Am I overreacting?

[noel]

Just wondering what other people think about my current situation.

DH and I live in a duplex that my brother owns. He charges us reasonable rent and never asked for security deposit or signed lease. However, he's taken advantage of having people he knows (a family friend used to live in the upper unit) by letting repairs and upkeep slide over the last 4 years so he could care for his own $300,000 home and the 4 other rental properties he owns.

Shortly after we moved in my brother tried to sell it to us for about $5000 more than what he paid for it. We weren't in a position to buy anything at that time so told him we were happy just to rent. Last night he informed us he's putting it up for sale and said he would offer us a "deal" before he puts it on the market. The "deal" he offered, was a price that is $60,000 more than what he paid for it including the few thousand dollars he's put back into the place for repairs.

The house is assessed for about $50,000 less than he's going to put it up for so I think he's insane, plus it needs a new roof and windows. But beyond that I'm insulted that he thinks he's offereing a "deal" to us and would actually want to profit from his own family. I could see a few thousand dollars, but not an amount that's equal to a year's salary!!!


The other kicker is that my husband is having major reconstructive surgery on his foot on 3/2 and will not be able to work or walk on it for 3-4 months. My brother knows this and still is choosing to sell the house now. That is bothering me more than anything, we've know Todd needed surgery for 4 months, he's had plenty of time to sell it before now if he wanted to.

It won't be a big deal if whoever buys it and lets us stay and rents out or lives in the upper unit, but they could kick us out or raise our rent by several hundred dollars more/month.

I guess we'll just have to wait and see what happens.
Just wondering what other people think. He has a right to make a profit on the house, but I'd never do it at the expense (or at least not to the extent he's looking to do it) of my own relative, let alone a sibling....

 

[darlene9947]

I don't think you're overreacting at all I'd be upset if my brother was doing that to me. Of course, with some families, anythink involving money is "business". My brother is a contractor and let me tell you, I could never afford one of his houses, even at the "family" rate!

 

[Lisa F]

Assessments are generally for tax purposes and pretty much unrelated to what the fair market price is for a house.

My husband and I have been watching the market for the past several years and houses have appreciated an AMAZING amount in the past several years. One house that we looked at last november with an asking price of $375k in a so-so area sold for $219k exactly 2 years prior (and the seller made ZERO improvements to the house, he bought it with a brand new kitchen and bathrooms). It makes me sick to my stomach, but what can you do?

Before getting bent out of shape as to whether he is trying to take you for a ride or not, I would check out what fair market value for the house is. To do this, you really need to know what comparable houses have sold for in your area. Again, housing has appreciated SO rapidly over the last few years because of low interest rates that assessments in many areas have not quite kept up with appreciation. It may very well be that even at $60k over what he bought for it, he is still willing to sell it to you for less than market value.

As far as the timing of it goes, if he wants to put a house on the market, march or so is pretty much the prime time to do it. Prime selling season is from after easter til before labor day. By waiting to put the house on the market until it is convenient for you to move, he will be out of the prime selling season time and will not be as likely to get top dollar for his house.

 

[kasar]

I'm a part time realtor - so maybe my experiences will help. Well there are a few things to consider. Have property values in your area gone up considerably since he purchased it? He's obviously doing it as an investment and may have counted on making a profit - it's possible you are getting a "deal" even though it doesn't feel like it.

He may have to pay capital gains on the property since it's not his primary residence - that can really add up.

It sounds like it was a good deal while it lasted. Please don't begrudge your brother from profiting from the sale - you said yourself that you payed reasonable rent and didn't have to come up with security deposits. That's a good deal in any case. You knew that he tried to sell it before and that was always a possibility. That's one of the major drawbacks to renting. He may have many reasons for wanting to sell now and I think he was being nice by giving you first dibs on the property. You have the right to counter offer at any time, maybe once he sees that his neglect of the property has lowered the value he'll reconsider the price and you'll be able to get it.

Unfortunately the timing's bad for you and your husband but I'm sure he isn't doing it purposely to inconvenience you. Best of luck to you.

 

[noel]

I should have added that the average home on our street and in our area is selling for about what he paid for the duplex 5 years ago. I also casually asked my best friend, who is works at city hall in the planning department and knows a great deal about the city we live in, what she thought my brother would get the house for if he was going to sell it. She quoted me about $40,000 less than what he'll be putting it up for.

For my brother's financial well being I hope he makes a bundle, it just won't be my money that he's getting.

