My friend is going into a nursing home. Can he sell his house to me for what is owed on the mortgage?

yellacat10, yes, most of her income goes toward her nursing home costs. (Medicaid pays the rest.) She is allowed a small monthly allowance, for things like haircuts and treats and buying clothing. The amount varies by state, but it is not enough to pay a mortgage or taxes or insurance.

My mother has been in a nursing home for 4 months. She was approved for Medicaid. My aunt and I have both have POA, since I live 700 miles away.

My aunt just received a bill stating that almost all of my mom's SS check is owed to the nursing home. I am joint tenant on her empty home, but cannot afford to pay the mortgage, taxes, and insurance. Exactly what can I expect to happen as far as her income check is concerned? Will Medicaid just take it?

Thanks
Bree

Karen why do you actually want to buy this house?
Do you think it will be such a bargain than you can fix it up and flip it for a profit?
Are you thinking of becoming a landlord?
Would the house be ideal for a friend or relative?
Even in it's poor condition are you thinking of renting cheaply to a homeless family?
Talk to people who have done this
I have held a Real Estate license, brought and sold a number of houses and am still a landlord. Don't be fooled because someone stresses that they are a Realtor. They are simply a licensed real estate salesperson who is paying a quarterly fee to the National Association of Realtors. I won't go into all the pitfalls of buying this property. There are many some the size of sinkholes.

@Dogabone. I hear you. But what you have written brings certain important questions to mind. Almost every caregiver on this forum talks about spending down a parent's assets (usually a surviving Mother/widow's assets) while being vigilant as to how and for what these funds get spent during the five-year Medicaid look-back period. My question is whether it is indeed legally possible to 1) have a legal, valid will, in which one lists bequests to various family members and friends, charities, whatever, in specified amounts and to be paid from one's estate; and 2) at the same time maintain separate funds and/or accounts, and spend down these funds as required for the sole personal use and the purpose of caring for the parent, including all necessary personal needs, medication and medical care as required by the parent (also named in the valid will) until such time as these funds reach the $2000 Medicaid asset limit at which point the caregiver accepts financial responsibility for the parent (if possible) until that time when the need of a nursing home becomes evident (if in fact this point ever comes), at which point the patient's (parent) care might now fall under the jurisdiction of the State's Medicaid program. I'm not a lawyer, that's obvious. But are the super wealthy the only people who have use of the power of the will? Secondly, you mentioned how this was handled by your Mother by dispersing her assets as she wished at some point prior to her passing. This seems very civilized. But how does it work (or does it conflict?) in relation to the Medicaid five-year look back? If we had cradle-to-grave health care as many enlightened countries have none of this would be relevant to our lives, it seems.

HolyCow. Thank you. It's amazing that people feel that way abt realtors. I work 7 days a week, 12 hours a day. I'm sure you remember. My time is not mine, it's theirs. My office just held a fundraiser and raised 21k for the Salvation Army. All of the food was prepared and paid for by the agents!
Enough abt real estate, Dogobone, thanks for your answer. That's what I've been looking for.
Veronica, I'm truly sorry your experiences have been so bad. There are always good and bad, fortunately more good than bad

I see on this forum many people asking if they can sell their family or friend's house/home after they go into a nurcing home?Or another is can I buy it?Or can the friend,family give the house/home to me?
The number one thing that people posting questions like this needs to provide to recieve the correct answer is.
(Compatent)Is the owner of the home compatent or not?
The elderly people,
Elderly people have families or friends to Will their stuff to if/when that pass away.
It's called a Living Will. A Living Will requires a "Executor" Or "Executors" of a Living Will.
Another one is called a Medicaid Trust. This is used in the case where you don't want the nurcing home, Medicaid, Medicare to get the home after or when the owner goes into a nurcing home.
Acting on this requires timing. And only if the owner of the house/home is compatent to sell, give or donate.
When a friend or family member goes into a nurcing home.It cost money. If the person runs out of money while in a nurcing home? Medicaid will go after assets including the sale of their home. To pay for healthcare cost exceeded. The house/home should be used for that purpose only, not for someone elses profit gain. If Mom, Dad or friend wanted you to have their home? They would of Willed it to you or placed it in a trust for you. Or even gave, sold the home to you before a nurcing home. Or before incompatent by a doctor. If your attempting to sell the home for further healthcare that's fine and correct to do. But, if your attempting for your profit gain that's wrong and not right. That person/owner of the home will need that profit for further healthcare down the road. When my Mom started getting sick she decided to sell her home and get a apartment complexe. She decided to sell the home because, she couldn't afford the upkeep on the home. And it was to big to heat for one person. She sold the home. Gave 25% of the money to her kids for their inheritance. She lived on the rest of the money for her retirment. No Will or Trust was needed because, she gave are inheritance to us all before she died. No fighting among one another that was they to do it.
When I see & hear people attempting to sell their families home because, their in a nurcing home many wonders arrise as why? The factor is, if they wanted you to have the home? They would of sold or gave you the home in a Will or Trust. Many people act to fast placing a person in a nurcing home without thinking of the aftermath. Enough said. You need to talk with a attorney to cover you before selling a thing.
Best,

In my area being a Realtor is a really cut throat business they will do anything to each other to steal the deal.

