Jump to content

Recommended Posts

Posted (edited)
7 hours ago, Gatorubet said:

What is the response from your clients who were holding out for lower rates before they pulled the trigger?  Are they jumping at this or does Hope spring eternal and they’re still sidelining it waiting for better rates?

This is why I structure everything for all bills paid when rates are higher. So they can jump and take the win now and do it again in 6 months. My suggestion is not to hunt bottom until you get into 30’s with a 4 handle. 
Personally I have 37 loans on the books right now for September and expect to add 15 more. That’s after closing 19 in August. 
I expect to be the #1 or 2 volume LO in texas in the broker channel for the month. We shall see. 
My clients response that have worked with me in the past is trust, because we’ve planned this strategy for a year or two with lender paid buy downs, lots of closing cost money from me and other stuff. 
people who get referred to me have a response of “why doesn’t everyone do this?”  Well, bc the typical customer doesn’t understand the business so they ask exactly one question “what’s your rate?” So the vast majority of LO’s become stupid rate monkeys that don’t listen to their customers lives and plan strategy accordingly. 

Edited by Wulaw Horn
  • Hook 'Em 1
Posted
7 hours ago, Dbeasy said:

Yes. What’s interesting is that the 5 yr bond is down to 3.5%, which is below both of the rate cuts planned for sep and nov. so the bond market believes it’s headed lower, faster than the current consensus rate cut predictions. 

Maybe. Maybe there’s some hedge as well thinking we could see a bit of a surprise 50 point cut. 
I personally think they are still too restrictive by 150-200 basis points but I’m a contrarian by nature, who knows. I follow the macro but trying to time up policy or market moves in the extreme short term is a fools errand. Like trying to time any market be it stock, housing etc. 
I have so many problems with how my industry has been run the last 2.5 years from a  facing the customer perspective that it makes me sort of ragey in a purely autistic kind of way where something doesn’t affect me but it bothers me bc it’s not being done right. 
do you know that when rates where in the 7’s 80% of the market was buying points?  That’s literally fucking insane. Buying points at the height of the market when you are most likely at any time ever to be refinancing shortly into the future?  

it’s like the morons who were putting people on arms during Covid… really?  You want to make it so your rate can get worse than 2.75%?


there’s nothing in this game that’s more important than the break even time. Get that break even below 6 months (0 is better, having money out in your pocket is even better than that) and don’t get greedy and take money off the table (for free) every time rates drop. 

this was actually a fuller answer to gator’s question  

 

  • Hook 'Em 2
Posted
On 9/5/2025 at 11:09 AM, UTPhil2006 said:

Down .11 to 4.06 so getting closer 

Down to 4.04 (down .04 on the whole today) so inching our way to the very long term lows 

  • Hook 'Em 1
Posted
23 minutes ago, Wulaw Horn said:

But we pretended they were and market priced accordingly. 
it’s awesome that the Fed drives looking through the review rather than the windshield. 

I think most people have felt for awhile that the employment situation seemed worse than the reported numbers. I’ve certainly felt that way for about a year. 

But with that said, you do realize that there are 160 million people employed in the US, right? The unemployment rate is still not high, and these number adjustments are still relatively small on a large denominator. 

We haven’t even begun to see the types of job loss numbers you see in a recession. Those numbers are coming, though, because of the government policies being enacted. The economy is being driven into a ditch as we speak, and it’s not due to Fed policy. It’s a President looking for someone to blame. The BLS numbers have become the latest politicized topic for people to try and bolster their “team”. 

https://www.bls.gov/news.release/empsit.a.htm

Rate cuts are definitely coming now, but too much too fast and the inflation problem that is already a problem (PPI 3%, etc) will become a serious problem. Oh, and the inconsistent tarriff policies, global foreign relations disasters, and other bad policies make it virtually impossible for the Fed to do their job. The problem is this President. Period.   

There is a reason this administration has been begging for rate cuts. They don’t care about inflation, and especially don’t care about the fact inflation is an incredibly regressive tax on the lower income populations. They care only about business growth for their wealthy donors and their own business interests. And there is a real chance he wants a recession so the wealthy can buy up even more of the country’s wealth during it. 

All this to say that the Fed has not been driving thru the rearview mirror, and I don’t think you’ve fully realized who this President is really working for. 

Posted
42 minutes ago, Dbeasy said:

I think most people have felt for awhile that the employment situation seemed worse than the reported numbers. I’ve certainly felt that way for about a year. 

But with that said, you do realize that there are 160 million people employed in the US, right? The unemployment rate is still not high, and these number adjustments are still relatively small on a large denominator. 

