Need help on real estate buy out

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Need help on real estate buy out

I purchased a forclosed home with a business partner almost a year ago. The home required renovations which my partner and I completed, bringing the assesed value of the home up $68,000 from it’s assesed value when purchased. Originally, we planned on renovating the home and renting it out for a monthly profit to both parties involved however since the renovation has been completed my partner wants to “buy me out” of the property to own and live in the home himself. What is the proper way of coming to a “buy out” price in this case? If we cannot agree what are my options?

Asked on May 11, 2009 under Real Estate Law, Virginia

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The assessed value is less relevant that the actual practice you paid when you bought the home.

If you were up $68,000 on paper after the improvements, good for both of you.

Now if he wants to buy you out, if you and he can't agree on a price, you can get a real estate agent or other person to be the arbitrator to determine the fair market value and he can pay you half of that for your share.  He'll argue that he should only pay half the value after normal sales commissions and selling expense (not a bad argument), and you may also squabble at who put in greater effort in the remodel. You'll say this is not the time to sell, and you may be right (or wrong). 

One approach is you guys could do a buy sell. He can offer you a price to buy him out, and if you don't take it he can buy you out at the same price, or you can do the flip. Or you can both agree on a price and then flip a coin -- the winner can buy it at that price.

 


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