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Problem with executor regarding a buyout of my dads house in his trust Illinois

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  • Problem with executor regarding a buyout of my dads house in his trust Illinois

    Dad passed away a year and a half ago. Upon his death, his assets were to be equally divided among his 3 boys. The house is in a trust. No probate is needed.

    Executor and trustee is my brother. I am successor executor. My brother distributed my dad's cash and stocks with no problem. Now he has to distribute my dads house. He has notified us that he wants to buy the house from us other two brothers and move there.

    We have no problem with that. I asked him to get an appraisal and use that as the value of the house and then calculate out the percentages for the buyout. HE REFUSES TO GET AN APPRAISAL. He said he knows what it is worth in his mind and says that value is 100k. I went to Zillow to see an estimate for the house and it says 160k. Thus market value is between 100k-160k imo, and I want him to get appraisal. He refuses.

    questions

    1. As executor, is he able to sell himself the house based on 100k without the other two brother signatures? (And then give us the percentages based on the low 100k value).

    2. If he refuses to budge regarding getting an appraisal, what recourse can I use since he is clearly in violation of fidicuary duty in several items...self interest, not getting fair market for assets, etc.....
    Last edited by jjj70095; 05-12-2013, 12:09 AM.

  • jjj70095
    replied
    Originally posted by Alice Dodd View Post
    Yes, you should get a separate date of death appraisal. If you use the same appraiser, you should get a discount on the 2nd appraisal, since much of the data will be the same. But the comps will be different so don't expect the discount to be huge. Also, the appraiser will need to know if any improvements have been made since the date of death. The DOD appraisal should exclude those improvements.
    Thank you. I did tell him to get two appraisals and he told me he is not going to. He told me that nobody cares (its a small house worth maybe 130k, no improvements), and that getting an appraisal one year and two months after Dads death is reasonable..... What trouble can he get into if he only gets one appraisal that is current? I assume he will use the current appraisal to reach the buyout figures for the other two brothers...

    Leave a comment:


  • Alice Dodd
    replied
    Yes, you should get a separate date of death appraisal. If you use the same appraiser, you should get a discount on the 2nd appraisal, since much of the data will be the same. But the comps will be different so don't expect the discount to be huge. Also, the appraiser will need to know if any improvements have been made since the date of death. The DOD appraisal should exclude those improvements.

    Leave a comment:


  • jjj70095
    replied
    Originally posted by Alice Dodd View Post
    Real estate agents are NOT appraisers. They do CMAs, a comparative market analysis, but they only do it in an attempt to get the listing, so they are motivated to give you a high price to entice you to sign for the listing. Hire a real appraiser.
    Ok, good news. My brother has caved in decided to get an appraiser for the value of house.

    Next question:
    I know we have to have it appraised at current market value, but do we also need it appraised from date of Dad's death which was Feb of last year? To get the basis and compute any gain for the brothers who receive buyout money? Prices have risen over the past year and half...

    Leave a comment:


  • Alice Dodd
    replied
    Real estate agents are NOT appraisers. They do CMAs, a comparative market analysis, but they only do it in an attempt to get the listing, so they are motivated to give you a high price to entice you to sign for the listing. Hire a real appraiser.

    Leave a comment:


  • Marketeer
    replied
    If the house in the trust, the only signature needed is that of the trustee.

    Leave a comment:


  • jjj70095
    replied
    Originally posted by Marketeer View Post
    Yes, there was also an appraisal, and it came in at $725,000. My husband also interviewed three real estate agents before choosing one with whom to list the house and, based on seeing the condition of the house and their knowledge of the market, none of them would list it for anything more than about $725,000. Google "Zillow" and "unreliable" and you'll find a host of stories about how you can't depend on it to set the value of a house.

