Quick real estate/breakup question...

I had my house appraised last year. Appraisers base their numbers on a lot of things: age and condition, recent sales in the area, location, square footage, etc. A real estate agent may certainly try to ask for more than the appraisal but in most cases the banks etc are going to go with the appraisal figure. The old days of the banks going gaga cuckoo over any real estate deal no matter how freaky, loaning 125% of value, no down payment, etc are pretty much gone.

Zillow will get you a reasonable idea for planning purposes but it is not considered an appraisal.

Dude, I can sympathize with you. I am in the exact same boat you are in. I bought a house with my now, ex-fiance, and she just up and split 3 months before getting married. You are hosed. Get appraisals. If at all possible, buy her out. Sit on it for a while and then sell it. When you actually run all of the numbers, it will prolly be cheaper that way. As far as I am concerned, its a house, there is no emotional attachment with me - its business. But, with government spending the way it is, they are going to have to raise interest rates eventually to pay for all of the money being spent. When that happens, there will be inflation and inflation is going to be bad. If you are going to be in a position where can not buy another house NOW, keep in mind, the buyer pool is small now and when interest rates rise, the home buyer pool will not get smaller. This will effectively lead to a landlord's market as far as renting goes (because no one is buying houses), and rents are expected to rise dispproportionately larger compared to inflation. This is because condos were built, not apartment buildings. Hopefully, I will be worng about this though.

A real estate agent can not list the house without your consent.

SVreX wrote: Don't offer to give her half of an over-inflated opinion. The appraisal should be based SOLELY on actual sales in the past 12 months.

It also depends on where you are at. In my area, appraisals are based on the past 6 months.

And one more thing about downward pressure on the market, also keep in mind some insurance companies are not writing new PMI policies because of losses they've already incurred. Thus, if you are a buyer, unless you've got 20% to put down or a Federally backed loan, you might be S.O.L on the whole house buying thing.

.....like I said, I'm in the same boat and have been living this nightmare for the last 10 months

Minor point: increasing interest rates is generally used as a tool to limit inflation.

Osterkraut wrote: Minor point: increasing interest rates is generally used as a tool to limit inflation.

How so? In the early 1980's you had double digit mortgage rates & double digit inflation. You raise interest rates to slow the economy's growth. Unless you are considering making it cost prohibitive to borrow keeps prices down, thus the CPI stays down.

andrave wrote: Tell me more about title of the house and the financial history- whose money went towards downpayment? How much equity? How much debt? Who made payments? Are you in a state that reconigzes common law marriage?

Here's some more detail. I went over this with my new brother in law's old divorce attorney, but at $6 a minute, and me being unemployed, I was trying to talk as fast as I could.

We bought the house in 2004, paid 160K for it. Her mom pitched in 80K (wrote her a check with the understanding that she would pay her back monthly, 0% interest.) My parents pitched in the other 80K, and had a lawyer write up a mortgage with both her's and my names on it at 4% interest rate. I was left 30K by the woman from whom we bought the house as a "little help to fix things up." (The seller lived in the house for 75 years before we bought it, and I grew up next door to her, treated her like a grandparent, and she treated my family as if we were her own, since she had none.) We used the 30K and an additional 60K that I borrowed from my parents to fix up the house. All new heat, plumbing, insulation, electric, walls, windows, a total gut job. So my parents and I had a sort of handshake agreement that I would pay 4% on the whole 140K they lent us, but never actually got around to having the mortgage papers revised, but I currently owe them about 132K. I believe from old conversations with the ex, she owes her mom around 50K. There's also a home equity loan on the house in mine and my ex's names totalling 48K. of that money, 13K is my car, 25K is for her credit card bills, and the rest is stuff for the house. so, we have about 230K in debt on the house. The appraisal I had done back in April said the house was valued at 240K. The tax assesment on the house done last year put the value at 311K. She thinks the house is worth 300 and 335K. Zillow is useless in this scenario because the value on Zillow is nearly 100K higher than the appraisal. It looks like it hasn't caught up to the market drop, because that is where the value was before the crash. Her assumtion is that we get a value on the house, and I buy her out by giving her a check for half the value.
My assumption is that we get a value on the house, and all the debt on the house gets paid off, and if there's anything left over, we split that. If I buy her out, I am willing to pay off the debt to my parents, her mom, and my portion of the home equity line, and the portion of the home equity line that was spent on the house, she pays off her CC bills portion, and she gets a check for whatever is left. I'm hoping to avoid court, but am thinking it is headed to mediation. I am not in a common law state (NJ). Is my thinking crazy, or is she a lunatic? I'm willing to let her have all/any equity we have in the house just to get it done. At one point when she was going to buy me out, I told her I just wanted enough to pay off my parents. She changed her mind and told me she no longer wanted to buy it and that we had to sell it. That's when I told her again that I would buy it. I like the house, I have emotional ties to it that go deeper than what I have there with her. I've been mowing the 2 acre lawn for over 22 years and I promised the woman that lived there previously that I'd take care of it for her after she died. I just want to know if I'm looking at this the wrong way. What I have offered seems more than fair, yet my ex keeps insisting that the house is worth more, and I'm trying to screw her. I just can't figure her out, and I can't wait to get the whole thing over with. I figure I can finish up some of the projects that need to be done, and once the market rebounds, I'll reevaluate whether I want to stay in the house, or sell.

