If you’re trying to sell your home, it helps to broaden potential sellers to more than strangers. One option is selling homes to family members, and here are tips for success
Are you ready to sell your home but unsure of the best way to accomplish this?
There are options.
You could list the home as a way of finding a buyer or you could sell your house to a company that pays cash for homes.
Another option is asking your family if any of them are interested in buying your house. If you find out that someone in your family is highly interested, you may want to know more about selling homes to family members.
A house is not the type of asset you should rush into selling without thought or work. A house is a big deal. You’ll want to take your time and handle the event right.
So how do you go about doing this?
I’m glad you asked because here are seven tips that will help you know exactly what to do if you decide to sell your house to a family member.
1. Reach an Agreement Verbally
Step one is talking to your family member in person or over the phone to reach a verbal agreement. The purpose of this conversation is basically just for you to get on the same page as your family member.
If you can talk about the deal and come up with a mutual agreement, you will be halfway there. Well not quite, but this is definitely the best place to start.
2. Put the Agreement in Writing
One huge mistake people often make when selling homes to family members is not putting everything in writing. People do this because they assume they can trust this person. After all, he or she is family.
This type of thinking could land you in a big mess though, so make sure you get the agreement in writing. Also, make sure the written contract is clear and detailed.
3. Avoid Seller Financing Deals When Selling Homes to Family Members
A second mistake you’ll want to steer clear from is offering seller financing to your family member.
Seller financing is where you keep the loan in your name but the buyer moves in and takes over the house as if it is his or her home. The buyer then makes payments to you – as though you are the lender.
This type of financing can land both parties in trouble, as it is risky, but it is an even worse situation when the person living in the house is your family.
If your family member stops making the payments, how would you handle it? It’s hard enough handling a situation like this with a complete stranger but even worse when it’s your family.
You should never agree to offer seller financing to your family member even if it is just for a few months.
4. Get the House Inspected to Avoid Problems
You should discuss the need for a home inspection with the person buying your house too. While both of you might think this is silly, getting this done now will help prevent problems later on.
Suppose you didn’t get a home inspection and a year after your family member moves into the house he or she encounters mold in the basement walls. This would not be a good situation.
Your family member might call you after finding this out and expect you to pay for the repairs. I mean, you knew there was mold there, right? Well, you probably didn’t know but a home inspection would’ve revealed this.
Getting a home inspection helps prevent issues like this that could occur down the road.
5. Hire a Title Company
You’ll also want to have a title company involved in the transaction, and again, this is a step you should do to avoid problems in future times.
Title companies are great at finding small details and problems with home titles and they insure the work they offer. If there’s a problem with your title, they’ll find it. If they don’t find it and it comes up later, they’ll fix it for free.
A title company will also work with the lender and will perform the mortgage closing when you’re ready to seal the deal.
6. Have It Appraised
It’s also wise to agree on having the house appraised even though this too might seem like a waste of time.
Do you know that an appraisal is almost always needed when a person buys a house? It is that buyer’s lender that requires it, so even if you think you don’t need one, you probably will.
The only way you could get by without getting the house appraised is if you chose to sell to a cash buyer instead. Cash buyers do not perform outside appraisals or a lot of other steps taken in traditional real estate deals.
7. Consult With a Real Estate Lawyer
A house sale is a big deal, and you probably shouldn’t try to handle it on your own. Consulting with a real estate lawyer is a smart move, even though it may cost a little extra.
Working with a lawyer helps you create a written contract that covers all the bases. It also helps prevent issues like the ones listed here and many others.
If you want a smooth sale when selling to your family member, don’t skip the lawyer.
An Alternative Option if You Want to Avoid Potential Issues
Selling homes to family members can involve a lot of challenges which is why you might decide that this really isn’t the best route for you.
If you’re looking for a different option that would offer a fast, easy sale, you should give us a call. We buy all kinds of houses and pay cash for them.
You can learn more about our services by visiting our blog or by filling out a contact form on our website.