    At this point, you have three choices: 1) go with the status quo, 2) hire your own appraiser, or 3) hire an attorney and fight your brother in court. I can assure that you can hire an appraiser for about the same as it would cost to pay about two hours' of an attorney's time. Taking your brother to court would cost a lot more than that and, under the law, he could use estate funds to defend any lawsuit you filed.
    I'm going to go to a realtor next week and get a free apraisal, that way I have a ballpark idea of what it is really worth. Now what about signatures needed? Does the executor need the other two brothers signatures if he wants to do a buyout???

    Leave a comment:


  • Marketeer
    replied
    Yes, there was also an appraisal, and it came in at $725,000. My husband also interviewed three real estate agents before choosing one with whom to list the house and, based on seeing the condition of the house and their knowledge of the market, none of them would list it for anything more than about $725,000. Google "Zillow" and "unreliable" and you'll find a host of stories about how you can't depend on it to set the value of a house.

    At this point, you have three choices: 1) go with the status quo, 2) hire your own appraiser, or 3) hire an attorney and fight your brother in court. I can assure that you can hire an appraiser for about the same as it would cost to pay about two hours' of an attorney's time. Taking your brother to court would cost a lot more than that and, under the law, he could use estate funds to defend any lawsuit you filed.

    Leave a comment:


  • jjj70095
    replied
    Originally posted by Marketeer View Post
    If you feel that your brother is abusing his powers as the executor and trustee, your recourse is to hire a lawyer, take him to court, and have him replaced as executor and trustee. if you have access to the house, you could also pay for an appraisal yourself. Also, if the house goes up for public sale, the estate will pay brokers' fees, etc., that it would not pay in a direct sale to your brother, so any increased value in the price might be dissipated by those fees.

    Finally, my husband was in a similar situation (executor of his father's trust and with two brothers who would share in the sale of the house). One brother insisted that the house was worth $1,000,000 because that was what Zillow listed it at. After putting it up for sale and getting multiple offers, the best offer turned out to be $750,000 (a difference of $250,000). Zillow is not an accurate predictor of home values. It uses an algorithm to determine a value based on the description of the house in county land/tax records (Zillow is missing one entire bathroom in its listing of my home) and recent sales in the neighborhood. It doesn't take into account the condition of the house. In the case of my father-in-law's house, he had the oldest, least updated home in a neighborhood where the old homes are torn down in order to put up McMansions. Zillow's algorithm did not take into account that the only buyers for the house were developers who were only buying it for the land. So, all this is by way of saying that you really, really need to take Zillow with a grain of salt.
    I understand that Zillow may overvalue a property, but did your executor go and get an appraisal? All I am after is a proper value from an independent third party....I told him that the appraisal may help him, if it comes in at 80k......He wont get an appraisal. He told me to do it and its not my duty, imo. It is his responsibility to properly value assets. Funny, I look at zillow versus recent sales in our town, and Zillow was close to the sale price about 80 percent of the time.

    Leave a comment:


  • Marketeer
    replied
    If you feel that your brother is abusing his powers as the executor and trustee, your recourse is to hire a lawyer, take him to court, and have him replaced as executor and trustee. if you have access to the house, you could also pay for an appraisal yourself. Also, if the house goes up for public sale, the estate will pay brokers' fees, etc., that it would not pay in a direct sale to your brother, so any increased value in the price might be dissipated by those fees.

    Finally, my husband was in a similar situation (executor of his father's trust and with two brothers who would share in the sale of the house). One brother insisted that the house was worth $1,000,000 because that was what Zillow listed it at. After putting it up for sale and getting multiple offers, the best offer turned out to be $750,000 (a difference of $250,000). Zillow is not an accurate predictor of home values. It uses an algorithm to determine a value based on the description of the house in county land/tax records (Zillow is missing one entire bathroom in its listing of my home) and recent sales in the neighborhood. It doesn't take into account the condition of the house. In the case of my father-in-law's house, he had the oldest, least updated home in a neighborhood where the old homes are torn down in order to put up McMansions. Zillow's algorithm did not take into account that the only buyers for the house were developers who were only buying it for the land. So, all this is by way of saying that you really, really need to take Zillow with a grain of salt.

    Leave a comment:

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