Buying mother's house for cash to help her make improvements?

Question

My father passed away 2 years ago. My mother lives in the house with clear title, sole owner. The house requires about $15,000 in structural work (old house, pier and beam foundation, deteriorating rock walls). I could give her the money but I thought about buying the house for cash (assesed value $85,000). She would use $20,000 for remodeling and continue to live there as long as needed. I assume taxes and maintenance after remodeling expenses. I would have inherited the place anyway. Actually, my preference would be to pay $50,000 cash. She'd be happy to pocket $30,000. As is, the assesed value is unrealistic. It would take $20,000 to make the property saleable. This is in south texas near San Antonio, in a real estate market that is always fairly hot and unlikely to suffer a decline. What horrible problems might I be getting into? I have a sibling who would sign off on this if my mother approved the scheme and she has no objections at this point.

Answer 1

If your siblings are cool with it and your mom wants to sell fair and square it sounds like a decent deal.  I'd get something in writing from the siblings since they would no longer inherit the equity in the home.  

The only problem might be will the house pass a home inspection?  If you don't have enough cash to pay directly, the lender may require a home inspection to make sure the home isn't going to collapse if it's in as bad of shape as you say.  I'd advise getting one anyhow just to see exactly all the work you'd have to do, they're only a few hundred dollars.

Make sure you hire a real estate lawyer or a title company to make sure the home has no liens and that things are done by the book.  Your mom may not even know there are liens out there.

DO NOT get a reverse mortgage, they are the worst, most desperate mortgage type created yet.

Good luck!

Answer 2

Dear Bog,

              You failed to provide a market value for this property. Assessed valuation is not the same in most cases.

               You may want to minimize your cash outlay. Write a contract between yourself and your Mom. Give your sibling a nominal amount of money and let this sibling be part of your agreement. You can simply add yourself onto the property deed in co- ownership and with a little creativity you can hold the property in joint tenancy with survival rights. You would likely need to do this with an attorney to protect you, your Mom and your sibling.

          Your greatest concerns are that you are challenged at some point for taking financial advantage of your Mom. Secondly, if your decision is wise, your sibling may get angry and reward you with life-time family grief that will cause hard feelings and be difficult to overcome even if you divide your profits.

           This can be done but be sure it is fair and equitable to one and all.

Answer 3

Why not a reverse mortgage and then you can buy another property and if you are inheriting anyway then you would have two? Also hav eyou checked if insurance covers any of it... just because a house is old doesn't mean it should be in shambles..

and if you buy it she should get extra out of it because she has just signed away any right to obtain the equity out of the house.  Yo mom should get objective third party opinion.