Selling a home can be stressful enough, but selling it to a family member can send stress levels skyrocketing. This doesn’t mean, however, that there aren’t some definite advantages to selling your home to a family member. For one thing, you don’t have to go through the hassle and expense of staging it or worry about it stagnating on the market. That being said, there are certainly some precautions you want to take as well. Here are three tips to help make it a successful transaction.
Always Use a Lawyer
While you clearly don’t need a real estate agent when you already have a buyer, that doesn’t mean you don’t need a neutral third party to help negotiate the transaction. No matter how close you are to your relatives, in the end, you are both still going to want to get the best deal you can. As the seller, that means getting as much as you can, while your buyer is going to want to pay as little as possible. A good real estate attorney can keep things fair and equitable and help you maintain good relations with your relatives.
Investigate Your Options
There are different ways to structure the sale that can save both of you a great deal. If you don’t need the full price immediately, you can save your buyer a great deal of money by arranging a private “owner-financed” sale. That’s where your buyer simply makes monthly payments to you instead of going through a lender. You can also have them purchase 50 percent ownership in the house by arranging a mortgage for half the value of the home. They can immediately sign that cash over to you so you have some money up front and they can pay the rest off in payments. Whatever route you choose to go, there are a number of different options you don’t have in a traditional sale.
Get an Assessment
You’ll want to get a home assessment first and foremost to keep everything above board with Uncle Sam. If you sell your home for anything over a 25% discount on the assessed value, your buyer may end up paying a substantial “gift tax” as well. This, once again, is also why you want to use an attorney who can make sure you are aware of all of the legalities involved in selling to a relative.