Selling a home is rarely easy. There may be situations in which a house may need to be sold sooner than normal.
There could also be times when the transaction is drawn out for months or even years. Things can get even more complicated if you’re selling your home to a relative.
There will be personal and financial hurdles to overcome. Selling a home in Texas to a family member can be difficult, but it certainly can be done.
Here are a few tips to help make the transition smoother:
1. Hire a lawyer with experience in real estate transactions.
If you’re thinking about selling your home to a family member, it’s a good idea to consult a lawyer. The lawyer you retain should specialize or have significant experience in real estate transactions. Depending on where you live, there may be local or state laws that require hiring a lawyer in order for the sale to be valid.
The lawyer will review the offer and all other necessary documents to ensure that the transaction is valid. They should advise you during the sales process and can often provide information that you may not have thought of. Your lawyer can also help to alleviate or remedy any disputes or disagreements that may occur between you and the family member that you’re selling your home to.
2. Get it in writing.
Property transactions are too important to be settled with verbal agreements. It’s essential to get everything in writing. This can help you avoid any hassles or headaches, later on, should problems arise. Be sure to read the sale contract very carefully before signing it.
Feel free to add any special terms or contingencies that you feel are important. They should specify what would happen if the relative that you’re selling the home defaults on their payments or other circumstances that may occur.
3. Follow all local and state legal requirements.
While it may be tempting to give your family member a break when you’re selling your home to them, this is something that you should probably avoid.
4. Don’t finance the sale for your family member.
Another thing that you may consider is offering to finance the purchase of your home for the relative who is interested in buying it. However, unless you can absolutely afford this obligation, you’re better off not even offering it.
Let the relative take out a loan with their bank, credit union or other lending institution. It eliminates the possibilities of one side having an unfair advantage or the unpleasantry of having to foreclose on your relative if they default on their mortgage payments.
5. Have an asking price at or around fair market value.
If you set your price too low, it might be viewed as a gift to your relative. You may also have to pay a gift tax to make up the difference between the sale price and the home’s estimated fair market value.
6. Schedule and attend the home inspection.
The home inspection is a vital part of the home sale. A certified third party inspector will review the interior and exterior of the home and submit a report when they are finished. Both parties should attend the home inspection so that they can ask any relevant questions they may have.
You can work with the buyer to determine if you will be responsible for any recommended repairs or renovations, if the buyer will take on those tasks or if you decide to split the costs and responsibility evenly.
It’s a noble idea to sell your home to keep the property in the family. Just make sure that you consider the pros and cons of such a transaction. You should keep emotions out of the sale as much as possible. If there are other relatives who are interested in the home, you can accept offers from them as well. Think and conduct the sale with your head instead of your heart. If certain people feel left out or raise grievances, address such issues in a calm, rational manner.
Selling your home to a family member can also be examined more closely by local and state governments. Such sales are also called non-arms length transactions. This means that the seller and buyer have a pre-existing relationship. Because there is a greater possibility for fraud, there’s often a lot more scrutiny.
Selling your home can take weeks or months to finalize. It may take even longer if there are repairs, grievances or legal hurdles to clear. Talk to your real estate agent or real estate lawyer so you’ll be better prepared and know what to expect. You should also discuss the situation with the relative who wants to buy the home. Keep in mind that this is a major business transaction, and it should be treated as such.
Have Questions? Ask Rene!
