CletiusMaximus
Footballguy
For what its worth, these situations are becoming more and more common due to demographics - lots of family groups with property getting older and these disputes are becoming a cottage industry of sorts for valuation professionals and lawyers. It should go without saying that resolving these things short of litigation should always be your goal. Even if it costs you what seems like a ton of money lost in a negotiated buy-out, its still better than paying litigators to fight it out in court. That said, it doesn't hurt to at least be aware of your legal position when you enter into a negotiation. If there is an LLC agreement, it will (or should) say what process is followed when one member wants out. If its just a situation where you each own a certain percentage, it is most likely the case that the BIL may have no legal claim to force a buy out. If you were to value his percentage interest (rather than the whole property), it would have very little value in terms of his ability to separately market and sell it. Depending on how its structured and what the law in your state says, he may be at your mercy.tri-man 47 said:I hear ya. My wife and I have a small (~900 sq ft) summer cottage - no heating or cooling. Plain vanilla place, but with lifetimes of memories. We share ownership with my two sisters and their hubbies (place was passed down after both our parents had died). Younger sister and BIL announce out-of-the-blue in August that they've bought their dream house ...a full-year, $1M+ home on a lake - our same lake. So now they want a buy-out to exit the family cottage, which is fine. But BIL (a true cheapskate and wheeler-dealer) doesn't like the fair price we offer and goes and gets an appraiser. Based some Zillow pricings we saw, we figured our cottage is worth, maybe, $240K or so. The appraiser uses four comps that are all $400K, three- or four-season homes (not summer cottages) and prices us at $360K ...industry standard not to deviate by more than 10%. I'm convinced my BIL gave the appraiser a "go high" signal. Current status is no resolution and what's probably permanent damage to the sibling relationships. I'm still considering filing an official complaint about the appraiser. The comps were 2-3 years old (inappropriate) and one comp where the sale hadn't even finalized yet. He worked way too hard to make $400K his starting point.
Secondly, in the business world (real estate purchase, finance, M&A, tax, financial reporting, etc.) there would be no expectation for you to accept and rely on an appraisal someone else procured and paid for. Its a nice data point that may be mildly interesting for your negotiations, but in no way can he claim it should set the market for a buy-out between parties on opposite sides of a deal. If you want to use an appraiser to set the market, you should suggest you hire one jointly, find a good one and let him know this is not a simple $400 bank appraisal where he can do a drive-by and pull a few comps. Each owner should be responsible for their percentage of the appraiser's fee; you only communicate with the appraiser by email with everyone being copied; you tell him exactly what the use is - that he will be setting a price for purposes of one owner selling his interest to the others; and you agree to be bound by the resulting opinion of value.
Finally, if you're mad at the first appraiser, I would recommend taking a closer look at his report. What was the fee? What is listed as the "purpose" or "intended use" of the appraisal? Those designations drive the approach and certain assumptions and can change the value. An appraisal for insurance purposes is going to get a different number than one done for sale/purchase, collateral finance or tax. On the level of a small residential property, this is not a sophisticated piece of work, but there are some concepts behind it that are not inherently obvious.