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OT: Real Estate Question - Need Opinions

mosito

mosito

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Nov 1, 2006
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Scenario:

2 Friends(Joe and Bob) bought a house 20 years ago.
Joe is moving out and Bob would like to pay Joe out vs selling the house.

Bob believes that ((Appraisal - (Fees)) - mortgage) / 2 is what he should pay Joe.
Where Fees includes an agreed upon % Real Estate Average Costs. Lets say 5.13%(googled average).

Bob believes if he is forced to sell the house 2 months from now, he gets stuck with all these fees, the real estate being the brunt of it.

Assuming there was no mortgage and the house appraised at 500,000.
Bob is thinking, if he gave Joe 250,000, he has his 250,000 in the house, but if he had to sell the house this summer, he would have to pay $25-30K in fees and he ends up with $220,000(when you subtract the 250K he paid Joe). So Bob is thinking he should pay Joe closer to 235-240K.

In other words, Bob feels he will end up paying for Joe's share of "fees" eventually.
Also, if they actually sold the house vs Bob buying Joe out, each would receive 235-240K.

Joe is thinking, What the hell, who is to say that you sell the house, maybe you never do, why should i have to pay for your future fees.

Bob thinks, it shouldn't matter when he sells the house, those fees that are associated with the money that Joe received which will one day have to be paid(by Bob or family member) and a agreed upon sum needs to be considered.


Thoughts?

Bob and Joe are good friends, and they have no problem going either way or any part in the middle. They have spoken to a few folks and it seems to be a matter of opinion as to what is right (or who conveyed his their position best)?
We talked to a lawyer since we need to do paperwork and he pretty much said, you guys need to come to an agreement on the price. Not sure if he just didn't want to be bothered or if he had never encountered this scenario.
 
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Scarlet1984

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mosito said:
Scenario:

2 Friends(Joe and Bob) bought a house 20 years ago.
Joe is moving out and Bob would like to pay Joe out vs selling the house.

Bob believes that ((Appraisal - (Fees)) - mortgage) / 2 is what he should pay Joe.
Where Fees includes an agreed upon % Real Estate Average Costs. Lets say 5.13%(googled average).

Bob believes if he is forced to sell the house 2 months from now, he gets stuck with all these fees, the real estate being the brunt of it.

Assuming there was no mortgage and the house appraised at 500,000.
Bob is thinking, if he gave Joe 250,000, he has his 250,000 in the house, but if he had to sell the house this summer, he would have to pay $25-30K in fees and he ends up with $220,000(when you subtract the 250K he paid Joe). So Bob is thinking he should pay Joe closer to 235-240K.

In other words, Bob feels he will end up paying for Joe's share of "fees" eventually.
Also, if they actually sold the house vs Bob buying Joe out, each would receive 235-240K.

Joe is thinking, What the hell, who is to say that you sell the house, maybe you never do, why should i have to pay for your future fees.

Bob thinks, it shouldn't matter when he sells the house, those fees that are associated with the money that Joe received which will one day have to be paid(by Bob or family member) and a agreed upon sum needs to be considered.


Thoughts?

Bob and Joe are good friends, and they have no problem going either way or any part in the middle. They have spoken to a few folks and it seems to be a matter of opinion as to what is right (or who conveyed his their position best)?
We talked to a lawyer since we need to do paperwork and he pretty much said, you guys need to come to an agreement on the price. Not sure if he just didn't want to be bothered or if he had never encountered this scenario.
Click to expand...

Is this for real?

This is kind of like an “am I the a*shole” post on Reddit. The answer is: Yes, Bob you are.
 
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Scarlet1984

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newell138 said:
no fees should be paid because the wife may never sell the house. If the wife wants the fees up front she should then prepare to split the profits if she sells the house in the future at a higher sale price
Click to expand...

Duh. It didn’t occur to me that it’s a couple!

