Posted by Joe Kaiser on April 18, 2006 at 23:45:30:
Any number you use to price a percentage ownership is purely
“plucked from heir.” Pluck whatever you care to use and use it.
“Partial interest ownership positions typically are worth about 20 cents
on the dollar.” And now we can talk about it.
The flat fee thing goes against everything. People expect the exact
opposite arrangement where they are compensated precisely as to
their percentage.
You don’t need to get inside. It’s better you don’t. That way, you don’t
have to lie about the condition if you do get inside and discover it’s not
so bad.
Much better to negotiate hard and be able to say, “look, I’m pretty
much taking your word on this thing since I haven’t even been able to
see the inside.” If you can say that, there’s a trade-off now owed to
you.
Remember, it’s always contingent on your final approval so there’s
nothing to hang you up on by not seeing the inside, and only
advantages. Just assume the worst and make your stand there.
Here?s the scenario. Geneva owns a house of which she deeds ½ of to Richard. She also draws up a will that gives Richard ½ her estate and her Son Oscar and God-Daughter Naomi ¼ each (Geneva calls her a ?cousin? in the will but she isn?t). She names Richard as her Executor and Richard?s Mother, Constance as her contingent Executor in case Richard is unable to serve.
First Oscar dies. Geneva dies next. Constance dies after her. Richard then dies. Naomi is the only one alive. So it looks like at the time of Geneva?s death, Richard owned 75% of the estate (now owned by his heirs), Oscar?s heirs own 12.5% and Naomi owns 12.5%.
Of course there?s a maximum I?m willing to pay for the house. I figure I would negotiate with Naomi, secure her portion, then track down Richard?s heirs (Richard?s estate hasn?t been probated as of yet so I don?t know if there?s a will) to see if I can get them in line with what I?m willing to pay. I would then get someone from Geneva?s family, more than likely one of Oscar?s children, to step in as Administrator (although there?s a will) of Geneva?s estate.
However, Naomi doesn?t seem to like the offer I made her. I can try and get her more but first I have to see the inside of the house (it?s a 3 family in the nice part of town ? I did a lien search so I know there should be some equity there) and/or see if I can negotiate with one or both of the lien holders.
But I also realize that I really don?t have to negotiate with Naomi. I?m really only doing so because she?s the one on the will and I need her to give me written permission to go into the house (just in case someone calls the police after seeing me drill the locks off and they want to see some paperwork). Plus I?m likely going to need her to get payoff information on the liens and Richard?s estate hasn?t been probated and there is no written/public record of anyone in Richard?s family having an interest in the property where they would be authorized to obtain information on the liens.) So I figure If I can make one of Oscar?s children the Admin. of the estate then all I would have to do is negotiate with the him.
So I?m still interested in working something out with Naomi. I think she really has a problem with Richard?s heirs receiving a lot more money than she does (she asked how much were they getting). So my question is this:
Let?s say I don?t want to offer more than $40k to the heirs of Richard?s and Geneva?s estate. Can I just offer them $10k each irregardless of the equity share they own in the property (as stipulated both on the deed and the will)?
Your posting does not say how, precisely, the property is titled now. If still in the name of the decedent, you may have a much easier pathway to the property. But if the property was probated, and you now have multiple co-owners, the job is more complicated. and lal it takes is one co-owner to say no, and your deal is dead.
There’s bucks in messy situations (maybe). - Posted by DaveD (WI)
Posted by DaveD (WI) on April 18, 2006 at 11:43:38:
You have a fine mess, indeed.
With so many of the players gone, you have an almost intestate situation, will notwithstanding. Chances are the court will appoint an administrator, who will try to abide by the wishes of the will as best as can be. The law is pretty clear that not just anyone can step up and be the administrator.
As for the remaining (new) players. They can figure out percentages as well. Greed glands will heat up. Nobody will willingly give up part of “their” share. Expect to end up with with what a recent poster said: Getting them to cooperate is “like herding cats.”
Your best bet is to buy a share from the person least willing to duke it out… and will be happy with a quick nickel instead. That will get your foot in the door. Until then, you don’t have squat.
But, do you even have a deal here? What do your numbers look like?
Hi Jimmy. I mentioned in the original post that both decedents’ estates have to be probated. The property is still in the name of the decedents.
I agree that the job isn’t really that hard being that the estates haven’t been probated. But I’m still trying to find out exactly how many children Geneva (original owner - see original post) had. I know the one son she had in her will died. So my plan is to get one of his children (don’t know how many he had) to become Admin. According to my lawyer, that means the other grandchildren will have to okay it.
I hear what Joes says. But I need to get into that house to also see if there’s any proof that the older mortgage was paid off.
Thanks Dave. I’m really just trying to find out if, despite what the will says (25% to so and so, %12.5% toso and so, etc.) can I offer them a flat fee where everyone, regardless of percentage of ownership, gets the same amount of money.
But to address your other points, yes I’mlooking to make a lot of money on this as it’s in the better part of town and is (allegedly) a 3 family. Won’t really know the exact numbers until I get inside and see the condition and confirm (along with visiting city hall) that the house is indeed a 3 family. So stay tuned.
I think in the end, I’m going to hunt down the heirs who can and will become Adminstrator and work out a deal with them.
There’s a lot of work here so I have to get inside to make sure it’s worth it. To do that I really need the cooperation of the only surviving heir.
I think I talked with a probate guy about this kind of stuff before. Maybe on this forum. The idea was that anything less than a 100% interest in a property is worth less than the actual percentage. So someone’s 50% might only be worth 30% or 40%. Afterall - what are you going to do with 1/2 a house? So figure your deal as usual … say $100k ARV, $10k repairs, 60% offer = $50k. Say there are two 50% interests. Offer each interest $20k, that would be buying each 50% ($25k) at 40% ($20k) … or 80% of their absolute interest. The percentages may be even better than this, I don’t know.