House evaluation for Probate

rancid-a

Hello everyone.

My Mother passed away in November and I'm about to start the probate process for which I need to value her house.

She requested that I sell the house I inherit, to her Grandson for a fair price.

We were aware that the house may be worth between £90-£100k due to my Mum getting an estate agent's valuation just over a year ago. She originally wanted me to sell the house to him for £50k, however I said this would probably raise suspicion with HMRC (gifting?). The actual amount was dropped and instead I was asked in the will simply to sell it to him. He was aware of the 50k sale.

He has agreed to buy the property from me for £83k, I choose this amount by comparing the RightMove value of 3 other similar houses in the same street (they sold a total of 5 times over 15 years) and then offering less than the lowest sale which was £85k. I felt this was a reasonable amount, especially after all the updating he will need to do to the house.

I want to use an estate agent to sell this house to him after probate has been granted. Their own recent evaluation came in at 120K (after updating/general repairs etc) but they didn't use same type of house or even in the same street. They also suggested £90k would be a reasonable amount for my nephew to buy considering the repairs etc.

So I'm currently about to start probate online and need to value the house. I'm worried about the amount I've offered to sell to him versus the 120k the estate agent thinks it's worth. Those 5 sales on RightMove averaged out at 101k - Do you think 101k this will be an acceptable amount to use for the probate form?

Would you suggest spending money on getting a RICS evaluation? It's not really something I could afford at the moment as I might have to do an asbestos survey as well.

I'm guessing that HMRC may at least see the difference between 83k & 101k as 'gifting' to him. I'm not a greedy person, my Mother wanted me to sell it to him at a reasonable price, it would have felt wrong to ask for any more.

Thank you for helping.

serpico100

Does the £120,000 valuation bring your mum’s estate up to anywhere near the £325,000 threshold for Inheritance tax?

Keep_pedalling

Who are the actual beneficiaries of her will? If she died intestate how many children did she have?

Unless you are the sole beneficiary you cannot sell the house at a discount without the permission of the other beneficiaries.

Rodders53

How much is the whole estate worth?  What exactly does the will say?  Who are the residuary beneficiaries of the estate?

If a lot less than the IHT nil rate band of £325k then the precise value of the house is immaterial in all truth for HMRC.  You can put any reasonable sum on the HMRC forms for Probate.  The selling value may cause arguments between the residuary beneficiaries, though (or not).

NB Do not instruct an estate agent to sell to nephew.  They'll take a (relatively large) fee for nothing value added.  EPCs can be got other ways.

msb1234

Who are the beneficiaries of her estate? If she had a will, the executor has a duty to act fairly for all beneficiaries, which may mean selling the house at market value.

macman

Was the house left to you, or the proceeds of the house sale? Very different things. If the latter, then it makes more sense for the g/son to purchase it from the estate. 
What are the specific terms of the will? A professionally drafted will would not use such terms as 'sell for a reasonable price'. because it's impossible to define it.

badmemory

Why are you using an estate agent & having to pay their fees for absolutely nothing, or have I misunderstood.

Flugelhorn

badmemory said:

Why are you using an estate agent & having to pay their fees for absolutely nothing, or have I misunderstood.

absolutely - all the EA does is find a buyer... and the OP has got the buyer

rancid-a

Sorry everyone, here's a bit more info.

Mum's will leaves her house to me valued at 100k-120k. Contents to me too, about 7k
Her savings will be split between her grandson & grand daughter, just over 50k to split between them. So her total estate is roughly £157k if I don't use the estate agents house evaluation.

Her will also states she would like me to sell the house to her grandson which I am happy to do as I have my own flat.

There are no other relatives, no one else in the will. The granddaughter is aware of the house being sold to the grandson and doesn't seem to be bothered by this.

@macman. The will didn't say 'sell for a reasonable amount', this was something Mum said to me and my nephew is well aware of this.

@Flugelhorn. @badmemory.  I have no experience in selling houses, I honestly thought using an estate agent would make things easier for me. Also, when I offered to sell the house to my nephew for £83k, I was worried he would say no & that I would just end up using an estate agent anyway.

Keep_pedalling

rancid-a said:

Sorry everyone, here's a bit more info.

Mum's will leaves her house to me valued at 100k-120k. Contents to me too, about 7k
Her savings will be split between her grandson & grand daughter, just over 50k to split between them. So her total estate is roughly £157k if I don't use the estate agents house evaluation.

Her will also states she would like me to sell the house to her grandson which I am happy to do as I have my own flat.

There are no other relatives, no one else in the will. The granddaughter is aware of the house being sold to the grandson and doesn't seem to be bothered by this.

@macman. The will didn't say 'sell for a reasonable amount', this was something Mum said to me and my nephew is well aware of this.

@Flugelhorn. @badmemory.  I have no experience in selling houses, I honestly thought using an estate agent would make things easier for me. Also, when I offered to sell the house to my nephew for £83k, I was worried he would say no & that I would just end up using an estate agent anyway.

This is entirely down to you what you sell the flat for, but the wish is simply that it is not an enforceable clause enforceable. 

The only issue as far as HMRC are concerned would be with your estate should you die within 7 years as the discount is effectively a gift, so if your net worth is in IHT territory or near it you might want to do this using a deed of variation.

As others have said no estate agent needs to be involved that would just be chucking money away.

Flugelhorn

@rancid-a - re not using an agent , I have done this twice and all that was required was for me to tell my solicitor who had made the offer, ie name and address, who their solicitor / conveyancer was and what the agreed amount of money was - they did everything else