When you're ready to sell your home, you can eliminate some of the hassle that comes with the process by selling the property to a family member.
Whether your sibling, child, cousin or other related individual, selling real estate to family can eliminate some of the back and forth that typically comes with the endeavor. You already know the buyer likes your home, and there may be fewer or no negotiations for the sale price. Considering the steps of finding a buyer and settling on a price can be the lengthiest parts of selling a house, you're likely to save some time.
However, this benefit is not to say that you should take the transaction lightly. After all, you're still conducting a business deal, which means you and your family member must view the situation professionally. Financial disputes break of even the strongest of families, so consider the following tips when selling your home to a relative:
Get professional help
The process of selling a property is complex and riddled with paperwork and legal jargon. If you want to ensure the transaction is completed with every i dotted and t crossed, hire a real estate attorney or agent to help you with all the documentation.
Even if you're selling to a relative, you must supply the appropriate paperwork or issues with the home title could arise in the future. Real estate professionals understand the steps that go into a property sale to ensure the house changes hands without any legal hiccups, such as ordering a title search, having you complete seller disclosures and other steps.
Although real estate agents typically charge commission on the sale price, you may be able to negotiate a flat fee because your agent won't have to list and show your home.
Get everything in writing
This goes along with the first point. You would hope that your family members wouldn't try to pull a fast one on you, but this unfortunate situation is something you and your relative must protect against. Have everything documented - from the sale price to the date of sale - to ensure the transaction agreement is clearly understood by all parties.
Schedule a home appraisal
There are tax implications that come with any home sale, and unique challenges come with selling to a family member. These obstacles stem from the desire to offer a relative a discount on the home. Of course, you wouldn't want to charge full price for family, but you also don't want to sell too far under market value. If you do, the IRS could consider the home a gift. Plus, your relative could be required to pay capital gains taxes when he or she sells.
Order a home appraisal to determine the fair market value of your home before you settle on a sale price. This way, you can protect yourself and the buyer from unnecessary tax implications and ensure the property is sold for a fair price.
Have the house inspected
You wouldn't want to sell your relative - or any buyer for that matter - a home that has underlying issues that will be expensive to fix. Doing so could break down family relations and possibly lead to legal action.
Schedule a home inspection to give your family member peace of mind the property is in good shape. If there are needed repairs, you can make them before the sale is completed or provide a bigger discount on the sale price so the buyer can complete the work.