Elderly in-laws refuse to sell house that needs $200k of work, are out of money, can’t get loan

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have a frustrating, stressful situation going on with my in laws. This will be long as it is complicated, but I would love some advice from anyone who may have been there before (my condolences).

* In laws are in early 80s, with moderate health problems, but can live independently and safely drive. They’re mentally competent but there are a couple signs of early dementia for one of them and they have become deeply sentimental at this stage in life. DH’s sibling lives nearby and regularly checks on them. We live across the country.

* They are terrible with finances — making poor “investments,” buying collectibles on eBay, going out to fancy dinners because keeping up with appearances is very important to them. They owe $100,000 on their mortgage. They are almost out of money. FIL works a few days a week for pocket money. DH and his sibling deposit a modest amount of money to their account on a semi-regular basis.

* They are deeply, emotionally connected to their large ramshackle house. They are terrible about upkeep and have always cut corners or done failed DIY projects. The house needs $100,000 in repairs to make it sellable/more livable, $200,000 to make it competitively sellable/more permanently livable. It somehow assessed for $600,000 (large lot with water access on coastal state). Even with the lower end of repair work done it would likely be a developer buy where the house would be torn down.

* They are in denial about their circumstances, and their plan is to stay in their house until the end of their days. They joke that will have to take them out feet first, even though, like the majority of people, especially those with health problems in their senior years, they will likely require assisted care at some point. For one, that could be within the next couple of years; the other could probably live independently for maybe 10 years.

* ALL of their problems could be solved by selling which would let them move into a smaller, safer, newer home; pay off their mortgage debt; and enjoy the remaining cash flow from the sale to help see them through the end of their days (or most of them).

* They absolutely refuse to sell. But the house is in such poor shape that they don’t qualify for a reverse mortgage. They could take out a home equity loan but wouldn’t be able to make the payments on it because they would need so much work done, and it also doesn’t help with daily expenses the way a reverse mortgage could.

* DH’s sibling just bought a house and isn’t in the position to give them the money they need to make the repairs. DH and I could make their home equity loan payments for them, but it would mean we’d have to stop making contributions to our 401k, for who knows how long. We are also saving to buy our own home and have kids who need to go to college one day, so it’s not ideal. DH is willing to do it, but I am not.

* Getting them to sell is the best choice for everyone of course. It buys them financial freedom, gives them a safer place to live, and cash to work with. But they are dead set on staying, even at the risk of continuing to minimally improve their living situation while worsening their financial situation, and even if their continued bad choices keep money out of the pockets of their children who keep financially helping them.

Outside of eventually having to get POAs to take over handling this horrible property and their finances when they eventually get too elderly to manage it, is there anything else we could possibly do? I have suggested that DH and his father meet with a financial planner to have a third party show them how selling would be a positive and staying would be a negative. I also suggested that he try to set up a meeting with a family counselor who can help walk through some of these very deep, emotional connections they are feeling to the house, as the reality of their situation just isn’t sinking in. He is game but needs to talk to his parents about both and doesn’t know if they will buy in to either. In the meantime, he is wracking his brain to see if there’s any other financial way for his parents to stay in their beloved (dilapidated) house but I truly think there’s no other option. Either they sell, or they stay and stay consumed with underfunded repairs they will constantly be in debt for. And eventually we will be too.

If you do not yet own your primary residence, and 401ks and 529s are not fully funded, then you CAN NOT afford to help financially. You have to bring DH around to grasp this. It is incredibly poor judgement to put your own financial future and the future of your children at risk in order to fund your in-laws' preferences. It would be a different call if you were using the funds for groceries or critical medications or to keep the heat on.

Thank you for validating this. DH gets it, but also feels very torn that he needs to support his parents in this way. I am very risk-averse, particularly with finances, and there is no way I would feel good about paying their loans when we aren’t millionaires with money to spare. Just isn’t happening. I did tell him that as a concession I would be willing for us to dip into savings to give them a one time payment of $10,000 that they could use for a specific
immediate home repair or to pay closing costs if they move. But that I would not be giving them more money after that. We would pay directly to the lender or vendor for that; neither of us trust his parents to take that type of money, and put it in the place that needs to go.

[Anonymous]

Anonymous wrote:OP, the reason there is no path to making the finances work is because the house is a tear-down. Your inlaws got into this situation over YEARS and YEARS. Any money spent to improve the house is throwing good money after bad.

And the best answer their kids can give them is to tell them you are really sorry that there is not a financial option that will let them stay in the house. It is too bad there is a bunch of deferred maintenance and they can't afford to fix it, but there are all kinds of things I want and can't afford.

You guys are not in a position to help, not really. (If helping is at the exclusion of college and retirement savings.) This is a huge problem and if you start throwing money at home repairs you might as well be lighting it on fire. Your inlaws have a path out. They just need to know that there is no money fairy coming to let them have everything the way they want.