We haven’t even begun to see the types of job loss numbers you see in a recession. Those numbers are coming, though, because of the government policies being enacted. The economy is being driven into a ditch as we speak, and it’s not due to Fed policy. It’s a President looking for someone to blame. The BLS numbers have become the latest politicized topic for people to try and bolster their “team”. 

https://www.bls.gov/news.release/empsit.a.htm

Rate cuts are definitely coming now, but too much too fast and the inflation problem that is already a problem (PPI 3%, etc) will become a serious problem. Oh, and the inconsistent tarriff policies, global foreign relations disasters, and other bad policies make it virtually impossible for the Fed to do their job. The problem is this President. Period.   

There is a reason this administration has been begging for rate cuts. They don’t care about inflation, and especially don’t care about the fact inflation is an incredibly regressive tax on the lower income populations. They care only about business growth for their wealthy donors and their own business interests. And there is a real chance he wants a recession so the wealthy can buy up even more of the country’s wealth during it. 

All this to say that the Fed has not been driving thru the rearview mirror, and I don’t think you’ve fully realized who this President is really working for. 

Don’t tell me about “latest politicized issue dude”. I’ve been saying this for 30 months. Consistently. And I’ve been right literally every single time I’ve said it. 
And I was calling for them to raise rates 4 years ago (or at least 3.5).  

Posted (edited)
1 hour ago, Dbeasy said:

 They don’t care about inflation, and especially don’t care about the fact inflation is an incredibly regressive tax on the lower income populations. 

100% agree, but begs the question. The last 4 years saw an average of 4.95% inflation with a peak of 9%, the worst period for the working class since Nixon, was the problem the President as well?

To combat this interest rates were increased and home mortgages went from sub 4 to +7% while home prices were still rising. This effectively shut out 80% of the country from the real estate market for the last 4 years and counting. 

Edited by ChickenSandwich
Posted
36 minutes ago, ChickenSandwich said:

100% agree, but begs the question. The last 4 years saw an average of 4.95% inflation with a peak of 9%, the worst period for the working class since Nixon, was the problem the President as well?

To combat this interest rates were increased and home mortgages went from sub 4 to +7% while home prices were still rising. This effectively shut out 80% of the country from the real estate market for the last 4 years and counting. 

Yes, except I would point out that the initial inflation that was so bad was caused by the trillions of dollars the Trump administration dumped into the economy during Covid, not Biden. It was the most egregious financial move in us history. 

Then Biden, rather than trying to rein it in more aggressively, let spending as a percent of gdp still remain too high. Trump in his second term, is making spending as bad if not worse than Biden.

So we have two Presidents and three Presidencies that have caused these problems. People need to get educated and put a leader in office who is effective, Republican or Democrat , and quit being duped by disinformation.

  • Hook 'Em 3
Posted
11 hours ago, Dbeasy said:

People need to get educated and put a leader in office who is effective, Republican or Democrat , and quit being duped by disinformation.

Is my sarcasm meter broken or did you really just type this with a straight face?

  • Haha 2
Posted (edited)
16 hours ago, Dbeasy said:

Yes, except I would point out that the initial inflation that was so bad was caused by the trillions of dollars the Trump administration dumped into the economy during Covid, not Biden. It was the most egregious financial move in us history. 

Then Biden, rather than trying to rein it in more aggressively, let spending as a percent of gdp still remain too high. Trump in his second term, is making spending as bad if not worse than Biden.

So we have two Presidents and three Presidencies that have caused these problems. People need to get educated and put a leader in office who is effective, Republican or Democrat , and quit being duped by disinformation.

Agree to disagree on the cause

https://www.cnn.com/2021/05/26/economy/inflation-larry-summers-biden-fed

 

 May 27, 2021

New YorkCNN Business — 

Larry Summers is urging Washington to tap the brakes on stimulus — or risk unleashing a serious burst of inflation.

In December 2020 the inflation rate was 1.4% with an average of 2.46% the previous 4 years

 

2020

image.thumb.jpeg.c73cbcc3a01b9bdc1ccab8d44e5d3e87.jpeg
 

2025

image.thumb.jpeg.58069b496090c31f1b9f58d44f32155f.jpeg

Edited by ChickenSandwich
  • Hook 'Em 1
Posted
3 minutes ago, ChickenSandwich said:

Agree to disagree on the cause

https://www.cnn.com/2021/05/26/economy/inflation-larry-summers-biden-fed

 

 May 27, 2021

New YorkCNN Business — 

Larry Summers is urging Washington to tap the brakes on stimulus — or risk unleashing a serious burst of inflation.

In December 2020 the inflation rate was 1.4%

And the COVID-19 pandemic was still in its early stages with a vaccine months away. Cmon man, stop being so willfully obtuse and ignorant. It's not a good bit.

Posted
2 hours ago, ChickenSandwich said:

Agree to disagree on the cause

https://www.cnn.com/2021/05/26/economy/inflation-larry-summers-biden-fed

 

 May 27, 2021

New YorkCNN Business — 

Larry Summers is urging Washington to tap the brakes on stimulus — or risk unleashing a serious burst of inflation.

