When Medicaid does a five year look back, and an applicant had sold a home during that period, what are the rules for Fair Market Value? My mother was given an asking price from a realtor, but, attorney says as long as it is above the assessed value, Medicaid will be satisfied. There is a significant difference between these two numbers with the realtor amount being much higher then the assessment. Does anyone have experience in this situation?
They are going to look at where her money went.
Like house sold OR house abt to be put onto market?
if it’s already sold, the price sold will be in the Act of Sale paperwork, so whatever the final figure that is paid to you is the $# Medicaid will want to see that is used in a spend down. Even if your in a state that does property paperwork as “for $10.00 and other considered value”, the exact figure can be determined by the state, county or city.
But if your just just starting off in this, couple of things to understand:
- if mom is already on LTC Medicaid, most Realtors are -imho- clueless about medicaid requirements on exempt assets (which mom’s house is now) & then what can happen when it shifts to non-exempt due to the sale & the subterranean aspect of Medicaid ability to place a predeath lien on property in most states if mom has applied for LTC Medicaid, all of which can pose issues for placing clouds on title & delays Act of Sale
- if this is just going onto market, & if there is a wide Gulf between tax assessor valuation & what Realtor promotes as sale price, I’d ask Realtor for a print out of comps that Realtor is placing their hope to sell at price on. Go thru the comps, should be like dz or more listings of homes with similar sq footage & Bed/Bath #s, if any of these have been on mkt & sold last couple of years, all the info on them along with photos are on line. Are the comps nice, stages & renovated homes? New builds but in mom’s neighborhood? Is your mom’s anywheres close to looking like these? If not, it’s not gonna sell for optimum price.
If you know of homes in mom’s hood that are actually more like hers - like hers hasn’t been touched since 1995 then others that are the same no permits pulled since last millennium - what is their value? You can find this via assessor website but also you can go to citi-data.com for info on housing value block by block if it’s a bigger city.
Id be especially concerned that Realtor is over estimating value as owners / sellers inherently will go with Realtor who tells them they can get the bigger bucks. Mom signs a 6 mo listing agreement and then like week 4, Realtors tells you major price decrease needed if you want to move it..... that mom needs to be a “motivated seller” as House old, has issues, and it’s moving into over 30 DOM (days on market), so needs lower price. 4 weeks later, same song & repeat... If this is your old neighborhood, I’d try to find old friends to see who sold thier parents home and speak with couple of these Realtor as to realistic price.
Personally for me, if its a old house with no full renovation on all the majors & with roof over 10 years old or is in a historic district, I’d hire an inspector to do a full property inspection. Then once you get that report, you get an appraisal done & inspection report given to appraisal. The appraisal will be the FMV specific for the property and is a legal document. Appraiser is licensed & registered with the state & their report will have a seal on it. House can be sold for that figure. Again it’s legal, like legal enough that appraisal value can be entered into probate as value of the asset, no matter what assessor has as $ value.
If this is an old place & it really needs to be sold asap, really I’d suggest you get these done so you have accurate value to list it at. inspection may show problems - you are unaware of - that will effect selling. If house has foundation problems, it’s likely not gonna qualify for FHA or VA lending. & their like 80/90% of mortgage underwriting. House could be on the market for a long, long time. Realtor & agents will loose interest. Yet every month, the house has costs to continue to be owned by mom & costs to keep it market ready.