Thank you for your comment. I 100% agree, and these statements are literally exact things I have said to my husband. They have made so many complex bad decisions. I can’t believe they even owe money on this house that they bought more than 25 years ago, but that shows you how little they have been paying down their original mortgage, and how much they have been spending on fancy brunches and crap from eBay. They have a wonderful, perfect escape hatch out of this terrible situation, they put them self, and that will clear their debt, give them cash, and let them live in a really safe, spacious house. It is so incredibly selfish to me that they just want to stay and keep throwing money into this hole in the ground, quite literally.

[Anonymous]

If you stopped helping them, they would understand their financial situation better. I'm just saying.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Let it go and play out. Plan on selling house as is at the end.

It sounds like the value is the location.

FIL still works, they both drive, they are both healthy.

Let them live their life.

A lot of people are happy living in run down housing.

Thanks for your reply. We definitely don’t try to control their decisions but the big problem is they need some pretty immediate repairs, like a new roof before the next hurricane season. They don’t have the money for it, so they would have to take out a home equity loan for it. But they won’t be able to make the payments. They truly have no plan to how to cover the expenses other than asking us for it… it’s just bad.

Well, it would preserve the value of the asset. But you don't have to just hand it over. You can make it really difficult for your DH first. I feel for him, it's a hard position to be in.

True. It is just a difficult position. I am very practical and am struggling to comprehend how they can be so adamant about staying in this house, at any cost, especially because they cannot support the cost. It is just bad decision after bad decision, and they don’t seem to realize or care that their continued bad decisions are causing so much undue stress and strain in the family, financially harming their children, and not solving the longer term problem that living in this house forever is not going to be possible. It just super stinks.

Well, the dementia is part of it. They probably have more dementia than you realize and are trying to keep it from you. It's a cruel disease. Can you imagine how scary it feels to be losing your memory and your ability to think? The home is where they feel safest and have systems that work (sort of). They will never agree to trade that for the unknown. It will help you to attribute their choices to their illness. You don't have to go along with it but you'll probably take it less personally. They literally, mentally, cannot process the change.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Has anyone actually identified this new “safer place to live”? If the expectation is that your in laws will sell their home without any idea what the future options might be, I don’t think that’s realistic, or healthy, or kind. Perhaps some in — or outside of — the family could take the step of identifying for them what their wish lists and non-negotiables might be — should they leave their home, and identify a few options that might meet these criteria. This might be a long and laborious process, but it probably will be anyway. If they can see some positive aspects related to moving , that might help a bit.

Thank you. This is a very thoughtful comment. Yes, we have spent time looking at other properties in the same small town they live in and have found several really great options. Their area has not been too severely impacted by the real estate crisis; you can get a 2500 square-foot one level new construction house for under $300,000. They could even continue to have water access with a home in the range of $400,000.

It sounds like at their ages and stages, assisted living with a memory care option might be best. If they buy a new home they might have to sell it again really soon.

[Anonymous]

would they sell you half the house for less than market value so you can fix it up and allow them to live there until they pass? With the agreement that you inherit the house entirely at that time?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Has anyone actually identified this new “safer place to live”? If the expectation is that your in laws will sell their home without any idea what the future options might be, I don’t think that’s realistic, or healthy, or kind. Perhaps some in — or outside of — the family could take the step of identifying for them what their wish lists and non-negotiables might be — should they leave their home, and identify a few options that might meet these criteria. This might be a long and laborious process, but it probably will be anyway. If they can see some positive aspects related to moving , that might help a bit.

Thank you. This is a very thoughtful comment. Yes, we have spent time looking at other properties in the same small town they live in and have found several really great options. Their area has not been too severely impacted by the real estate crisis; you can get a 2500 square-foot one level new construction house for under $300,000. They could even continue to have water access with a home in the range of $400,000.

I would look much harder at independent/assisted living places in their area. If they are in their early 80s, they literally only have at most a few years before they will need much more help. Moving them to another sfh really doesn’t help them. It just puts them somewhere temporarily that they’ll have to again move from and lose transaction costs.

Do you know their monthly income? Social security? Any pension?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, the reason there is no path to making the finances work is because the house is a tear-down. Your inlaws got into this situation over YEARS and YEARS. Any money spent to improve the house is throwing good money after bad.

And the best answer their kids can give them is to tell them you are really sorry that there is not a financial option that will let them stay in the house. It is too bad there is a bunch of deferred maintenance and they can't afford to fix it, but there are all kinds of things I want and can't afford.

You guys are not in a position to help, not really. (If helping is at the exclusion of college and retirement savings.) This is a huge problem and if you start throwing money at home repairs you might as well be lighting it on fire. Your inlaws have a path out. They just need to know that there is no money fairy coming to let them have everything the way they want.

