How to buy out co-trustees?
Ask Phyllis: a blog series of frequently asked real estate questions.
Dear Phyllis,
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 persuaded both of my brothers to list the property. I have never had a good relationship with her and resent her interference. I am now outnumbered in the decision-making process. This home holds significant sentimental value for me, and it is ideal for my family. Have you encountered a similar situation before? How can I buy out my co-trustees at a fair price?
NB
Dear NB,
Thank you for your loyalty as a reader. I frequently work with numerous trustees in various situations. In the past, I have listed the home, allowing the potential trustee buyer the option to match the highest offer. Here’s how it works: a Realtor will list the home, giving you the chance to match the terms of the highest offer. In today’s market, the “fair price” is determined by what a buyer is willing to pay. When the Realtor lists the home in the multiple listing service and gathers competing offers, your brothers and their wives can rest assured that you matching the best offer is fair to all parties involved.
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. This agent will also 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%.
I understand your frustration and see your point. If your offer of $1,550,000 is indeed the best one, you shouldn’t have to cover any part of the Realtor’s compensation. You can attempt to persuade your brothers to agree on sharing that cost among themselves.
Best of luck to you and our family!
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I know three trustees is better than two because decisions can be made without resulting in “a tie vote” but I can see, as in this situation, how easy I’ll it could feel like you are odd man out and being ganged up on.