In December 2020 the inflation rate was 1.4% with an average of 2.46% the previous 4 years

 

2020

image.thumb.jpeg.c73cbcc3a01b9bdc1ccab8d44e5d3e87.jpeg
 

2025

image.thumb.jpeg.58069b496090c31f1b9f58d44f32155f.jpeg

You say agree to disagree, but I stated above Biden was also to blame. So that means you believe Trump wasn’t also to blame. So using your own sources, here is the summary from them during Trump’s first Presidency. Why people don’t understand that inflation never shows up immediately, I’ll never understand. It’s completely obvious. 
 

1. Lawrence Summers

  • In 2020, Summers (former Treasury Secretary) cautioned that the Trump tax cuts (2017) plus emergency COVID stimulus created risks of overheating once supply recovered.
  • He later (in 2021) became the loudest critic of excessive stimulus in the Biden era, but his warnings built on the idea that the U.S. had already primed the pump with Trump-era fiscal expansion.

 

2. Olivier Blanchard

(former IMF chief economist)

  • Blanchard warned in 2020 that the scale of COVID stimulus (Trump-signed CARES Act, $2.2 trillion in March 2020) was “larger than necessary” and could lead to inflation once demand rebounded.
  • His point was that fiscal packages were not just relief, but also injected huge demand capacity.

3. Douglas Holtz-Eakin

(former CBO director, conservative economist)

  • Criticized Trump’s 2017 tax cuts and 2020 stimulus for dramatically increasing deficits without long-term growth offsets.
  • He flagged the inflation risk, even if it didn’t show up immediately due to depressed demand in lockdowns.

4. Jason Furman

(former Obama economic adviser, Harvard economist)

  • Supported emergency spending in 2020 but also warned about lagged inflationary risks if fiscal and monetary policy stayed loose as the economy reopened.
  • He noted that the Trump-signed relief checks and expanded unemployment benefits were unusually large compared to past crises.

5. Federal Reserve Voices

  • While Jerome Powell (Fed Chair) emphasized in 2020 that the priority was stabilization, Fed minutes from mid-2020 reflected concerns that the size of fiscal stimulus under Trump could “eventually be inflationary” once bottlenecks cleared.
  • Some regional Fed presidents (like Robert Kaplan of the Dallas Fed) flagged that a surge in government spending would likely push inflation higher in a delayed way.


So like I said earlier, people need to stop blindly following “their team”.  And you are one of the worst offenders of that. You are a smart enough person, like many others, to hold these politicians accountable for their behaviors, but why you don’t, I’ll never understand. When a politician is doing stupid things, it should be pointed out. 

  • Hook 'Em 1
Posted

Warning - Potentially boring Fed conversation debate post - Actual industry questions at the end that I am really curious about.

So what do you guys think about the bump up in inflation in today's reports as the other side of the Fed's dual mandate coin?  It seems as if a quarter point rate cut is built into most all the market predictions.  But I would love to be a fly on the wall hearing everyone's point of view.  Is this inflation transitory?   Or perhaps more accurately what weight is 3% inflation going forward, with the potential to rise as tariffs trickle through the economy?  

The flip side of the mandate coin is job creation.  And while job creation sucks, unemployment is is a fairly comfortable place overall.  If you are just looking historically.  How bad do individual fed members think the momentum is?  Is it markedly higher than inflation?  Right now it seems that is where the sentiment is, but I would love to know the high and low predictions of individual members of the Fed say 3 and 6 months and a year out right now.  (on both inflation and jobs)

The other odd ball thing that has been added to the rate cut debate is the affect of a potentially shrinking workforce, in relation to job creation and in turn unemployment numbers.  And what weight members give that (if any) in their forward looks?

Right now we are in almost exactly the spot I predicted a year ago.  I said it would be a miracle to see the MMI below 6.25%.  Simply because of what policy implementation of tariffs would entail creation of a lot of conflicting data, making it hard for the Fed to have moved comfortably downward through the Spring and Summer as many hoped for.  Anyhow I just like the debate.  Which side of the dual mandate coin will the data push the Fed the next 6 months? Most likely move is a quarter point, with the conflicting data. Not a jumbo half.  But fuck what do I know. I sort of fear we get the quarter, and then inflation starts to make it's move, stalling/slowing that next quarter point. 

--------------------

The good news for the RE market IMHO?  Is that folks have seen those rates they just had to wait a few more months for, within sight.  So there may be some brisker off season activity than the norm.  Basically off the realization that the just beyond the horizon downward moves in rates back to covid/post covid levels are not a guarantee.  Not to say rates may not indeed continue to drift downward!  Just to say that emotionally folks who have been waiting, probably are feeling pretty good about where rates are right now.  OR do you still think that the mindset of the folks that have been holding off is that waiting for lower is still the prevailing mindset?

