How to buy out co-trustees?
Ask Phyllis: a blog series of frequently asked real estate questions.
I faithfully read your real estate advice and appreciate your insight. My father had a trust and recently passed. My two brothers and I are co-trustees. The home was appraised at $1,550,000, and I want to buy out my brothers at the appraised value. One of my sisters-in-law is friends with a local Realtor who told her the home would sell for more than the appraiser noted. Her Realtor said it would sell for at least $1,700,000. This sister-in-law has now talked both of my brothers into listing. I have never had a good relationship with this sister-in-law and resent her interference. I am now outvoted. This home has much sentimental value to me. I really want it, and it is perfect for my family. Have you come across this situation in the past? How do I buy out my co-trustees at a fair price?
Thanks for being a loyal reader. I often work with many trustees in various scenarios. In the past, when in this situation, we listed the home subject to the potential trustee buyer having the option to match the highest offer. Thus, a Realtor will list the home, and you will have the opportunity to match the terms of the highest offer. The “fair price” is what a buyer is willing to pay in today’s market. To ensure fairness to all, you can satisfy your brothers and their wives by matching the best offer obtained through listing the home in the multiple listing service by the Realtor and attracting competing offers.
You should discuss with the listing Realtor if there will be a negotiation on the commission charged if you opt to purchase the home. Remember that the Listing Realtor has done all the prep work in readying the home for sale and then fielding the offers. Additionally, this agent will handle all the paperwork required in all Los Angeles County real estate sales. In my instance, my broker agreed to reduce the commission to 4%.
Acknowledging your frustration and recognizing your valid point that if your $1,550,000 offer is the best offer, you should not be obliged to pay any portion of the Realtor’s compensation. In this situation, you can attempt to persuade your brothers to agree to split the cost among themselves.
Best of luck to you and our family!