If the house is worth $240k, borrrow $235k - 230k goes to pay off the leins on the house the other 5k is her half of the equity. Then start rebuilding your life. Unfortunately I don't think you are going to be able to recoup the 25k in her credit card debt. This is part of the reason you do not pay off unsecured debt (credit cards) with secured debt (mortgages). Just sit on the house, make other improvements and sell it in a few years.

CamaroKeith wrote:

Osterkraut wrote: Minor point: increasing interest rates is generally used as a tool to limit inflation.

How so? In the early 1980's you had double digit mortgage rates & double digit inflation. You raise interest rates to slow the economy's growth. Unless you are considering making it cost prohibitive to borrow keeps prices down, thus the CPI stays down.

You said it yourself; "You raise interest rates to slow the economy's growth." It was also explained to me once, probably overly simply: Raising interest rates encourages people to keep their money in the bank. More money in the bank means less floating around. Less money floating around, less there is to buy goods, less the cost of goods will rise.

OK, doode, you have issues that go way beyond driving cheap old cars fast. The whole employment thing needs to be addressed, but not today. You made a lot of poor decisions, which we won't discuss at this time. Today, you need to go to mommy and daddy and get them to pony up some bucks for a lawyer. It is to protect their equity in the house. They have significant risk involved here, and they need to help you out to protect themselves. Next, exactly what of this whole arrangement is in writting? Get all that together for the lawyer. This sounds a lot to me like the ex-Ms. is going to get the money her mommy put up and berkeley-all after that. Now, how you come up with that fifty large is going to be up to your parents, because right now, no bank is going to lend fifty plus large to someone unemployed. You could just owe it to her and pay it as you get some money. The house is worth what is owed on it. There ain't no majic payoff, which most women who are splitting think they are going to get. That's up to your new lawyer, paid for by your parents, to explain to her lawyer.

Sorry for being so blunt. It's what I do.

Well said doc, I concur. This is a mess with much more than was first posted to be sorted out, priority one, protect your parents and their property/investment in you

Osterkraut wrote:

CamaroKeith wrote:

Osterkraut wrote: Minor point: increasing interest rates is generally used as a tool to limit inflation.

How so? In the early 1980's you had double digit mortgage rates & double digit inflation. You raise interest rates to slow the economy's growth. Unless you are considering making it cost prohibitive to borrow keeps prices down, thus the CPI stays down.

You said it yourself; "You raise interest rates to slow the economy's growth." It was also explained to me once, probably overly simply: Raising interest rates encourages people to keep their money in the bank. More money in the bank means less floating around. Less money floating around, less there is to buy goods, less the cost of goods will rise.

Yeah but you are not really keeping money in the bank, you are just spending more for the crap you need. If I borrow money from my parents to buy a car at 0% interest and you buy the same car but borrow from a bank at 8% interest you are not able to put as much money in the bank. You are just paying more for the same thing.

