Dad). Could be ANY AMOUNT you mutually agree to

For instance, if it's current estimated agreed on value is $100,000 and you are entitled to $20,000 from the other properties, you could take this "equity credit" and apply it towards the purchase.

The  difference, in this example, is $80,000. You and Dad can negotiate what the payments are, interest (if any) when payments start, length of term (5, 10, 15, 20, or 30 years, etc.).

This is a "make your own deal" situation. Suggest you negotiate based what you can afford rather than toward purchase price because over time, overpaying a few thousand, won't be so important years from now.

Later, Dad can sell all or a part of his note for cash if you closed with title insurance (or forgive the debt after he is gone :-).

Shane Pearlman · Answer

The only situation in which an appraisal plays a role in setting the price is if you plan to get a loan. The bank will only lend on a value which is backed by an appraisal. You can be below the appraised value with no issue to yourself, the government (taxes) or the bank.

Dave Metsker · Answer

This is not complicated, but it is obvious you need some help and forms.  Your agreement will be with your father, at a transfer price you both agree to, not what the appraisal says, which was for the valuation of the probate estate.  Send me a pm for help.

ROTIMI OLUWO · Answer

price of the property  is not dependent on time of death maybe not even on appraisal , The house could appraise for 150K and you offer 50K , price is dependent on offer and acceptance; Offer him the least amount possible