One last question - Do you think that lower rates and longer DOM heading into Fall will also create some price capitulation to help buyers along with lower rates?  In other words sort of create a Fall sales graph volume anomaly, to the usual decline heading toward Spring?  

 

Posted

Just gonna snag one piece of your post -- I actually do think we get a rate decrease in a hungry RE market and prices get more fine tuned and RE sees a bump. Especially higher end homes where that .25 lower rate makes a bigger difference. I think lenders then push 1-0/2-1 buydowns and such which sellers will gladly agree to and we have a decent fall season which sellers sorely need 

  • Hook 'Em 1
Posted
1 hour ago, horn4life said:

Do you think that lower rates and longer DOM heading into Fall will also create some price capitulation to help buyers along with lower rates? 

I’ve long held the hope that the typical summer buying cycle might be disrupted if rates fall into attractive territory, but I will share something with the board that’s the benefit of having 40 years of experience either in the industry or growing up under someone in it.

Forget about interest rates, affordability, what the Fed might do, etc.  Nothing compares to employment uncertainty when it comes pulling buyers off the market. 

  • Hook 'Em 3
Posted
2 hours ago, tbone_ said:

I think there is a lot of pent up demand to trade houses. Feels like any significant movement down in rates could unlock some of that.

 

But what do I know. 

From your lips to gods ears 

  • Hook 'Em 1
Posted

Heard a real estate economist say today that he thought the 10 year needed to get to about 3 1/4 to spark real movement in the apartment market. That would be huge for housing as well imo.

 

Job growth not really helping things though. 

  • Hook 'Em 1
Posted
8 hours ago, LCHorn said:

Forget about interest rates, affordability, what the Fed might do, etc.  Nothing compares to employment uncertainty when it comes pulling buyers off the market

I am not educated enough in this area to offer any kind of meaningful opinion, but my gut is that a family taking perhaps their most major, long-term financial decision would heavily depend on if they think they will have sufficient employment stability to ensure the necessary assets are there not to lose their home.   

My other non-educated opinion is that I recently saw an extremely large percentage of people with student loans feel that they are impacted in a major way by recent administration decisions on student loan repayment. 

I think it entirely immaterial to the home buying issue whether the policy decision about student loan repayment is a wise or unwise fiscal move.     That said, a significant deletion of your disposable income would seem to have an effect on your decision to make a home purchase, and upon your ability to meet underwriting qualifications at attractive interest rates.   And I have no facts, but it would also seem that first time homebuyers and getting out of first starter home buyers would match closely with the demographics of people still owing student loans in a significant amount.

The one thing old age has taught me is that simple causes or simple solutions are like unicorns.   What causes problems or what solves them are usually a bucket of nuance and contributing factors that are hard to put your finger on.  It might be that the upcoming interest rate reductions will turn on a strong flow from the now-more open rate faucet, only to see an unavoidable recession emerge that slows it down again.

But the best of luck to all of you.

  • Like 1
Posted
On 9/10/2025 at 1:32 PM, Incredulity said:

 

 

 

March Madness Omg GIF

This is like saying global warming is nothing to worry about because we haven’t had a major hurricane this year.   We’ll see, said the Zen Master.

Posted

Thanks for the input.  There are so many different angles to look at Fed policy priorities and the direction of interest rates and unemployment that it's a debate that has no perfect answer.  Thus, it's interesting to debate.  As different experiences and points of view are probably the same around the Fed table when everyone is discussing what they see as the most important from a weighting perspective. And as we have seen the Fed can move and the market doesn't. but I dont think that's the case in this instance

I also think there are folks on both sides of the buy perhaps willing to bend a bit more to try and close out a deal in 2025? Or not...

------

Different subject - 

Regarding what I "think" I know.  Background -  Dad has house on lake that will fall to my Sister and myself.  We were going to get it remodeled and on the market this Spring but a combination of things got progress pushed back and now I am suggesting we not put it on the market this year, but wait until Spring and hope for an even better market with better price.  I have toyed with the idea of potentially buying my sister out of her half of the house as a longer term investment.  My sister has no interest in the place, beyond someone putting a check in her had without any effort required.

I am the person basically being the GC on a complete remodel and with my Dad being 93 he honestly might not make it until Spring (but doing well now!!!)  I am hoping to value might jump up from $450K now to a list of $675K according to the realtor and let's say a close of $650K less fees.  But that's only after I put everything together! 

I was trying to figure out a way to get that stepped up value of $675K without buying my sister out at that higher stepped up price when inherited.So how do I buy out my sister's 45% at current value of $475K and end up with an inherited stepped up value of $675K?  Any ideas?  I just want to buy her without her getting half the value of my efforts to increase the value of the house next Spring should my father pass in the interim.  It's a real oddball question I know.  I thought about simply giving my Dad cash and having him change his will, but I do NOT want to do anything shady as the executor. Nor do I want to try and screw my sister.  Just trying to find a way to hang onto the place and minimize my cost to do so.