Back to the task at hand, after rereading this, you are going to need to get a lawyer and fast and your mom and dad are going to need to get in on this as well. If there is a court order for this house to be sold, you are going to pay a sales fee for whoever sells it and then actual mortgage amounts deducted (home equity plus the written agreement) and you will either split the debt or the leftover $$$. From your part of the leftover dough you are then going to have to repay your parents from the handshake agreement because the court can say "Nothing written, nothing exists".

CamaroKeith wrote:

Osterkraut wrote:

CamaroKeith wrote:

Osterkraut wrote: Minor point: increasing interest rates is generally used as a tool to limit inflation.

How so? In the early 1980's you had double digit mortgage rates & double digit inflation. You raise interest rates to slow the economy's growth. Unless you are considering making it cost prohibitive to borrow keeps prices down, thus the CPI stays down.

You said it yourself; "You raise interest rates to slow the economy's growth." It was also explained to me once, probably overly simply: Raising interest rates encourages people to keep their money in the bank. More money in the bank means less floating around. Less money floating around, less there is to buy goods, less the cost of goods will rise.

Yeah but you are not really keeping money in the bank, you are just spending more for the crap you need. If I borrow money from my parents to buy a car at 0% interest and you buy the same car but borrow from a bank at 8% interest you are not able to put as much money in the bank. You are just paying more for the same thing.

With INFLATION you're spending more money for the same crap. That's what raising interest rates fights. It lowers the available money supply, which makes money more valuable, which makes the buck buy more.

That's why the Fed controls the interest rates.

nocarbud wrote: We bought the house in 2004, paid 160K for it. Her mom pitched in 80K (wrote her a check with the understanding that she would pay her back monthly, 0% interest.) My parents pitched in the other 80K, and had a lawyer write up a mortgage with both her's and my names on it at 4% interest rate. I was left 30K by the woman from whom we bought the house as a "little help to fix things up." (The seller lived in the house for 75 years before we bought it, and I grew up next door to her, treated her like a grandparent, and she treated my family as if we were her own, since she had none.) We used the 30K and an additional 60K that I borrowed from my parents to fix up the house. All new heat, plumbing, insulation, electric, walls, windows, a total gut job. So my parents and I had a sort of handshake agreement that I would pay 4% on the whole 140K they lent us, but never actually got around to having the mortgage papers revised, but I currently owe them about 132K. I believe from old conversations with the ex, she owes her mom around 50K. There's also a home equity loan on the house in mine and my ex's names totalling 48K. of that money, 13K is my car, 25K is for her credit card bills, and the rest is stuff for the house. so, we have about 230K in debt on the house.

So In my eyes you owe her 56K to buy here out of the house (her origional 80K - half of the 48K Home equity loan). Similarly she would owe you 108K (your 132K - half of the 48K). If this isn't agreable to you, then I'd sell the thing Pay off all debts and split the proceeds 2/3 to you, 1/3 to her (it's your shares of the initial investments) or more than likely Pay off all debts and split the proceeds 50/50.

Time to Lawyer up..

OK, you've got a mess.

Here's how I see your financial breakdown:

-Her mom GAVE her $80K, she CHOSE to GIVE it to this project. Bad decision. -Your parents LOANED the two of you $80K, with 4% interest secured by the house. You BOTH have an EQUAL obligation to repay this, though EACH of you probably owes the ENTIRE debt, regardless of what the other one does. -The previous owner GAVE you $30K, which you CHOSE to GIVE to this project. Bad decision. -You BORROWED $60K additional from your parents on a verbal agreement @ 4%, which you CHOSE to GIVE to this project, and YOU have an obligation to repay it, not her. Bad decision, for both you and your parents. -BOTH of you borrowed an additional $48K secured by the house. Again, you BOTH have an EQUAL obligation to repay this, though EACH of you probably owes the ENTIRE debt, regardless of what the other one does.

By my calculations, you share $128K in debts secured by the house. Figure out how to repay it- probably from the asset you share (the house).

Additionally, you have a personal debt to your parents of $60K, and she has a personal debt to her mom of $80K. The right thing to do for each of you would be to repay these debts.

If the value of the property is $240K, it won't be possible to repay the entire $268K in debt. The secured debt will have to be first, the personal debts to your parents will be last. Sadly, everyone is about to take a beating, including your parents.

