How to Sell Your Home to a Family Member or Friend

Moving can be stressful—and complicated—and all-too-often, full of unknowns. For many people, especially homeowners who are somewhat new to the process, the uncertainty of the market and whether their home will sell right away can be a cause for anxiety; however, there’s something to be said for deciding to sell your home to a family member or friend.

At first glance, this may seem much easier than actually placing your home on the market, but while somewhat true, it’s still important to remember that these types of transactions require a bit of preparation as well.

1.) PUT IT IN WRITING—Sure, they may be family—or about as close as you can get to family—however, buying and selling real estate is still a business transaction, which means both parties need to lay out their expectations in advance. Transparency is imperative, so if promises are made on either end, go ahead and get them in writing so there’s no chance for miscommunication later.

2.) GATHER A TEAM OF PROFESSIONALS—You may wonder why professional help is important if you’re not technically marketing your home, but that won’t change the fact that you will still need to fill out all the paperwork and have your inspections completed. It’s always a good idea to hire an experienced Realtor who can serve as a consultant and offer consistent help throughout the process.

3.) OBTAIN A NEW MORTGAGE—While it may be tempting to simply transfer your current mortgage to the new owner, it can present a slew of issues that may hurt you in the long run. Again, buying a home is a business transaction, so the best thing for a buyer to do is to obtain their own mortgage before you close the deal. It will obviously require prequalification and inspections of the home; however, you’ll both be better protected in the long run.

4.) GET AN APPRAISAL—Whether you’re placing your home on the market or selling it to a friend, it’s still important to actually have an idea of how much the property is worth. Plain and simple, you don’t want to be over or underpricing your home, so getting things in order now will make sure that all parties are clear on its value.

5.) BE CAREFUL OF GIVING OUT TOO MANY DISCOUNTS—Sure, you may be saving a bit of time and money by selling to someone close to you, but it’s still important to refrain from giving large discounts because of it. When it comes to the IRS, if you sell your home with a markdown of more than 25%, your sale may be seen as a gift instead of a legit transaction, leaving you open for an audit.

CONCLUSION

Yes, things are often easier when you already know who you’re doing business with, but as previously stated, buying and selling a home is a massive financial transaction which still takes organization and advanced preparation. While everything may seem cut-and-dry, it’s important to be prepared for the unknown. Hiring the services of a professional real estate agent or real estate attorney may go a long way towards making sure the relationship between you and your family member or friend remains intact.

Pam Evans | Hello Pam Evans Real Estate | www.HelloPamEvans.com | 678-778-6551