This is pretty basic stuff. Quibbling over $15k is moronic especially since the value of the house is an approximation anyway.

They’re trying to achieve precision on something that is imprecise. Also, I think everyone is being “fair” but Bob sounds petty. That said Joe should meet her part of the way to get it closed out.
 
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mosito

mosito

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Nov 1, 2006
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A little more background.
It is a a likelihood that Bob will be forced to sell the house within a year. Hence what triggered the conversation. If we sold the house now, both parties get ~235K. But if Bob buys Joe out, Joe gets 250K resulting in Bob only getting 220K later this year.

Both Folks understood each other's predicament.

And no "********" in this transaction.

Joe knows that he put Bob in a bind by saying, "I want out now". Joe knows he would get less if they sold the house immediately and split the profits.

Bob knows that what he is asking for only seems to make sense when you consider what might happen if he ends up selling the house soon. If Bob keeps the house for decades, he understands that he will reap the benefits of future profits.
 
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newell138

newell138

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mosito said:
A little more background.
It is a a likelihood that Bob will be forced to sell the house within a year. Hence what triggered the conversation. If we sold the house now, both parties get ~235K. But if Bob buys Joe out, Joe gets 250K resulting in Bob only getting 220K later this year.

Both Folks understood each other's predicament.

And no "********" in this transaction.

Joe knows that he put Bob in a bind by saying, "I want out now". Joe knows he would get less if they sold the house immediately and split the profits.

Bob knows that what he is asking for only seems to make sense when you consider what might happen if he ends up selling the house soon. If Bob keeps the house for decades, he understands that he will reap the benefits of future profits.
Click to expand...
sounds like you have your answer
 
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Jm0513

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Aug 16, 2018
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mosito said:
Scenario:

2 Friends(Joe and Bob) bought a house 20 years ago.
Joe is moving out and Bob would like to pay Joe out vs selling the house.

Bob believes that ((Appraisal - (Fees)) - mortgage) / 2 is what he should pay Joe.
Where Fees includes an agreed upon % Real Estate Average Costs. Lets say 5.13%(googled average).

Bob believes if he is forced to sell the house 2 months from now, he gets stuck with all these fees, the real estate being the brunt of it.

Assuming there was no mortgage and the house appraised at 500,000.
Bob is thinking, if he gave Joe 250,000, he has his 250,000 in the house, but if he had to sell the house this summer, he would have to pay $25-30K in fees and he ends up with $220,000(when you subtract the 250K he paid Joe). So Bob is thinking he should pay Joe closer to 235-240K.

In other words, Bob feels he will end up paying for Joe's share of "fees" eventually.
Also, if they actually sold the house vs Bob buying Joe out, each would receive 235-240K.

Joe is thinking, What the hell, who is to say that you sell the house, maybe you never do, why should i have to pay for your future fees.

Bob thinks, it shouldn't matter when he sells the house, those fees that are associated with the money that Joe received which will one day have to be paid(by Bob or family member) and a agreed upon sum needs to be considered.


Thoughts?

Bob and Joe are good friends, and they have no problem going either way or any part in the middle. They have spoken to a few folks and it seems to be a matter of opinion as to what is right (or who conveyed his their position best)?
We talked to a lawyer since we need to do paperwork and he pretty much said, you guys need to come to an agreement on the price. Not sure if he just didn't want to be bothered or if he had never encountered this scenario.
Click to expand...
You mean they talked to a lawyer ? Lol
 
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yessir321

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mosito said:
A little more background.
It is a a likelihood that Bob will be forced to sell the house within a year. Hence what triggered the conversation. If we sold the house now, both parties get ~235K. But if Bob buys Joe out, Joe gets 250K resulting in Bob only getting 220K later this year.

Both Folks understood each other's predicament.

And no "********" in this transaction.

Joe knows that he put Bob in a bind by saying, "I want out now". Joe knows he would get less if they sold the house immediately and split the profits.

