Q: My sister and I inherited our mother’s house and 20 acres of land. I want to buy my sister’s half interest and we obtained an appraisal from a real estate broker, but my sister believes the appraisal was inaccurate and greatly underestimated the market value of the property.
She wants us to sell all of the property on the open market to a third party and is convinced that doing so is the only way to obtain her fair share of its value.
The property is in a jurisdiction where sales prices of real estate are not recorded in public documents, so finding useful comparables is problematic.
Do you have any suggestions for breaking this impasse?
A: Knowledge is key in working this issue with your sister. Your expectations of what the property’s value is might be too low and your sister’s might be too high. If you get more information and that information gives both of you some comfort level, you can then work with that information to come to a resolution that suits both of you.
There are a couple of things that come to mind that could help. While you obtained an appraisal, that appraisal could be inaccurate, particularly in your area. Depending on where you live, you might be able to find three real estate agents to come and give you a comparative market analysis (CMA).
Those real estate agents can do some homework and give you their presentation as to what they feel you could list your property for sale in this market. They can also give you an idea what you might be able to get for your property based on their listing prices.
With three estimates, one will be high and one will be low. You will have to determine whether the one that came in high was solely for the purposes of trying to entice you to list with that real estate agent. Likewise, you will need to use your judgment in determining whether the one that is lowest is below the market in the hopes that it will sell quickly or can try to encourage a bidding war for your property. You might also want to average the three suggested list prices to come up with a value for the property.
Of course, with the information you receive from the real estate agents, you might decide that it might be better to actually list the property and sell it or your sister might decide that the pricing is right and that she is willing to sell you her half-interest in the property.
If you can’t come to an agreement, you can always go the less desirable and expensive route of having a court decide whether you have to sell the property or the price you have to pay your sister for her share. The litigation route is one that you should avoid. It’s probably the most expensive and least likely to give either of you the best result.
One last thought: Even if you live in a area in which real estate sales prices are not part of the public record, real estate brokers and agents may keep track of those prices. Some of that information is kept in the real estate databases for real estate agents that may not be available to you. Your best bet is to get as much information as possible and then approach the issue with your sister.
But keep the discussion amicable and try to work through the information. If you’re both reasonable, you should be able to arrive at a price that makes both of you happy – and preserves your relationship.