Posted
3 hours ago, LTtxfan said:

Sounds like a CFP/tax advisor question...  

The worst surly answer ever...  like this is a pay for play advice playground... 😉

 

 

 

 

 

 

 

with the exception of WuLaw and Phil.....

 

  • Hook 'Em 1
Posted

A lot of useful info here on mortgages and real estate! It's always good to hear different perspectives and experiences, especially when dealing with such big decisions. It definitely helps make the process a little less overwhelming.

Posted (edited)
17 hours ago, horn4life said:

Thanks for the input.  There are so many different angles to look at Fed policy priorities and the direction of interest rates and unemployment that it's a debate that has no perfect answer.  Thus, it's interesting to debate.  As different experiences and points of view are probably the same around the Fed table when everyone is discussing what they see as the most important from a weighting perspective. And as we have seen the Fed can move and the market doesn't. but I dont think that's the case in this instance

I also think there are folks on both sides of the buy perhaps willing to bend a bit more to try and close out a deal in 2025? Or not...

------

Different subject - 

Regarding what I "think" I know.  Background -  Dad has house on lake that will fall to my Sister and myself.  We were going to get it remodeled and on the market this Spring but a combination of things got progress pushed back and now I am suggesting we not put it on the market this year, but wait until Spring and hope for an even better market with better price.  I have toyed with the idea of potentially buying my sister out of her half of the house as a longer term investment.  My sister has no interest in the place, beyond someone putting a check in her had without any effort required.

I am the person basically being the GC on a complete remodel and with my Dad being 93 he honestly might not make it until Spring (but doing well now!!!)  I am hoping to value might jump up from $450K now to a list of $675K according to the realtor and let's say a close of $650K less fees.  But that's only after I put everything together! 

I was trying to figure out a way to get that stepped up value of $675K without buying my sister out at that higher stepped up price when inherited.So how do I buy out my sister's 45% at current value of $475K and end up with an inherited stepped up value of $675K?  Any ideas?  I just want to buy her without her getting half the value of my efforts to increase the value of the house next Spring should my father pass in the interim.  It's a real oddball question I know.  I thought about simply giving my Dad cash and having him change his will, but I do NOT want to do anything shady as the executor. Nor do I want to try and screw my sister.  Just trying to find a way to hang onto the place and minimize my cost to do estate agents in dagenham so.

To buy your sister out at the current value and avoid her benefiting from the future price increase due to your efforts, one option could be to negotiate a buyout now at the $475K value. You could explain to her that you're doing the work to increase the value and that you’d prefer she doesn't receive half of that increased value. It’s important to have an open conversation with her so she understands your position and how you’re trying to handle it fairly. If needed, getting legal or financial advice could also help structure the deal in a way that works for both of you while respecting your dad’s wishes as the executor.

Edited by Riolab27
  • Like 1
Posted
43 minutes ago, Riolab27 said:

To buy your sister out at the current value and avoid her benefiting from the future price increase due to your efforts, one option could be to negotiate a buyout now at the $475K value. You could explain to her that you're doing the work to increase the value and that you’d prefer she doesn't receive half of that increased value. It’s important to have an open conversation with her so she understands your position and how you’re trying to handle it fairly. If needed, getting legal or financial advice could also help structure the deal in a way that works for both of you while respecting your dad’s wishes as the executor.

That's what I was thinking but this is where I probably need to get an RE/Estate attorney involved.  As how do you buy someone out of something they don't yet own?  If my Dad was dead it would be easy to come up with a number (well maybe with my sis). 

I was also thinking this morning about what might be a way to structure some sort of lease with my Dad to get the experiment started ifure  my rental market research pans out.  Maybe a rolling 18 month lease until his death.  Just to protect my to recoup my furnishing cost investment? 

Probably the easiest is to have my Dad cap her value in the home in his will? Or predetermine my back end cost today, and put that hard cost into Dad's will.  If he died right now, I think there is almost enough on the investment/cash side of the coin that I could not be out much of my money to close the loop.  Seems like best option may be to have a rewriting of the will. 

Posted

You could contract with her to buy her interest in the estate.

 

We do stuff like this in the corporate real estate world all the time but it may be a little complicated for a regular transaction though. 

And yes, if you can redo the will beforehand that’s the best way. 

Posted
On 9/12/2025 at 2:20 PM, horn4life said:

  I thought about simply giving my Dad cash and having him change his will, but I do NOT want to do anything shady as the executor. Nor do I want to try and screw my sister.  Just trying to find a way to hang onto the place and minimize my cost to do so.

it seems to me you do need to get some tax advice to be sure the direction you are going will be good for you when you achieve it.   But maybe the easiest answer is to have a meeting with your dad and your sister.   Be upfront about what you wanna do, how you don’t want to cheat your sister, but you don’t want to be penalized for doing all the work and increasing the value so that it’s a negative to you.  She will be in on the discussion with your dad when you all agree to buy him out now. He can put that amount owed sis in a joint savings account with her with a right of survival designation so when he passes it all goes to her outside the will.  I think.    Actually, I’m pretty sure at that point he can just give her the amount as a gift without any tax consequences to her or him.  Caveat: talk to someone who practices in that area and ignore anything I think.