It makes no difference how all the rest of that money was spent. Work it out, and take your beating. Bad decisions to tie consumer spending (CC- unsecured) to secured real property. The lesson for both of you is to define things carefully up front, in writing, and watch who your partner is. Oh, and HAVE an exit strategy.

I understand your attachment to the house. You are NOT in the position to own a house right now. The closest you can come to this is if your parents would buy it, and you can consider buying it from them later. If I were them, I wouldn't do it unless there is a VERY STRONG likelihood that the property is going to increase by 30% in value in the next few years WITH NO FURTHER EXPENDITURES.

Tax assessment is meaningless to determine value. The $240K appraisal is the best you've got, but I certainly understand her disappointment in this number, and think a second opinion is a really good idea.

Sorry to be so blunt, and sorry for the current painful situation you are in. Good luck!

nocones wrote: So In my eyes you owe her 56K to buy here out of the house (her origional 80K - half of the 48K Home equity loan). Similarly she would owe you 108K (your 132K - half of the 48K). If this isn't agreable to you, then I'd sell the thing Pay off all debts and split the proceeds 2/3 to you, 1/3 to her (it's your shares of the initial investments) or more than likely Pay off all debts and split the proceeds 50/50.

I agree with nocones that the 2/3 1/3 cut sounds fair, but I don't think that is the deal you got into. Unless the written contracts define split like this, you are both on the contracts, and both have an equal claim. It doesn't matter how much you put in.

Dr. Hess wrote: NOT BUYING A HOUSE WITH SOMEONE YOU'RE NOT MARRIED TO,

Don't buy a car either...

Good luck with the situation... sounds messy as hell...

Your case is worse than my worse divorce case right now. you should be able to find an attorney to take the case for as little as $1500 but my experience is that you and she will have to come to an understanding whether there are attorneys involved or not.

Without knowing the law in the state you are in, I can't really know how things would be split up. If you hire an attorney she will too, and you'll probably end up having to work things out with her while your attorneys both eat up your retainers doing little to actually resolve the situation.

Thats usually how that works.

andrave wrote: ...while your attorneys both eat up your retainers doing little to actually resolve the situation.

And this is why I want to transfer into Pre-Law

Man, you gots a mess. Sorry to hear that. It will take some doings to sort this out and all sides are going to lose something. It seems so... impersonal... to draw up a contract at the start of anything you are doing with someone you are in love with, but it's situations like this which make it neccessary. Just think if either of you had died, where would this have left the parents on both sides?

A possibility: arbitration.

yeah, it seems women have a hard time thinking with the correct head when you say "honey, i'd love to buy a house with you, just as soon as we sign this partnership agreement in case we break up and sell the house".

Perhaps its the MEN who have a hard time thinking with the correct head when she says "honey, i'd love to buy a house with you, just as soon as you marry me".

not all things require marriage, svrex. its just as easy (easier, really) to set up an investment partnership via contract as it is to "just go get married". and its definitely a whole lot easier to terminate than a marriage

SVreX wrote: Perhaps its the MEN who have a hard time thinking with the correct head when she says "honey, i'd love to buy a house with you, just as soon as you marry me".

Amen!

Life is just so much easier when you do things in the right order.

Strizzo wrote: not all things require marriage, svrex. its just as easy (easier, really) to set up an investment partnership via contract as it is to "just go get married". and its definitely a whole lot easier to terminate than a marriage

I couldn't disagree more.

If you are talking contract law, perhaps. I wasn't.

I was referencing the fact that most men are unwilling to make the real commitment that matters. If a man has settled the "til death do us part" question, owning property together is really quite easy.

As this thread demonstrates, there was a WHOLE lot more at stake than an "investment partnership via contract". There were trust issues, commitment issues, careful united planning issues, and a whole bunch of relationship issues that simply never got worked out. If they had approached the issue from the perspective that "it would be easier if we were married first", they never would have bought the property, because they weren't ready for the commitment.

My apologies to the original poster. I am not trying to jump on you for your decisions. I know it isn't easy. I've been in the same boat.

you assume that someone who doesn't put the forethought of an exit strategy into purchasing a house with someone else would put the same thought into entering into a marriage.