Reader Question: My sister and I have been in our home since the mid 90’s and only have a $40K mortgage. She is the only one on the mortgage, and we are BOTH on the deed. The problem is we don’t get along, she has cancer and hasn’t worked but is getting treatment and now low on funds. I think we sell as is, she thinks we put more money in fixing the house to get more out. I think that money could go for her treatments. Our house can easily sell for $370-$400K without fixing. She is also demanding I sign to refi the house for $250K. What do I do? Do I get an attorney? I don’t want to put myself at risk, and she has cancer. I think the only solution is to sell. Help. Janie.
Monty’s Answer: There is much history in this situation that is not available to dissect for a specific recommendation. As an example, how is it you bought the house together, but you are not on the mortgage? Who is making the mortgage payments? Is there a written partnership agreement? What is your sister’s prognosis? These and other questions will have to be known and understood to provide sound guidance.
Explain to your sister that you need more information before you can consider her terms. You both need the following details. An attorney or mediator gathering the facts will have questions about the real estate and other circumstances. Here are issues to propose.
- The current range of value of the property. Select three real estate agents to preview the home and present a written document called a competitive market analysis (CMA). The CMA is their opinion of the highest price you could expect, and the lowest price you should accept were you to sell the home. It should also include the comparable sales the agents selected to compare to your home. You need three of these because they will all have different opinions. At this point, keep it simple with the real estate agents. Do not share or mention the list of improvements.
- The cost to make the improvements must be estimated. Your sister should prepare a written cost list of her desired improvements. The best way to do this is to call or invite a contractor to give you an estimate. For example, if a new countertop is on the list a company that sells and installs them, knowing the size, can give you a range of estimated cost. You are not seeking competitive bids here; you are inquiring to get a sense of true costs. Your sister should handle these calls, as she is the one seeking the improvements.
- “So she can get as much as she can,” implies she is willing to sell the house. She believes the improvements will net her more money. If this is the situation, it will be possible to prove or disprove either of your contentions. After the real estate agents present their CMA’s, now share with them the list of improvement your sister would like to make. Do not share the cost estimates, just the list, and ask them each to tell you how much more the house will bring on the market with these improvements. You are not looking to debate their opinions; you are simply listening and absorbing their thinking and experience. Some improvements help bring more money; others may not.
- Your sister not working will affect her ability to refinance without you. If you owe $40,000 and you could net over $300,000 after all expenses, your share is $150,000 plus. If your sister wants to refinance more than the home improvements, that money must be shared equally with you to keep the equity fifty-fifty unless there is an agreement to the contrary.
By seeking the information above and studying research, you may learn that you are both right. The truth could be somewhere in between. By getting multiple, experienced real estate agents, you have expert opinions to add credence to either argument.
Now take the data and propose a mediation with your sister. Mediators are skilled at helping people overcome their differences; it is less threatening than an attorney and often far less costly. Many judges today will require mediation before they will look at a case. To serve only as an example of a mediation center check out the National Association for Community Mediation.
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