House Calls: Grandchild Buying
Dear Edith: My father-in-law is moving from his home of 60 years to assisted living. One of his grandchildren wants to buy the house, possibly in a cash deal. What is the best way to set a fair market value? Are we naive to think we can make the transaction with just a lawyer and no Realtor? What "gotchas" should we be careful about? -- M. D.
Answer: A real estate broker's primary obligation is to produce a ready, willing and able buyer. Your father-in-law already has that, so there's no need for an agent. You could, though, ask a broker for a simple one-page written estimate of value. Or, you might ask two brokers and then use the average of their two figures.
In your state, it's customary to use attorneys for real estate transfers, so a lawyer, preferably one active in real estate matters, could certainly handle the paperwork. It might be more appropriate to retain two lawyers, one representing each party. They'll know whether any special precautions need to be taken.
In another state, you would simply follow local settlement procedures.
Selling Lakeside Gift
Dear Edith: My mother gave me a lake home for $1 in 1985. She passed away in 1999. I am considering selling it.
It is my understanding that if I sell it, my cost basis would be $1 plus the cost of any improvements. Is there a way to avoid capital gains on the entire value? Is there a way to sell it to a family member in order to avoid or minimize taxes? It's written in my will that my nephew will receive it upon my death. Do you have any suggestions? -- D. K.
Answer: You really received the place as a gift. You also received your mother's cost basis. That figure, plus the cost of improvements, is your cost basis.
For Sale By Owner
Dear Ms. Lank: We will put our house on the market without a broker, for sale by owner. We would like any advice about what to do when somebody says they want to buy it. -- P. I.