Who pays closing costs on equity split buyout?

3 Replies

2 brothers inherit a property with substantial equity. One wants to cash out and the other wants to fix it up to keep as a rental.

Brother A offers to buy Brother B out of his half of the equity (using fair market value determined by local realtors) and wants to factor in what the closing costs + realtor fees would be as if they were selling it to a third party.

Brother B feels closing/ realtor costs should not be factored into (subtracted from) his split because the house would not actually be sold. Only if and when the house sells in the future would he be open to paying those costs, along with a share of whatever additional future equity has been built.

Clearly this is a very subjective situation and a disconnect of what each side feels is fair and reasonable.

My question- is it fair/ reasonable for Brother A to factor in the realtor & closing fees if the house is not actually selling, but only being transferred?

Why are there any realtor costs at all? The two parties know each other and already jointly own the property, there's no reason to have a realtor in the mix. A realtor isn't adding any value.

The brother who is buying out the other should be handling his own financing costs & such. I would put title transfer fees on him as well. 

Another option is to cut the property in half and one brother takes the East side and the other takes the West