Heir buying grandpa's house? Get multiple appraisals

Q. I thought you might be able to steer us in the right direction. My grandfather lives in a nice home on a lake, boat dock, etc. My sister lives nearby and has expressed an interest in buying the house when Gramps either passes or moves into assisted living, which could be within a year or so.

Since my sister is the only one who is local, she would likely have the property appraised to determine its market value. She knows almost everyone in town, so we are concerned about getting a fair appraisal, not a low-ball figure that would lower her “buy-out” cost.

I know appraisers have a legal responsibility to generate an unbiased appraisal, but if she picks an appraiser who is a friend and says, “Hey, I want to buy this property, so let's keep the market value on the low side,” how would we know? We don't know the market there and have no real good way to judge.

To keep peace in the family, we hope to avoid a situation that would show a lack of trust, but we are only seeking what is fair.

A. When related parties are buying each other out in a divorce, for example they often settle the question of market value this way: Each party hires its own appraiser, agreeing in advance to set the price at the average of the estimates. If you're concerned about small-town chumminess, you could retain your appraiser from a nearby city.

Q. What is a short sale? What are the bad things to worry about if I do a short sale?

A. If you need to sell, but you owe more than you could get for your home, sometimes the lender agrees to accept whatever you can get and mark the mortgage cancelled so the deal can go through. That's a short sale.

The first bad thing is that you can't just decide to use a short sale. You need your lender's agreement ahead of time, and your situation has to meet their requirements.

After that, the lender reserves the right to approve or reject any contract you've arrived at with a buyer. Judging from the mail I receive, this can be a lengthy and frustrating process.

Another concern is that sometimes instead of just forgetting about it, the lender will then seek a judgment against you for the money that wasn't repaid. You'd want to ask about that before you started the process.

The fourth problem is that your credit rating will take a hit, though not as bad a one if you had a foreclosure.

Q. My son is interested in buying rental property; living in one apartment and renting the remaining apartments to families. Can you please tell us where he might begin to investigate information necessary for success?

A. Your son might want to take the most basic real estate course offered for pre-licensing in his state. He'd get a good grounding in law of agency, real estate law, fair housing law, finance, deeds, etc. the whole works. And he might meet agents who could help with his goal.

He should also start reading books like “Real Estate Investing for Dummies.” He needs to line up his own real estate lawyer and an accountant before he starts, as well as a broker who's interested in his project.

Q. We're refinancing our house this summer, and we e-mailed the lender to say we wanted to lock in the rate they offered. By the time the paperwork arrived in the mail, the bank's rate had dropped. We called the bank to ask for a new lock-in form, since the one we received stated the old rate. We were told that they couldn't offer us the new rate since we'd already said we were locking in.

To us, there is no valid lock-in contract. We haven't signed anything, just inquired about what we would need to do to lock in. If an e-mail expressing our interest locked us in, then there would be no need to sign a form.

What's your take? Should we just not sign it and see what rate is prevailing at closing?

A. Sorry, no way I can predict what will happen to rates before your closing. But if they don't want to offer you the new rate, that's their right. No one can force you to take the loan you applied for. Perhaps, you could tell them you'll look around for another lender at lower interest.

Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2010, Creators Syndicate Inc.