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Undervaluing an inherited property

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  • Undervaluing an inherited property

    Fairly simple situation, or it should be.
    Inherited property left to two siblings and one wishes to buy out the other. As sole executor I have had several valuations following a visit to the property that all range between 140,000 and 180,000. I believe that 150,000 is a fair value from these, especially in the current market where there are very few properties for sale in that area. The house remains fully furnished and I don’t want any of the items or any payment for them; the can go with the property.
    My sister refuses to accept that valuation and is using older data to undervalue the property quite considerably. As she obviously wants to buy the rights to the house at an attractive price, it will be difficult to get her to agree to put this on the market, but otherwise this could leave us unable to find a way to move on. She already owns properties so, even though she wants the house for sentimental reasons, I can’t be sure she isnt buying to let or to sell on for more later.
    Any ideas how to get around this? I can have a dozen more valuations but she just won’t accept them.
    On a similar note, when probate is granted does a property value have to be provided to the land registry? If so, how does one agree on a market value without actually selling the property?
    Last edited by NewHorizons; 5th May 2022, 13:53:PM.
    Tags: None

  • #2


    HMRC will require the estate valued prior to a grant of probate.
    At this stage it only needsto be approximate to see if IHT is payable so use the mid valuation.
    If IHT is payable exact figure can be submitted.

    Regarding your sister
    If she will not come to an agreement why not put the house on the open market?
    Is the will so worded that you as executor cannot sell it and distribute the funds?

    Comment


    • #3
      Thanks for the reply and the welcome. The will states that the two siblings will inherit the house equally., it doesnt stipulate any details of how to distribute funds. Putting the house on the market without mutual agreement will aggravate an already volatile relationship. She will see it as ‘trying to sell off the family home’…lot of emotional blackmail as you can imagine. I suspect listing it to see what is offered is the only option but it feels like I am messing potential buyers around.
      Failing that, a partition order as a last result, but that benefits no one really.
      I really would like to just do this nice and amicably, but dont we all. I really do think my valuation, being nearer the lower end, is quite reasonable.

      Comment


      • #4
        You dont say what your sister is saying the value should be or how far are you adrift with her figure? Is there any way you can find out similar properties have sold for in the general area?

        If she will not agree, then the only sensible suggestion is the one DES8 has mentioned, but in present circumstances, properties often fetch higher prices than the values agents initially state.

        Comment


        • #5
          You could try an auction...might go for less than your valuation but more than your sister's offer and she will have a chance to purchase at a fair price!

          The other way forward is a court order for sale. This could be refused but unlikely
          A partition is (IMO!) unlikely as they are only awarded in exceptional cases

          Comment


          • #6
            Are you one of the siblings to whom the property has been left?

            If yes, you do not have to agree to sell at a price that is not acceptable to you. Would you be in a position to offer to buy your sister out?

            If no, why not just leave it between those concerned?
            Last edited by atticus; 5th May 2022, 17:55:PM.

            Comment


            • #7
              Atticus, The OP is one of those concerned. She is one sister the other will not agree to the sale

              Comment


              • #8
                Originally posted by Sam101 View Post
                Atticus, The OP is one of those concerned. She is one sister the other will not agree to the sale
                Sorry, original post was not clear in hindsight. Yes, I am the other beneficiary as well as executor and trustee :-) My sister wants to agree a sale so she can 'buy me out' but will not accept the valuations received as she has her own (strong) opinion about house prices. The only valuation she has so far is 110,000 to 120,000 which is far below the others and I don't know if the agent even visited the property. It is natural that the 'buyer' would want to hang on to the lowest quote possible, but it does not seem realistic. She has also said that she would sell outright if the house really were worth the higher values, but that is said in defiance rather than genuine support of a sale.
                I am in a position to buy my sister out instantly with cash but, as I would then sell or rent out the house, it goes against what she says are her intentions to 'keep the family home. I never thought this would be easy, but I hoped we might at least get close on a valuation. Currently we are at least 30k apart and possibly more given how houses in the area are being snapped up :-(
                I also have to consider that every thousand reduced from my 'share' actually doubles for her (one less to pay, plus one more in equity value). Again, all ignored when mentioned...I'm embarrassed to even be asking on here as this is a case of one beneficiary simply being stubborn for their own benefit.
                Last edited by NewHorizons; 6th May 2022, 06:24:AM.