Bob knows that what he is asking for only seems to make sense when you consider what might happen if he ends up selling the house soon. If Bob keeps the house for decades, he understands that he will reap the benefits of future profits.
Click to expand...
How about this…

Bob pays joe $235k outright and an addition $15k held in escrow for a year. Written in the sale is a contingency that if bob sells the house within 12 months, the money in that escrow account will be applied to sale/fees. If Bob decides to keep the house or not sell if for a year, the $15k in escrow will be released to Joe after 12 months.

Happy medium
 
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Jtung230

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Bob should also speak with an account to make sure there aren’t any tax consequences.
 
M

Morrischiano2

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Either sell the house now and pay the fees or the remaining partner just pays the equity. No fees should be included.

Alternatively, like a previous person stated, hold half the fees in escrow for a yr.
 
J

Jtung230

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Jun 30, 2005
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Morrischiano said:
Either sell the house now and pay the fees or the remaining partner just pays the equity. No fees should be included.

Alternatively, like a previous person stated, hold half the fees in escrow for a yr.
Click to expand...
Joe sounds like an *******
 
N

NickRU714

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Has Bob considered the fees may be less? Or more?

Hope he's prepared for a full accounting. And if the house is never sold then his will stipulates the estate reimburses Joe.
 
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NickRU714

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Reading this thread - it makes sense why so many are cool with the Big Ten - Rutgers entry negotiations.

Not Joe's problem about any future fees.
What is the home doesn't sell for?

Also, Bob isn't getting $235. He's getting a full $485 later when the house sells.

If it doesn't sell for $500 does Joe have to give back money? It only sells $400.
 
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NickRU714

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NickRU714 said:
Has Bob considered the fees may be less? Or more?

Hope he's prepared for a full accounting. And if the house is never sold then his will stipulates the estate reimburses Joe.
Click to expand...

Or if the house sells for $600k will Bob reimburse Joe $50k? For the additional value of the property?
 
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Jtung230

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mosito said:
I am one of the parties.



I think you meant Bob which seems to have less of a case based on what others have said.
Click to expand...
Nope, Joe is willing to pay an agent brokerage fees but not to Bob. Dick move. I’m with #teambob
 
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Jtung230

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NickRU714 said:
What?
If they sell now then split all fees.

There are no fees now. House isn't being sold. It's just "hypothetical fees" that may or may not even ever materialize.
Click to expand...
The fees are split. He isn’t charging the full fee on 500k. If Bob isn’t willing to buy him out, Joe has to pay his fee to an agent. It’s net neutral to Joe.
 
mosito

mosito

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jtung230 said:
Nope, Joe is willing to pay an agent brokerage fees but not to Bob. Dick move. I’m with #teambob
Click to expand...

That is what Bob was thinking. Joe makes more money only if he sells to Bob. And Bob gets screwed visibly if he is forced to sell soon. And he takes the hit regardless of whether it is now or later.


NickRU714 said:
What?
If they sell now then split all fees.

There are no fees now. House isn't being sold. It's just "hypothetical fees" that may or may not even ever materialize.
Click to expand...

And that was what Joe was thinking. What fees... i see no immediate fees. Are you trying to scam me.
 
RUTGERS95

RUTGERS95

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Sep 28, 2005
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mosito said:
Scenario:

2 Friends(Joe and Bob) bought a house 20 years ago.
Joe is moving out and Bob would like to pay Joe out vs selling the house.

Bob believes that ((Appraisal - (Fees)) - mortgage) / 2 is what he should pay Joe.
Where Fees includes an agreed upon % Real Estate Average Costs. Lets say 5.13%(googled average).

Bob believes if he is forced to sell the house 2 months from now, he gets stuck with all these fees, the real estate being the brunt of it.

