Does this scheme exist?

Woolington

Hi all,
four of us - family members have been left a house as an inheritance, currently going through probate.

Two want to sell it at auction and liquidate the money quickly, my brother and I want to do the repairs required and sell on the open market. We had a survey done which said that when the repairs were done the house would be worth £200,000 more than were they not done.

The four of us are in deadlock. Does any scheme exist where a company/person might buy the other two family members out so my brother and I could proceed with our plan - splitting the profits at the end?

I suspect it's not going to be so easy! but thanks in anticipation

lisyloo

Who is/are the executors?

Liquidating quickly is likely to come at a 30% discount just down to the quick sale not the repairs. Are the others aware of this? This is actually better for you as you’ll be paying around 70%.

Could you and your brother get a mortgage between you secured on the house? (If you already own homes there would be extra Stamp duty plus CGT).
A bridging loan is an alternative but as those aren’t secured they are more expensive.

So basically my answer is mortgage or loan (for the lower auction value).

You might want to try the probate board as there are some experienced people there but basically you are describing a loan.

sal_III

If by scheme you mean, someone to buy 2/4th of the property with you and your brother retaining 1/4 each, then you 3 jointly renovate, sell and then split the profit - I don't think so. Only a madman would entertain such a deal. Splitting out expenses and profits will be a nightmare. Probably the main reason the other 2 heirs prefer quick payout vs. bogging down in "homes under the hammer" style saga.

Nothing is stopping you from buying out the other 2 shares, then renovate jointly with your brother and sell.

AdrianC

Woolington wrote: »

Hi all,
four of us - family members have been left a house as an inheritance, currently going through probate.

Two want to sell it at auction and liquidate the money quickly, my brother and I want to do the repairs required and sell on the open market. We had a survey done which said that when the repairs were done the house would be worth £200,000 more than were they not done.

That sounds like one heck of an uplift, unless the work required is VERY substantial.

What's the value as-is, and what's needed?
Do you fully understand what's needed...?

Presuming everything has been left equally, does the estate have any other assets?

The four of us are in deadlock. Does any scheme exist where a company/person might buy the other two family members out so my brother and I could proceed with our plan - splitting the profits at the end?

I don't know what you mean by "scheme", but of course you can do it. Assuming you can all talk to each other like grown-ups.

Let's say the property is £200k-worth now, and there's no other assets in the estate.
You are each owed £50k from the estate. If A and B want out, you and C want to refurb for sale, then you and C put £100k between you into the estate, A and B each get paid £50k cash, you and C split the ownership of the property 50/50. Then you and C refurbish and sell your property...

If there's £40k of other assets, then you simply say "Well, instead of £10k each, we offset our £10k against the £50k we owe in" - A and B have £40k cash from you and C, plus £20k each of the other estate assets.

G_M

* Current value of property for Probate/Inheritance tax?
* Estimated cost of repairs? (List them as there are people here who can advise if realistic costs!)
* ongoing costs during repairs (and timescales)?
* value you place on your own time either doing, or overseeing, the repairs?
* prospective sale price after repairs?

Woolington

Who is/are the executors?

all four are both executors and beneficiaries. Neither side get on!

Probably the main reason the other 2 heirs prefer quick payout vs. bogging down in "homes under the hammer" style saga.

I just see it as a challenge to be met and not particularly a gamble when compared to the auction room. The £200,000 carrot is also very compelling!

Nothing is stopping you from buying out the other 2 shares, then renovate jointly with your brother and sell.

Not enough personal money, and can't get a mortgage on the property.
An additional, and important factor is that the property has a subsidence crack on its bay - it doesn't impact on the main structure of the house and is only part of the £20,000 repairs costing (by surveyor) the other things being not particularly serious. Consequently, the surveyor doesn't think it would get a mortgage until the repair to the bay is done. The house has always had a historical crack in the front bay, (built 1898) but it has increased in the hot summer of 2018. The bay is an add on. Two builders have said it's easily fixed and wouldn't need completely rebuilding (the bay)

What's the value as-is, and what's needed?
Do you fully understand what's needed...?

yes, I the survey was very comprehensive. The current value according to the surveyor due to the crack and its mortgage-ability is £450,000. He estimated £20,000 work to bring the house up to £650,000 because it would then be mortgageable. It''s a very unique and highly desirable property. They rarely come on sale and are instantly snapped up.

