Can my sister legally sell my mother’s house for $50,000 less than what it’s worth?

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Can my sister legally sell my mother’s house for $50,000 less than what it’s worth?

About 3 years ago, my girlfriend and I moved in with my 90 year old mother to help take care of her. She just passed away. I have 4 sisters, 3 older and 1

younger. The older 3 live out of state but the younger 1 lives 10 miles away.

My youngest sister is executor of estate. About 5 weeks before my mother passed, I spent 3 weeks in the hospital with a staph infection in my prostetic

knee; I may lose my leg. The house is worth $200,000 and is willed to all of us. Her husband seems to have convinced her to sell the house for $150,000 because it is in need of major repairs and houses are not selling in this area. All is far from the truth. We had a realtor assess the house and no work needs to be done as it was well kept. Houses sell within a month in this area. Right now there is only 1 active house on the market. She also told me to get out before my mother even passed. However, when my mother was in hospice she said for me to get well before I have to move. We just buried her 2 days ago, and my sister claims that she’s closing the sale of the house in 2 days. Where do I start?

Asked on August 25, 2018 under Estate Planning, Iowa

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

An executor has a "fiduciary duty" to the heirs and beneficiaries, to do what is in their interest. IF that duty is violated, there may be grounds to bring a lawsuit to stop her action(s) (e.g. stop a sale) or to seek compenation from her (e.g. make her pay the shortfall in proceeds or purchase price to the estate). But in a case like this, this can be very difficult to prove. House pricing is subjective--there is no "right" price. Depending on its condition, its exact number of bedrooms, bathrooms, and square footage, and market conditions (including how many other similar houses for sale then, and how long houses are sitting on the market), price can vary substantially. Also, you have to balance price vs. carrying cost: a higher price may take months longer to sell, and every month you carry the house, you have to pay insurance, mortgage, taxes, utilities, and general maintenance, and the odds of some damage occuring increase; often it is worthwhile to take a lower price to sell the house faster, especially if there are debts to pay and/or some other need for money. So maybe you are right, and they are low-balling the house by $50k; maybe they are right, and market conditions are not as good as you believe or the house does need repairs; maybe there is no need to wrap things up quickly, so you can hold out for money; or maybe there are estate debts and final expenses to pay, and money is needed. Or maybe the truth is in the middle: perhaps, factoring everything in, $175k is a reasonable price.
If you are convinced she is lowballing it, such as so that her husband can join in flipping it, you can, as stated, sue. You will need a realtor to testify in court on your behalf and will likely need to pay her for her time; you and your witness(es) will need to convince the court that all things considered, your executor sister is violating her fiduciary duty by pricing the house $50k too low, such as so that her husband can flip it. You will probably need an attorney, unless you are confident of being able to handle a case in "regular" county court, not small claims, on your own. If have 4 sisters, there are 5 of you altogether. That means that even if you won 100%, your share of the extra $50k from a higher sale price would be 1/5th of $50k, less the realtor commission (usually 6%) on $50k, which reduces that extra $50k by $3k, or around $9.5k. Is it worth going to the trouble and expense of a lawsuit, a lawsuit you are not guaranteed to win, and presumbably forever alienating a sibling, over possibly getting $9.5k? That's what you need to decide.


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