My wife and I got married later, at 48. It was the second marriage for both of them. We are both successful and doing well financially. Our total net worth is approximately $3 million. When we got together, I sold my house and we refinanced her house, buying half of it. Her house was too big for the two of us, so after a few years we sold it and downsized.
The great thing is that we sold it to his son – I have no children – at a substantial $100,000 discount, based on what our neighbor’s smaller, less modern house sold for right after we sold ours. The house is a lot for a young couple. Since my stepson and his wife had a baby, his wife hasn’t worked much and they’ve fallen behind on bills.
My wife gave them $15,000 in “loans” with no expectation of repayment, but it looks like they may have to sell the house. Its value has certainly increased over the last two and a half years in addition to the steep discount it received, so I believe we are entitled to a portion of the profit from the sale, perhaps $75,000, recognizing the $100,000 discount it received, plus some repayment of the loan.
My wife is a very experienced and successful real estate agent. She knows how much the house is worth. I expect they will raise around $250,000 from the sale. Am I being unreasonable or is this fair?
Stepfather
Related: I inherited $246,000 from my mother and used $142,000 of it to pay off our mortgage. If we divorce, can I get him back?
“Is this a classic case of having second thoughts about your decision to sell? Or did you both agree on a price that seemed reasonable to friends and family?”
MarketWatch illustration
Dear stepfather,
I have two outstanding questions for you: When you sold the house, did you know you were selling it at a $100,000 discount, or do you suspect your wife knew they were buying the house significantly below market value? And if so, have you talked about it with your wife? If not, she that is the person you should talk to.
The first step is to talk to your wife about the price you sold your house for. Is this a classic case of second-guessing your decision to sell? Or did you both agree on a price that seemed reasonable to friends and family, and now that they’re selling, you have seller’s remorse? It was bad luck for you, but good luck for them.
The US housing market is a strange beast. According to Zillow Z, the median home price in June 2021 was $286,728,
As of December 2023, it had risen 19.5%, to $342,685. In Santa Barbara, one of the hottest markets in the United States, real estate prices have increased nearly 30% in the same two and a half years, from about $1.3 million to $1.7 million.
As any real estate agent will tell you, a house can sell for $500,000 one day, and a nearly identical house — aided by a drop in interest rates, a couple of hungry buyers and a lack of inventory — can sell for $100,000 only one more day. shortly after. Or maybe it’s not exactly identical: it could be a corner lot, for example, with a larger garden.
What if the house had lost value?
So what does any of this have to do with your son-in-law selling his house for a $250,000 profit? We make the best decisions we can with the information we have at that time. If you sold him this house in 2006 and he tried to sell it in 2008, would you expect the opposite to be true? In other words, I wonder if you would welcome a call from your son-in-law saying, “You sold us a turkey!”
Home values, despite the occasional real estate crash, tend to rise over time, and you had other reasons to sell: You wanted to downsize two and a half years ago. The fact that the value of the house has increased by $150,000 or $250,000 in that time obviously sticks in your craw, as you now wish you had held on to it. It might help to remind yourself that, I assume, you saved on the 6% real estate broker commission.
They are selling because your son-in-law lost his job and needs to downsize his life. It was a nice idea to leave this house in the family, as it obviously has sentimental value to your wife, but that’s not always possible. Mixing finances and family often leads to hurt feelings. What if I sold the house to complete strangers? Then you wouldn’t ask for a cut.
You made an agreement and signed the contract. Stick to it. It would be bad manners to go back – as they say in corporate America – and ask your son-in-law for the $100,000 you think you are owed because you sold the house at a discount two and a half years ago. Your wife should get her $15,000 back once the sale closes. After that, all they owe you is their gratitude.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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Previous articles by Quentin Fottrell:
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“If I say the sky is blue, she will tell me it is green”: My daughter, 19, will inherit $800,000. How can you invest in your future?
“They don’t have running water”: our neighbors constantly ask us for money. My husband gave him $400. Is it selfish to say no?