Presuming everything has been left equally, does the estate have any other assets?

there are equally split estate assets of £200,000 but the solicitor says she won't release them to complete the repairs, but WILL give interim payments - I'm querying this - why can't the interim payments be used???

I don't know what you mean by "scheme"

I hoped there might be a collective of property developers who might see the project as an opportunity to make money, just with two others involved!

This was our family home. I don't know what will happen in that we're deadlocked. I'd be gutted to think it went to auction at a knockdown price because the other two want a fast buck. I'd like to fully explore every avenue.

TIA!

Woolington

* Current value of property for Probate/Inheritance tax?

£575,000 for probate (estate agent) £450,000 in present state, and £650,000 repaired (surveyor)

* Estimated cost of repairs? (List them as there are people here who can advise if realistic costs!)

rebuilding of utility room (later add on) - £10,000. rebuilding of porch - £1,000. Sorting out of bay - £10,000 although he recommended a structural engineer report. A builder friend said it would prob be mended by acro propping the bay below the window rather than dismantling.

* ongoing costs during repairs (and timescales)?

I don't think there are any ongoing costs during repairs?? timescales - not known as the solicitor is asking that we DONT pursue having quotes done until we all agree to proceed with the repairs - not happy about this!

* value you place on your own time either doing, or overseeing, the repairs?

I don't work. I live 6 doors away. I'd be more than happy to oversee the repairs.

* prospective sale price after repairs?

at least £650,000. Living in the same road, I know that they often exceed their sales price. They have two top schools - primary and secondary easily within their catchment area - that seems to be the main selling factor.

Thank you!

AdrianC

Woolington wrote: »

* Current value of property for Probate/Inheritance tax?

£575,000 for probate (estate agent) £450,000 in present state

That's a ludicrously wide gap. Why is the probate value so high...? Or is it the "present state" value which is being understated?

The property's down as £575k on probate, and IHT has been paid on that, and you're asking to buy me out for my proportion of the £450k, you're going to have to come up with some damn good reasons why...

* Estimated cost of repairs? (List them as there are people here who can advise if realistic costs!)

rebuilding of utility room (later add on) - £10,000. rebuilding of porch - £1,000. Sorting out of bay - £10,000 although he recommended a structural engineer report. A builder friend said it would prob be mended by acro propping the bay below the window rather than dismantling.

£21k of work for £200k of value-add...? <raises eyebrow>
And propping the bay is one thing, but then what? That's simply temporarily taking the weight while the structure is repaired.

* ongoing costs during repairs (and timescales)?

I don't think there are any ongoing costs during repairs??

CT on the empty property?
Mortgage payments if you can't lay your hands on the £112k-£143k to buy each of the other two brothers out?

Strikes me that the most likely scenario here is that £575k is more likely to be accurate than £450k, and £21k is a serious underestimate.

I think I'd be with the two brothers who just want out.

Tom99

Since you are at a stalemate why not put it on the market as is for a couple of months, not auction.

Woolington

Thank you for your replies. AdrianC do you doubt the surveyor report? would you query it? The difference in the two costings was that without the repairs the property is not able to be insured... does that make sense? (consequently could only be sold at auction).

The acro propping thing - I wasn't really paying attention, so forgive me if this is dopey - do they just pour concrete into the void?

Since you are at a stalemate why not put it on the market as is for a couple of months, not auction.

thanks Tom! I think the other family members' objection to this is that it might prolong the selling process - my understanding is that it is currently un-insurable so can not get a mortgage. Do we just sell it as it is with all the knowledge up front? perhaps include the survey? if so, what price would you suggest? I know the others would be happy with £500,000 as they intend this as their auction reserve.

AdrianC

Woolington wrote: »

do you doubt the surveyor report?

I have no idea, since I haven't seen the property.

The difference in the two costings was that without the repairs the property is not able to be insured... does that make sense? (consequently could only be sold at auction).
...
I know the others would be happy with £500,000 as they intend this as their auction reserve.

Why would you put a £500k auction reserve on a property that would only be worth £450k at auction...?

Unless you and your brother can raise the money to buy the other two out, and do the work, just get it in the auction and take the money, along with your sanity and blood pressure...

Let's go with £500k as-is and £650k done, and let's go with £75k of work needed. That's £75k margin. Between four of you. Less than £20k profit each - before CGT, and without taking into account other costs, finance costs, CT etc etc.

How much ball-ache and acrimony do you want for that?