Calculate home's value upon inheritance

When it's time to sell, some shocked by massive fees, tiny profits

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jun. 1, 2011

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Again, when one of the owners die, the survivor becomes the owner (by operation of law) and probate is not necessary; (3) tenants in common -- if this is how title was held, on the death of one person, his/her interest goes by way of a last will and testament, and usually probate is required.

Most husbands and wives hold title as tenants by the entirety, so my answer is based on that assumption. As indicated, when your husband died, the property automatically went into your name.

I understand you would like to take his name off of the title, but it really is not necessary. Should you ever want to sell, so long as (1) title was in tenants by the entirety -- which can be determined by looking at the land records -- and (2) you have a death certificate showing that your husband died, you will not have a problem selling. You are now the full owner of the property.

But if it is important for any reason to put title in your own name, all you have to do is go down to the office of the recorder of deeds and show him/her the death certificate. From my experience, most recorders of deeds will assist you.

DEAR BENNY: My brother and I inherited our mother's house when she passed away in January. We wanted to fix it up so we could rent it out. We were hoping to keep it and pass it on ourselves. We need approximately $50,000 to get it ready for rental.

Neither of us could ever qualify for a loan on our own. I thought because the house is paid in full, with no mortgage, we would easily get a loan based on the equity in the house. Also, the house was purchased in the 1950s and has incredibly low taxes. Doing research, I am being told that is not true. What options do we have to find the money for the remodeling? --Diedre

DEAR DIEDRE: In the good old days, because you have a house with no outstanding mortgage, you would not have had a problem getting a loan of at least 50 percent of the appraised value.

But times have changed. Lenders are scared, and are now very conservative.

No one really knows what lenders are willing to lend. However, all I can do is suggest that you shop around for a mortgage. I can't believe that some lender will find your transaction favorable.

While I am not recommending this, there are what are called "hard money lenders" -- lenders who take greater risks but with higher mortgage interest rates. If all else fails, you can consider such a lender.

DEAR BENNY: In connection with getting an appraisal for a house, you discussed the "three appraisal" method. You wrote: "If the appraiser's values are far apart, the two parties together hire a third appraiser whose decision will be final."

This makes sense to me if the third appraisal is between the first two, which are more than 10 percent apart.

But, what if the third appraisal is outside of either of the range of the first two? To say that this outlier appraisal was final seems questionable to me. I may use this recommendation in a sibling situation with my sister for our mother's home. Can you please clarify? --Jim

DEAR JIM: Appraisal is not a science, but perhaps an educated art. If the third appraisal is so out of line, you could arrange that the appraisals are all added together, and then divided in three. That would be the number.

However, while your situation could happen, my experience is that competent appraisers will come in fairly close to a market value. But if you want to cover this contingency, have your agreement spell out that if that third appraisal is too high, you will take the average of all three.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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