Author Topic: Buying House From 95 Year Old Grandfather-In-Law  (Read 296 times)

bassguitar115

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Buying House From 95 Year Old Grandfather-In-Law
« on: August 04, 2018, 03:37:00 PM »
I hope this post is in the right section (wasn't sure if it should go here, ask a mustachian, or case studies). Here's my situation.

We (my wife, 2 kids, and I) have lived with and helped take care of my wife's 95 year old grandfather for the last 5 years. Recently (when we found out my wife was pregnant with #3), we told him that we needed more space and were going to have to move and buy a house. Instead, he wants to move to a retirement home and sell us his house. We're open to this idea. This 1970s house needs a ton of work, but is obviously livable. It is plenty big if we have the whole thing to ourselves. Not having to move is an added benefit.

Now, here is where things get more complicated.

He wants to sell us the house for $200K which seems low based on raw SF numbers and such, but about right considering the condition and amount of updating there is to do.
  • What do we need to do before buying the home from him to ensure it is a good price and worth it for us? Inspection? Appraisal?
  • Anything in particular to look out for when buying an older home?
  • Any other suggestions?
My second set of questions has to do with the actual transaction. Assuming the $200K price is fair, he wants us to pay $100K to him and have the other $100K be a (wife's inheritance) gift. We have $50K saved up in cash for a down payment and can comfortably pay him the remaining $50K balance in 4+ years.
  • How would we handle this to make everything official?
  • Will this make a difference on our taxes?
  • What are the pros and cons of not having an actual mortgage?
We both would like to keep the sale simple and keep realtors, loan officers, attorneys, etc. at a minimum if possible. It's definitely a unique situation and I'm just trying to make sure I look at all aspects of the deal and don't overlook something important. Am I missing anything? Thanks in advance!

Sibley

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Re: Buying House From 95 Year Old Grandfather-In-Law
« Reply #1 on: August 04, 2018, 06:43:47 PM »
You are not going to be able to keep professionals at a minimum here. I can't answer your questions, but things to keep in mind:

1. If you buy the house below market, then when you sell you're potentially going to have to pay more tax.
2. If he sells it for under FMV to you, then needs Medicaid, then it's possible that there will be complications.
3. The "gift" to his granddaughter is lovely, but see #2.

If you do go forward with buying it, then treat it like any house you would be considering buying. Due diligence so you know what you're getting into, decide if you even want to buy it.

You think 1970s is old. LOL. My house was built in 1919. That said, it would have been constructed differently than houses today. Most likely better actually. A good home inspector can help, combined with the internet.

Start with a real estate lawyer. Check in with your in-law's elder law attorney so you don't screw him accidentally.

Realistically - I'd recommend a 3rd party sale at FMV, and your family buy whatever house works for you. This could get complicated to protect him. If he wants to leave an inheritance, then he can stash the proceeds, or gift her money (carefully). I'm sorry, but he's 95, he likely doesn't have many years left.

Lmoot

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Re: Buying House From 95 Year Old Grandfather-In-Law
« Reply #2 on: August 06, 2018, 04:03:34 AM »
Is your wife his sole heir? If he passes before you repay the $50k, how will you continue to pay back the “estate”. On the surface it seems like a pretty good deal for your family, I would just ensure that your good fortune doesn’t step on any toes.