Assuming there was no mortgage and the house appraised at 500,000.
Bob is thinking, if he gave Joe 250,000, he has his 250,000 in the house, but if he had to sell the house this summer, he would have to pay $25-30K in fees and he ends up with $220,000(when you subtract the 250K he paid Joe). So Bob is thinking he should pay Joe closer to 235-240K.

In other words, Bob feels he will end up paying for Joe's share of "fees" eventually.
Also, if they actually sold the house vs Bob buying Joe out, each would receive 235-240K.

Joe is thinking, What the hell, who is to say that you sell the house, maybe you never do, why should i have to pay for your future fees.

Bob thinks, it shouldn't matter when he sells the house, those fees that are associated with the money that Joe received which will one day have to be paid(by Bob or family member) and a agreed upon sum needs to be considered.


Thoughts?

Bob and Joe are good friends, and they have no problem going either way or any part in the middle. They have spoken to a few folks and it seems to be a matter of opinion as to what is right (or who conveyed his their position best)?
We talked to a lawyer since we need to do paperwork and he pretty much said, you guys need to come to an agreement on the price. Not sure if he just didn't want to be bothered or if he had never encountered this scenario.
Click to expand...
Bob is wrong, he wants to buy him out then pay mkt price. Fees don't matter, you're not selling!
 
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iReC89

iReC89

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Given that Joe has put bob in a bind, withhold half the expected fees now, and if the house does not sell within 18 months, Bob pays joe the half that was withheld and hopefully covers that with better property values later.
 
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Scarlet1984

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mosito said:
That is what Bob was thinking. Joe makes more money only if he sells to Bob. And Bob gets screwed visibly if he is forced to sell soon. And he takes the hit regardless of whether it is now or later.




And that was what Joe was thinking. What fees... i see no immediate fees. Are you trying to scam me.
Click to expand...

What is this hypothetical forced sale?
 
R

RU4Real

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Jul 25, 2001
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It's never a good idea to get involved in someone else's domestic squabbles. Joe and Bob should seek professional counseling for their issues.
 
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yesrutgers01

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Nov 9, 2008
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I could follow this better if Bob or is it Joe just spoke in me and him terms. He already told us he is one of the parties but continues with the sham of two friends- so damn confusing to follow- lol
 
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RUsundevil

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What if the house sells for significantly more or less when it'd sold on the market?? Does the agreed upon price change? Of course not so costs inherent in putting it on the market should not ve factored in either. You only deal with the current reality, not some theoretical future that may or may not happen.
 
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yesrutgers01

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Nov 9, 2008
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Also- going through your responses, you stated that there is no real negative answer, both of you will be understanding either way it goes. It seems that the one of you that would be keeping the house is trying hedge all of the bets. Have the assumed cost of selling will be covered no matter what. but on the other hand, the one holding the house also gets the benefit of if and when they do sell, if the selling price is up, you get to reap the extra rewards. If the value is down, you hang onto it as long as you want until the value is up again. Maybe they never sell and just get the extra 15k.
The only answer is do you both a favor and write up an agreement similar to what someone else mentioned but I would give it 2 years. That 15k goes into escrow and to be released if the house is not on the market within 2 years.
It should be pretty straight forward.
 
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Jtung230

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yesrutgers01 said:
Also- going through your responses, you stated that there is no real negative answer, both of you will be understanding either way it goes. It seems that the one of you that would be keeping the house is trying hedge all of the bets. Have the assumed cost of selling will be covered no matter what. but on the other hand, the one holding the house also gets the benefit of if and when they do sell, if the selling price is up, you get to reap the extra rewards. If the value is down, you hang onto it as long as you want until the value is up again. Maybe they never sell and just get the extra 15k.
The only answer is do you both a favor and write up an agreement similar to what someone else mentioned but I would give it 2 years. That 15k goes into escrow and to be released if the house is not on the market within 2 years.
It should be pretty straight forward.
Click to expand...
so, with your example above. Market is down, he has to hold and pay an additional 15k. How does that make sense again?
 
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