Guide to Buying Out a Sibling’s Share of Real Estate
When a parent or other family member passes away, it isn’t uncommon for multiple survivors to end up co-owning real estate. In many cases, this is two or more siblings. Unfortunately, it isn’t always practical to jointly own a property. So, that leaves many people wondering how they can get an estate loan to buyout siblings.
Start With an Appraisal
Real estate ownership and sales is business. Dealing with business transactions when family members are involved can be challenging. The mix of personal feelings and financial realities can lead to trouble. One of the best things you can do is get a professional appraisal. This disinterested party can help you and your siblings come to a common understanding of what the property is worth.
Consider asking your realtor for recommendations for an appraiser. This is one of the best ways to ensure that everyone is treated fairly and can walk away from the situation feeling reasonably happy.
With an agreed-upon value for the property, it is time to figure out how much each person’s share is worth. Hopefully, this is laid out by the will or probate. However, things can get a little tricky here. If there are other assets involved or one sibling helped the parents pay for the property or many other factors, it may be helpful to have an attorney help with this process. Again, a third party can ensure that everything is fair.
Get the Money
Once you have settled on a value and percentage share, it is time to buy out your sibling(s). For this, you will likely need a real estate loan. Sometimes going to private money lenders for residential real estate loans can be easier than going to the bank. They are more accustomed to working with borrowers in non-typical situations such as buying out a sibling.
This can be especially beneficial if you already own your home and plan to either sell or use the inherited home for another purpose. While you can get a loan on a second home from a bank, it is often much more challenging.
When you have the money, all that is left to do is pay your sibling(s). Unfortunately, this isn’t always as easy as you may think. People get cold feet as they get close to the final closing of the deal.
Sadly, the reality of buying out siblings is often less than smooth. In some cases, people have to turn to filing a partition lawsuit to get things settled. You may be able to avoid this by laying out expectations for how third-partied will mediate the process right from the start. Once fights start coming up, it can be difficult to backtrack.
This process can be difficult but it is better to get started sooner rather than later. Delaying won’t make it any easier. What will make it easier is finding the right lender to work with you. Check out some of the hard money loan Los Angeles residents can use to buyout estate assets. When you can come up with the money quickly, you are less likely to have disagreements.