 

[Desnik]

First if you don't take your brother up on his offer to buy the house, he could put in the contract that they buyers have to give you till a certain date to leave. Or, he could sell it to someone who wants to have you there for the income and you would have to sign a lease with them.

You said the house is assessed for $50,000 less than what he is asking for it. How do you know this and when was this assesment? Real estate has been crazy and prices everywhere have been sky rocketing! He maybe asking the right price if the house is in a "hot" neighborhood. Also don't forget, he could ask for whatever price he wants. Once the bank appraises it taking into the consideration the down payment of the buyers, they will not approve a mortgage if the value isn't close to the sale price. For example, I sold a home for $309,000. My buyers bank appraised the house for $300,000. They were putting 20% down so the bank approved the mortgage. If the appraisal came back at $250,000 the bank wouldn't approve it.

Business is business and you certainly can't expect anyone to sell you a house at no profit to them! He will have to pay closing costs. If you did buy the house a new roof and windows could be a negotiating tool to lower the price.

Yeah it stinks that the sale is around the time of your DH surgery but, you really shouldn't expect your brother to do things when it is convienent for you. Besides by the time the house goes on the market and then someone buys it and moves in is at least 2 months.

It sounds to me that you were just surprised by your brother wanting to sell the house and you didn't have time to save or prepare for it. Totally understandable. You now are faced with a decision you had no idea you would have to make so soon.

What's the animosity I sense in your post towards your brother? You mention his $300,000 home like he shouldn't have one? Has he neglected repairs in your home, or are you just talking about what he has done to other people? If he is nice enough to charge you reasonable rent, not have you sign a lease or give a security deposit, then give you "first dibs" on the house and willing to work with you, what's the problem? I'm confused??

 

[noel]

I don't expect most people to do things at my convenience, but I would expect my own brother to consider my situation. We are a close family and weren't taught to put business before family.

I guess the animosity is not that he has a $300,000 home. There are other issues I'm not mentioning here. I am glad he has a wonderful house and I'm thrilled he's doing well financially to afford that and his other rental properties as well, plus the 10 family unit he'll be buying.

He did neglect our unit and just the whole house in general.
It's my fault for not being more aggressive towards him with fixing it and I realize that now.

The house was assessed last year, so I don't know what will happen once he puts it on the market. We live in a popular area, but we also live in the crappiest part of the city we live in and homes on our typically are for sale for several months and sell fast or for the asking price.

I don't begrudge anyone the opportunity to make a buck or lots of them for that fat. I personally would not approach a family member with an offer like that, it's not a deal to me.

But getting other perspectives from people who know much more than I do about real estate is intersting and helpful. I am trying to see it from his side too.

 

[Desnik]

OK, I'm not confused anymore!! I knew there had to be more to it than mentioned.
Perhaps this is a blessing in disguise. You not being involved with your brother in a financial way my be the best thing for you.
Good Luck!

 

[noel]

You're right about the blessing in disguise Desnik, I have learned my lesson!
Thank you for sharing some interesting points.

 

[momof2inPA]

Does he need the money for his new "10 family" business venture? If the whole point of his buying that property was as an investment, you should have realized that you would need to move when the time was right, for him.

I bet he feels bad that this is coinciding with your husband's surgery, but it will probably take several months to tie up all the loose ends. I would start looking for a new place if I were you and just be grateful that you have had a decent place to live at a reasonable price until now.

 

[KimRaye]

Hi Noel! Maybe, as an alternative, you could now ask your brother for a lease. It would create a month to month situation that a new buyer would have to honor. That way you'd have at least a 30 day notice before having to move. Just an idea.

 

[ohanafamily]

Well, there are 2 sides to every story, and understanding is a 3 edged sword. I have some family that can't see beyond a $ mark, but I think if I really needed them that they would be there for me (what can I say, I am an optimist).

In your situation, I would ask your DB for a 6 month lease. This would allow you to stay while your DH heals. If not, I would find a place pronto and move. You do not need to be moving while he is recovering from his surgery. JMHO.

DB Bad or Good? again theres that three edged sword of your opinion, his opinion, and the reality of the situation. I don't like to harbor malice towards anyone, especially family (just ask my wife!) So I would like to say give him the benefit of the doubt. I would also suggest CYA.

Advice? as the sign says, in God We Trust, All Others Must Pay Cash...See if he will work with you. Talk to him, and maybe he will let you buy it and pay a mortgage on it at areasonable rate. I would find out what a bank would loan on the house, and see just what it will take. If that won't work, there are other places with reasonable rents that will give you a lease and rights. Moving out might just be the best thing...