Thank you for your comment. I 100% agree, and these statements are literally exact things I have said to my husband. They have made so many complex bad decisions. I can’t believe they even owe money on this house that they bought more than 25 years ago, but that shows you how little they have been paying down their original mortgage, and how much they have been spending on fancy brunches and crap from eBay. They have a wonderful, perfect escape hatch out of this terrible situation, they put them self, and that will clear their debt, give them cash, and let them live in a really safe, spacious house. It is so incredibly selfish to me that they just want to stay and keep throwing money into this hole in the ground, quite literally.

It helps me to think about scenarios like this as if I were trying to parent through them. This one? A perfect time for natural consequences. It will suck because their kids are used to buffering them and bailing them out, but it just prolongs the painful part.

[Anonymous]

Anonymous wrote:would they sell you half the house for less than market value so you can fix it up and allow them to live there until they pass? With the agreement that you inherit the house entirely at that time?

The bigger issue is we don’t want the house or anything to do with it. We don’t even own our own house yet and we don’t want the liability of theirs, even if it may be “deal” at some point. Just not an option.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Has anyone actually identified this new “safer place to live”? If the expectation is that your in laws will sell their home without any idea what the future options might be, I don’t think that’s realistic, or healthy, or kind. Perhaps some in — or outside of — the family could take the step of identifying for them what their wish lists and non-negotiables might be — should they leave their home, and identify a few options that might meet these criteria. This might be a long and laborious process, but it probably will be anyway. If they can see some positive aspects related to moving , that might help a bit.

Thank you. This is a very thoughtful comment. Yes, we have spent time looking at other properties in the same small town they live in and have found several really great options. Their area has not been too severely impacted by the real estate crisis; you can get a 2500 square-foot one level new construction house for under $300,000. They could even continue to have water access with a home in the range of $400,000.

I would look much harder at independent/assisted living places in their area. If they are in their early 80s, they literally only have at most a few years before they will need much more help. Moving them to another sfh really doesn’t help them. It just puts them somewhere temporarily that they’ll have to again move from and lose transaction costs.

Do you know their monthly income? Social security? Any pension?

I agree but they are also adamant that on top of not moving they don’t want to be in a home. They do have some type of home health aid insurance they bought into that is supposed to cover skilled nursing in home, but I have pressed DH if he knows the particulars of what is included, and he does not. I’m not even sure if his parents do anymore. Moving into a better home would clear their debt, take the stress of a bad living situation away from them, and give them spending cash that they need. They may have to sell it or we may have to sell it when they do need a higher level of care, but it is a much better steppingstone than throwing money into the nightmare house. They’re in now, which is just a really bad Band-Aid for the situation.

They draw social security, but have spent through savings and retirement savings. No pension, no other assets really.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, the reason there is no path to making the finances work is because the house is a tear-down. Your inlaws got into this situation over YEARS and YEARS. Any money spent to improve the house is throwing good money after bad.

And the best answer their kids can give them is to tell them you are really sorry that there is not a financial option that will let them stay in the house. It is too bad there is a bunch of deferred maintenance and they can't afford to fix it, but there are all kinds of things I want and can't afford.

You guys are not in a position to help, not really. (If helping is at the exclusion of college and retirement savings.) This is a huge problem and if you start throwing money at home repairs you might as well be lighting it on fire. Your inlaws have a path out. They just need to know that there is no money fairy coming to let them have everything the way they want.

Thank you for your comment. I 100% agree, and these statements are literally exact things I have said to my husband. They have made so many complex bad decisions. I can’t believe they even owe money on this house that they bought more than 25 years ago, but that shows you how little they have been paying down their original mortgage, and how much they have been spending on fancy brunches and crap from eBay. They have a wonderful, perfect escape hatch out of this terrible situation, they put them self, and that will clear their debt, give them cash, and let them live in a really safe, spacious house. It is so incredibly selfish to me that they just want to stay and keep throwing money into this hole in the ground, quite literally.

It helps me to think about scenarios like this as if I were trying to parent through them. This one? A perfect time for natural consequences. It will suck because their kids are used to buffering them and bailing them out, but it just prolongs the painful part.

I agree. And thank you for your time in replying.

[Anonymous]

Look, very kindly, this problem is going to solve itself in less than 10 years and possibly far fewer. The need for a roof is not actually that pressing.

Also I think you’re overstating the likelihood they will need assisted living. No one in my family ever did. They all went out “feet first.” That part of their plan is probably more realistic than you think.

[Anonymous]

It sounds like you’ll just have to wait until there’s either a health crisis or something happens to make the house uninhabitable before they’ll budge.

[Anonymous]

Fix the absolute necessary things only and sell the house as is when the time comes. Let them stay in their house and stop being a bully.

[Anonymous]

As long as your husband and brother pay their mortgage, why move? Not happening, home will be a teardown or investor gut job.