Here is an excellent blog from Fred Griffin and the advice found within should be taken to heart by all of us faced with a 'Family Home' sale opportunity.
The time comes for many families when the elderly parents are no longer able to care for the large house that the family grew up in. The parents want to "downsize", perhaps to a retirement community or assisted living facility. What steps should the adult children take to help their parent(s) sell their house?
I was contacted recently by a family who is deciding "what to do" about selling Mama's house, and settling her into a new place. Could I come by, and look at their house, and talk with them about it?
One of the adult daughters greeted me at the door. "Mama has lived in this house since the early 1950's," she informed me. "She and Daddy raised us all right here." The walls of the house were adorned with family photos. I was shown the late husband's office and library.
"Mama doesn't want to leave all of this, and neither do we, but you know it's such a big house and everything, we just feel like the time has come. We looked at that new assisted living place off of Thomasville Road; we have talked with them about it, they would take good care of Mama, the cost is not an issue for us, but we still are not sure."
The daughter continued. "My brother and my sister don't really want to sell this house, but Sis lives in Atlanta and my brother is in Miami. My husband and I are settled on the northeast side of Tallahassee; we wouldn't move back into this house. So we are all discussing what to do about it."
It was my turn to speak. "So you have two decisions to make, don't you? First, your mother has to decide whether she wants to move into the assisted living place. Second, there is this house. If your mother moves out, should you sell the house? Rent it? Use the house for family gatherings now and then?"
"Well, what if we decide to sell the house? What do we need to do?" she asked.
Here is my advice to you, or to any family who is selling the house of a relative or elderly parent:
1. You as a family should make the decision together. Your parent(s), as long as they are legally and mentally competent, will have the final say.
2. You need to consult an Attorney. You want signed documentation from all of the children, and of course from your mother, that everyone is in agreement to sell the house. If there is any misunderstanding in the future, you will have that document to remind each other that you all said, "Yes". The Attorney will also give you any necessary legal advice regarding the sale. If a Power of Attorney is needed, the Lawyer can create the required legal form.
3. You should also consult a CPA or Tax Attorney regarding the sale of your mother's principal residence. You don't think that your mother will have to pay any Capital Gains Tax on the proceeds from the sale of this house, but you need a professional opinion from a CPA to be absolutely certain.
4. Get a pre-sale Home Inspection, and a pre-sale Wood Destroying Organisms Inspection (a "Termite Letter"). This can help you avoid unpleasant surprises; it can also help you if the Buyer wants to renegotiate after he or she makes his own inspections.
5. Hire a Licensed Real Estate Appraiser to determine the asking price for your family house. Provide the Appraiser with the reports from the Home Inspectors. If a family member later says that, "Mama should have asked more money for the house," you have the written opinion of value from the Appraiser to justify why you priced it as you did.
6. Sell the house "As Is, Subject to Inspections". The house I was called about was built in the year 1952. That 65-year old house may need thousands of dollars in repairs and upgrades (I sold a house recently that required $35,000 worth of structural repairs). See your Attorney before you sign ANY contract that reads, "Seller Warrants", or "Seller Agrees to Make Necessary Repairs".
7. "Mama" needs to move to her new home before we put this house on the market. It will be much easier to show the house to prospective Buyers, and to sell the house, if it is already vacant. Get your mother settled into her new home at the assisted living complex, then we will put the house up for sale.
When the time comes to sell the house of an elderly parent or relative, there are certain steps that you and your family should take. See an Attorney and a CPA for legal and financial advice. Have the property inspected to get a professional overview of the condition of the house. Hire an Appraiser to help you set the highest realistic asking price. If it is financially feasible, vacate the house before putting it on the market.
Disclaimer: Nothing in this blog article is to be construed as legal advice, tax advice, or financial advice. For legal advice see an attorney. For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.
Frederick Griffin, Licensed Real Estate Broker Tallahassee, Florida