                Comment


                • #9
                  Originally posted by Sam101 View Post
                  You dont say what your sister is saying the value should be or how far are you adrift with her figure? Is there any way you can find out similar properties have sold for in the general area?
                  This is the problem, people seem to stay in their properties around here for many years so few house have sold there in recent years. The last one sold a few years ago for a ridiculously low price (under 100K) that even the agents can't explain. However, my sister likes to quote this to support her own low valuation, even though one has just sold on the same street (in poorer condition) for more than the valuation of my property. Will she accept this as being a current market price? Of course not...I am told its a sellers market so, in an ideal world, she would agree to put it on the market and then we might both do well out of it :-(

                  Comment


                  • #10
                    Thank you for clarifying your position.

                    One other thing you might try is agreeing your sister's price, but with an uplift if the property is sold within say 5 or 10 years. This would need to be recorded as a covenant in the transfer deed.

                    But any uplift would not be payable if the property is sold on even one day after the end of the specified term.

                    I would still make a counter offer.

                    Comment


                    • #11
                      Originally posted by atticus View Post
                      Thank you for clarifying your position.

                      One other thing you might try is agreeing your sister's price, but with an uplift if the property is sold within say 5 or 10 years. This would need to be recorded as a covenant in the transfer deed.

                      But any uplift would not be payable if the property is sold on even one day after the end of the specified term.

                      I would still make a counter offer.
                      Great minds, I had wondered if such an option was available. That way I would know a lower agreed price was at least keeping the house in the family as intended. I will certainly look into that....and make a counter offer.

                      Comment


                      • #12
                        I read in some generic online advice (I know not to trust it at face value) that the executor can put the property on the market if a value cannot be agreed. Is this an option without involving the courts?
                        One more 'speculative' question if I may :-)
                        When the will of probate is granted, I believe I will have to register the property in both our (beneficiaries) names. If a 'buy out' deal could be agreed and prepared (legal documents, money transferred) before this is done, can the property then simply be registered in my sisters name to save any additional documents being submitted to the land registry?

                        Comment


                        • #13
                          If the Will states that the property is to be sold, then the executor/s can put it up for sale, but a sale cannot be completed until Probate has been granted.

                          There is no need to change the Land Registry at this time. Once a sale is agreed, it can be dealt with at that time.

                          Where a property is registered, a sale can be prevented by a registration at the Land Registry to prevent changing ownership without reference to the person or firm's agreement. As with a mortgage or loan, the lender would register a charge on the property at the Land Registry to prevent it being sold without discharge of the mortgage.

                          Hope that clarifies it for you.

                          Comment


                          • #14
                            Originally posted by Sam101 View Post
                            If the Will states that the property is to be sold, then the executor/s can put it up for sale, but a sale cannot be completed until Probate has been granted.

                            There is no need to change the Land Registry at this time. Once a sale is agreed, it can be dealt with at that time.

                            Where a property is registered, a sale can be prevented by a registration at the Land Registry to prevent changing ownership without reference to the person or firm's agreement. As with a mortgage or loan, the lender would register a charge on the property at the Land Registry to prevent it being sold without discharge of the mortgage.

                            Hope that clarifies it for you.
                            It does, the will simply says that the two beneficiaries will inherit equal shares subject to being alive and over 21 (simplified version) ;-)
                            Good to know we can register the property into the relevant names after we reach an agreement (if ever). Grant of probate is imminent so hoping to get nearer some sort of agreement soon.

                            Thanks again for your help :-)

                            Comment


                            • #15
                              Take care about deciding that you can sell the property because you are executor. The terms of the will can be very important, and one of an executor's tasks is, so far as possible, to implement the wishes of the testator.

                              Comment

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