Regarding your concerns about doing something shady, and while it’s not my area of law, I’m not sure you actually have a fiduciary duty as executor of the will until he passes.  While he is alive, you are just a potential, not-yet-appointed-by-the court executor (if he does not revise his will). 

Given that your dad can leave the whole thing to his favorite stripper instead of either of you, it is far more his decision than yours or hers in any event.  Sit down with them both and give them your proposal.  Your idea to buy it before he passes has a whole lot of merit - and it makes what you do with it after entirely your choice.  Which is what you want.   And it ensures that your sister is not cheated - and your dad is assured she will receive the money.

  • Hook 'Em 1
Posted
15 hours ago, horn4life said:

That's what I was thinking but this is where I probably need to get an RE/Estate attorney involved.  As how do you buy someone out of something they don't yet own?  If my Dad was dead it would be easy to come up with a number (well maybe with my sis). 

I was also thinking this morning about what might be a way to structure some sort of lease with my Dad to get the experiment started ifure  my rental market research pans out.  Maybe a rolling 18 month lease until his death.  Just to protect my to recoup my furnishing cost investment? 

Probably the easiest is to have my Dad cap her value in the home in his will? Or predetermine my back end cost today, and put that hard cost into Dad's will.  If he died right now, I think there is almost enough on the investment/cash side of the coin that I could not be out much of my money to close the loop.  Seems like best option may be to have a rewriting of the will. 

I’ll be following to see how this plays out for you. Wife and I sit in your sister’s seat and would love to find a resolution where we don’t become co-owners of a lake house 2,000 miles away from us that we have no interest in having an ownership stake in. In general, we don’t want to be on the hook for maintenance and upkeep on a house that we visit maybe once per year, but her parents are adamant that the house be left to all of the children. We’ve tried to delicately approach the subject, but it has been a difficult conversation for us to have with her parents since they are very emotionally attached to the house.

  • Hook 'Em 1
Posted
8 hours ago, royiv said:

I’ll be following to see how this plays out for you. Wife and I sit in your sister’s seat and would love to find a resolution where we don’t become co-owners of a lake house 2,000 miles away from us that we have no interest in having an ownership stake in. In general, we don’t want to be on the hook for maintenance and upkeep on a house that we visit maybe once per year, but her parents are adamant that the house be left to all of the children. We’ve tried to delicately approach the subject, but it has been a difficult conversation for us to have with her parents since they are very emotionally attached to the house.

Spoke to my Dad about this and as I explained to him, first and foremost the math has to work, and I need to do some more research.  Depending on when my Dad passes there is a decent possibility that he will have enough liquid assets to where I would on the hook for under $100K.  The other thing I pointed out yesterday was that by not selling the house the Estate would not incur those closing cost expenses.  

royiv - The will will be the main thing.  Does the other side of the family, or the estate, have enough funds to make you whole? 

 

Posted
2 hours ago, horn4life said:

royiv - The will will be the main thing.  Does the other side of the family, or the estate, have enough funds to make you whole? 

 

The estate and the other side both have plenty of funds to make us whole. Our challenge is that the parents don’t look at it as a business transaction. They are very emotionally attached to the house and offend easy when it comes to having a conversation about why it doesn’t make sense for us to have an ownership stake in a lake house that requires a 5 hour flight and a two hour drive for us to use. For whatever reason, they don’t have the same attachment to their place in Hawaii or else that would be another conversation that would have to be had.

Posted
2 hours ago, horn4life said:

The other thing I pointed out yesterday was that by not selling the house the Estate would not incur those closing cost expenses.  

????   My first thought is, who cares?

You are spot-on in needing to get advice and think about it.   One idea might be to sit down and assign a value of the various competing interests

1) you apparently don’t want the estate to pay closing costs. ( It seems like if you bought it, you would save your dad mortgage and property taxes on the property in the next few years, which would cancel that expense out)

2) you want your sister to get half of the pre-improved assessed value of your dad‘s property and not cheat her

3) you don’t want to inherit the house with your sister, because you’ll be doing all the work to increase its value when you eventually sell it for more $

4) Closing costs again -  if you don’t buy it before your dad passes and you buy your sister out after it is left to you both in probate, she or you will have to pay closing cost on that sale, no?

