Medicaid states that a relative's home must sell for fair market value, but market conditions says it will bring less. How?

My bad, not H.V days, should have read H&G TV days, like House & Garden TV, where everybody just expects granite countertops and rainfall shower heads and manicured landscaping even in a 100K home.

Regarding assessors, in TX the assessor forms get done Sept/Oct and usually go out in Nov for payments due in Jan. Other states have a smaller window on this. Several years ago, before my mom even went to IL, we challenged her assessment. The challenge had to be done within the window from Nov to mid January and there was a form on the reverse of her assessment that needed to be sent in to do this. Then she got a letter back with the hearing date. Assessment jumped like 30% in a decade. At the hearing, I brought photos of the foundation settlement & other items related to value, got it reduced about 50K.

Just out of curiosity, what is the Realtor expecting for days on market for the house and can the grandson pay for all for this expected period of time? Putting a house on the market in this H>V days can cost alot, especially if you have to do twice monthly yard maintenace, run utilities full tilt for months and months and do cosmetic or significant repairs, hire a cleaning service, etc. If not, then sadly you might want to look into just walking away from the house and letting it go into foreclosure especially if the outstanding mortgage & mo. payment is big.

Coffee - the FMV rule is really in there so that family doesn't "buy" gram's house for 10K when it could easily sell for 100K. If you do a legitimate sale where it's placed on the market, use a Realtor and find a buyer who also uses a Realtor, what it sells for is what it sells for. Sales are based on comps and your Realtor should easily be able to give you a listing prospectus or packet for the property. All this you can use IF you get any Medicaid blowback. Actually you may want to contact 2 or 3 Realtors to do a packet for you, so you have in your hands documentation just in case. A good Realtor has MLS programs that they can do this easily by just imputing the address and the comps get run and they do a packet for you. When I looked into selling my mom's house, I spoke with a couple of Realtors and literally they had a "book" on mom's house to me within days.
The big national groups, like Keller Williams, Sotheby's, have templates for their agents to use, so it's rather routine and not a big deal.

BUT I think you have other issues to consider....the grandson is spending probably a good bit of $ to pay the mortgage and expenses on the house, & for gran's care etc. If he is wanting to be reimbursed for all these expenses from the proceeds from the sale of the house with whatever is left once the mortgage is paid off, then you all need to see an elder care or an estate attorney to make this happen if possible so that it is not viewed as "gifting" for Medicaid. If he is not wanting to be reimbursed, that is different. Speak with him about this and then seek legal to get this worked out. Also you will need to make sure you or whomever does the real estate contract has a DPOA that clearly states dpoa for ALL financial as this can be sticky in some states when it comes to real estate and could hold up closing.

Another thing, when you put it on the market, there probably will be a multipage form regarding the condition of the property. There usually is YES, NO, or UNKNOWN choices. Like plumbing is current code - YES, NO, UNKNOWN. Check off unknown on all, otherwise whomever signs the form, might get stuck in a tug of war right before closing on having to pay for repairs in order for it to go to act of sale. An experienced Realtor (that know the 'hood and does lots of closings) will understand the nuances of dealing with elderly owners property and can really make this work. Good luck and let us know what it sells for.

Okay, I did get your message on my wall - I'm new here too and don't know how to post a reply other than to "answer this question" I think you may have better luck than you think with the tax assessor. You just have to go in with proof of recent sales from your realtors. Go back a year, the housing market has collapsed in so many state, I can see where the 5 yr old VA law was put into place to prevent fraud when housing prices were soaring, but that is not the current conditions - which is obvious from your realtor's research

You of course must double check with VA Medicaid, my understanding is that fair market value reflects the current market value. Your realtor can provide you with current market values and you can ask other realtors to also give current market value to substantiate the first realtor's. Documentation of current market value is key. A concern of Medicaid would be if you were selling the house for under what your realtor says is fair market value. Sometimes people try to transfer property assets by selling the property to themselves, family or friends for under fair market value in an attempt to hide assets from Medicaid.