You are correct, I was a Realtor many years ago and people treat you like you are a used car salesman....out to get them, when all we are trying to do is assist you with buying or selling you home or providing information for free.... do we hope that someday you will come back and we can help you buy or sell? Yes, of course we do and so would you if you were in that business.

Realtors do not all "have an agenda".. We do comps all the time for people, no charge, no agenda. We have seen the inside of the houses, the appraisers have seen the pictures.

pstiegman is correct in her answer. It Must be sold for fair market value or your neighbor will be penalized. Medicaid looks at it as someone trying to pull a "fast one" basically.

Somewhere in this discussion it might be a good idea to add, why would you do this? Please make sure you put your money into an investment that's good for you, not just a favor for your friend. You don't want to lose your money and, in the long run if there's reason for regret, the friendship too.

Veronica91, correct an appraisal from an appraisal company and comparables from the realtor. I worded that incorrectly.

I think it would be safer to use the services of a licensed appraiser rather than a realtor. Realtors have their own agendas
You can get your own idea by looking at the prices similar houses sold for in the area within the past year.

All of the above suggestions are correct. It needs to be sold for "fair market value" or close to. You need an appraisal from a realtor AND you need a couple of inspections of the house. My mother's house had a tax appraisal of $90K, that was from the county tax assessor (which isn't always the same as FMV). But, her house was in such poor condition that I ended up spending $8K to get it fixed up decent enough to sell, plus we ended up getting the home owners insurance to help pay for a new roof, otherwise that would have come out of my pocket too.
We ended up selling it for $71K. Comparable houses in the area were selling for between $70-80K, so it was in the fair market value range. Now, will Medicaid look at the $90K and say that is the fair market value, who knows. It may all depend on the Medicaid caseworker you get also.

So, cover all your bases. Get appraisals and comparables for the area. Figure out how much it would cost to get the house in sellable condition and go from there.

Good luck.

Ferris, you are right. There can be many reasons why an inspector misses something, but if you are trying to establish value soe the sale will stand the test as to whether it is a gift or not, it's better than nothing. For all the inspectors miss, they will find more than you or me and can evaluate the cost to bring the home into compliance for an individual needing to get a loan to purchase. The majority of home purchases are made with a loan and the home has to meet certain condition requirements to get a loan; what is the cost to do that? Also, figuring into market value, the majority of sales are priced relative to normal commissions. If the home is not sold through a realtor then that would be calculated, perhaps, as a gain to the buyer

And even with two "professional" inspectors (one that is licensed by the VA) does not guarantee they will catch all that is wrong with a house. My new (old) house I am discovering is riddled with problems both inspectors missed or just discounted because it is 35 yrs. old. It sounds like Karen is trying to do her friend a favor and runs with emotions, rather than an objective real estate transaction, but I could be wrong. It always helps to have a licensed realtor as well. Still, the market only consists of sellers willing to sell to buyers willing to pay their price.

An appraisal will not give you true market value. I'm a realtor and I've seen appraisals that were way off from what a willing buyer would pay for a house. If the home is in poor shape it might benefit you to hire a professional home inspector to evaluate its condition. Also roof, heat and air, pest company. You might need that professional evaluation to support whether or not you paid less than market value.

If your friend is of sound mind, he can do anything he wants with his house. If he wants to sell it to you for what you are willing to pay for it, then get a title company to do the legalities. I am sure he wants peace of mind.

If you buy it for less than market value, the IRS may consider it a gift to you. If you buy it for more than market value, Medicaid may consider it a gift to him. Call the "we buy ugly houses" people and get a quote, plus see a real estate agent for an estimate so you know what it's worth. He'll need that info if he applies to Medicaid and maybe for his taxes.

Dogabone - What?

I don't see why not since he doesn't own it.Maybe better off paying off the house of what he owes.Then the house would be clear & free for him to do what ever he wants to do with it.After the house is paid off have him put the house in a trust for you.As a Medicaid Trust.This way it's still his home until he passes.

It would be wise to get an appraisal first. If you pay, for example, $20k and pay off a $20k mortgage, but the house is worth $30K, he will be penalized by Medicaid for the first $10K of his care. You may not be doing him a favor if this is the case.

To the extent that he is selling it under the fair market value, it will be considered a "gift" by Medicaid. However, if the house is in poor condition and is not worth much, that may not be much of an issue. Have you (or he) had an evaluation of reasonable price by a realtor? How much could he get for the house if he sold to one of those firms who pay cash for run-down houses?