5) you want your dad to be happy with whatever you do  - - because he has to be happy because he controls the whole thing because it’s his house

I can only assume that each of those goals does not have equal value.  Number five has the most value because nothing happens unless your dad agrees.    So you have to assign other values to the other interests involved.  is it more important to get her the money before he passes or after he passes? is it more important to you to get the house now free of your sister having an interest - or after he passes?

You are going to have to decide if the relatively modest closing costs are a reason to not immediately own property you admit you might be able to make a couple extra hundred thousand on.  The buyer can always contract to pay the closing cost to prevent an estate expense.    So if your dad is giving you half a house, say “thank you”, and pay the closing costs with your sister - to be deducted from the amount she is gifted by your dad so you both get the same thing (if for some reason she can’t afford to pay half of closing costs at the time of the sale)? Maybe? 

The only thing I can leave you with is that selling it now is the only thing with close to absolute certainty.    If you leave it in the estate to pass by his will, there is always some risk that accompanies every person who passes with wealth and a will:  He could change his mind and change the will, which would be his absolute right.   Someone could challenge the will.  Some unknown-to-you half sibling could show up to claim estate assets.  Some stupid fight could arise between you and your sister before or after his death that changes her position on selling it to you after his passing.  Or she gets bad advice from friends or husband or whatever that you are taking advantage of her.  Why?  Because she doesn’t understand everything, but is aware that you plan to make more money off the house than her. NEVER underestimate the influence of non-lawyer friends and family giving absolutely incorrect bad advice to people who for bizarre reasons adopts that as their position.

The thing is, every state law reporter is filled with hundreds or even thousands of cases where the most amazingly stupid stuff arises in probate and estate fights that nobody envisioned at the time of the will draft or later probate.  Even if you evaluate that risk as negligible now, it is still a risk.  So why take that risk? Like I say, they are all competing negatives and positives, and there is no one answer that solves it all.  And it’s not my money, but you and your sister sharing closing costs on a free half of a house seems like the least of your problems.

Look, I don’t practice that type of law and I have no idea what Texas law is at all. I have no idea how large your dad‘s estate is and what that means from a tax standpoint.   I’m not trying to say any of your ideas are wrong, I’m just trying to do what lawyers do - which is “issue spot” to bring up things you might not have thought about to discuss with the actual Texas estate attorney who knows what the hell they are doing.  

Oh. I don’t know what you mean when you say

Quote

 Depending on when my Dad passes there is a decent possibility that he will have enough liquid assets to where I would on the hook for under $100K

Why would you be on the hook personally for your dad’s estate assets? Or are you talking about your role as executor paying estate expenses and you don’t want to add closing costs to the pile? Best of luck in any event. 

  • Hook 'Em 1
Posted (edited)
12 hours ago, royiv said:

We’ve tried to delicately approach the subject, but it has been a difficult conversation for us to have with her parents since they are very emotionally attached to the house.

Has anyone tried the approach of saying that it is inevitable that that so many people owning it jointly will result in disputes and bad blood about it, as that is the normal thing that happens when a bunch of people are given the same piece of rental property?

Could someone explain to them that their generosity and good intentions will likely lead to creating bad blood, family disputes and conflict  - part owners who live a long way away who will never use it having to pay their share of a house they won’t use.  that everyone cannot possibly agree on what happens when the place needs new roofs or the plumbing freezes and burst, or property taxes and insurance goes through the roof.  One owner can handle that, but not a gang of owners. That when one of the several owners passes, there will be a state and probate costs.   Would they want their nice gesture to become a negative - to create a legacy of family conflict they insist on imposing on the kids? 

I don’t think any parent would want to create that for their children - especially when they view it as giving you a rental place where the kids will all meet as an extended family and enjoy it together.

Edit: and I forgot - what happens if some of the heirs get remarried and start second families? what happens in the future when the people trying to make a consensus are NOT the sibling - but children of the siblings -  or the second spouse of a sibling who inherits the property from her or his spouse?   Your parents seem wonderful, but they are literally creating an unhappiness and litigation bomb.

Edited by Gatorubet
  • Hook 'Em 2
Posted
33 minutes ago, Gatorubet said:

Why would you be on the hook personally for your dad’s estate assets? Or are you talking about your role as executor paying estate expenses and you don’t want to add closing costs to the pile? Best of luck in any event. 

Only if the liquid portion of the estate do not exceed the value of the house.  My Dad's burn rate at independent living isn't much right now.  But if he needed nursing care, that could cause the erosion of the cash position of the estate.  My original idea was to rent the house to prevent erosion of the estate in a worst case scenario.  

It may be that selling the place and me just getting a bigger pop is the way to go. Especially if rates are a bit lower in the Spring.  

Like I told my dad the other day. "If you try hard to prove yourself wrong and can't, you might actually have a good idea."   My MIL is actively dying right now, and I have covid.  I have been thinking more about the commitment to pull this off, and the possibility he might be actively dying during the process.  I want to be able to be there for him at the end, and I need to allocate that some additional weight on the negative side of the ledger for that in the decision making.  I also need to think about the things I hate now, higher property taxes and never ending rises home insurance.  I fI inherit ,and then sell I take the whole hit on the closing costs for example.  Lots of little details to think about in trying to evaluate this idea.

 

 

 

  • Hook 'Em 1
Posted
32 minutes ago, horn4life said:

Only if the liquid portion of the estate do not exceed the value of the house.  My Dad's burn rate at independent living isn't much right now.  But if he needed nursing care, that could cause the erosion of the cash position of the estate.  My original idea was to rent the house to prevent erosion of the estate in a worst case scenario.  

It may be that selling the place and me just getting a bigger pop is the way to go. Especially if rates are a bit lower in the Spring.  

Like I told my dad the other day. "If you try hard to prove yourself wrong and can't, you might actually have a good idea."   My MIL is actively dying right now, and I have covid.  I have been thinking more about the commitment to pull this off, and the possibility he might be actively dying during the process.  I want to be able to be there for him at the end, and I need to allocate that some additional weight on the negative side of the ledger for that in the decision making.  I also need to think about the things I hate now, higher property taxes and never ending rises home insurance.  I fI inherit ,and then sell I take the whole hit on the closing costs for example.  Lots of little details to think about in trying to evaluate this idea.

First, I want to congratulate you for being the moving force during this difficult time and taking on all of these responsibilities to make sure all the other members of your family are taking care of fairly and respectfully. Unfortunately, not every family has a good son like you who has his own needs on the back burner and the family needs upfront. Kudos.

I’m old enough to have lost both parents, and I was the one closest to Florida to take care of my mom when she went through assisted living to nursing home to hospice.   And it is certainly not cheap the way the American model works (or doesn’t work).    Selling the house would at least give your dad further assets to pay for those needs, although I’m not sure what the equity is or if it’s paid off.     

If he has a long extended stay in a nursing home and Medicaid is involved, Medicaid has his own rules about how much assets your dad can have before they kick in. I generally know there are special needs trusts that can be created with some of that liquid cash that won’t be counted against him.  I’m pretty sure that there are time limits involved in how the assets are used - so that the money hasn’t moved right before he needs it to the detriment of Medicaid.    

Fortunately, there are wonderful experts in that field that can help you navigate it.    That is a hell of a lot of moving parts you are dealing with friend.    I’m sorry to hear about your MIL. And about you having Covid.  And that you have to deal with most all of this yourself.    As soon as you feel better, you can start seeking out people who actually know what the hell they are  talking about and come up with a game plan.  

Ignore everything else I’ve said up to this point, and do one thing: take care of you and your physical and mental health. It seems a lot of people are depending on you.

  • Hook 'Em 1
Posted
2 hours ago, Gatorubet said:

Has anyone tried the approach of saying that it is inevitable that that so many people owning it jointly will result in disputes and bad blood about it, as that is the normal thing that happens when a bunch of people are given the same piece of rental property?

Could someone explain to them that their generosity and good intentions will likely lead to creating bad blood, family disputes and conflict  - part owners who live a long way away who will never use it having to pay their share of a house they won’t use.  that everyone cannot possibly agree on what happens when the place needs new roofs or the plumbing freezes and burst, or property taxes and insurance goes through the roof.  One owner can handle that, but not a gang of owners. That when one of the several owners passes, there will be a state and probate costs.   Would they want their nice gesture to become a negative - to create a legacy of family conflict they insist on imposing on the kids? 

I don’t think any parent would want to create that for their children - especially when they view it as giving you a rental place where the kids will all meet as an extended family and enjoy it together.

Edit: and I forgot - what happens if some of the heirs get remarried and start second families? what happens in the future when the people trying to make a consensus are NOT the sibling - but children of the siblings -  or the second spouse of a sibling who inherits the property from her or his spouse?   Your parents seem wonderful, but they are literally creating an unhappiness and litigation bomb.

Don’t disagree with any of what you posted and my wife and I have had many conversations covering these exact points. Unfortunately, these aren’t my parents, it’s my in-laws and, while well intentioned and very kind and generous, are the most passive aggressive people I know. It’s an odd family dynamic that none of the kids feel comfortable having frank conversations with their parents. My wife is the baby, by a lot (she was a later in life ooops!), and is treated as such by the rest of the family despite her being the most assertive member of the family. As far as additional heirs go, none of the kids have children and won’t ever have kids (probably a lot to unpack there that out of three children none had children of their own). 
 

At some point if this issue doesn’t get worked out, the wife and I have discussed walking away from the house and letting her older sister just have it as she’s the only one of the three siblings that wants to hang on to it. It’s not worth it to us to create a tense family dynamic with her siblings. We’re already the black sheep of the family that don’t live in the PNW and don’t have a desire to do so.

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



×
×
  • Create New...