It can be a stressful experience to put your home on the market and wait for offers in the hope that you’ve priced it right. However, for those who are considering selling to family members, the sale of a home can be fraught with just as much stress before and after sealing the deal. If you’re wondering if it’s a good idea to sell to a family member, here are some things to consider beforehand.
Providing A Discount
Whether you’re selling to a sibling or a child, you may be considering offering the home at a discount to help them out. Fortunately, since the discounted value will be different than the market value of the price, this may mean a taxable gain when it comes time for them to sell the property after a few years of residing in it. On the other hand, if your financial health is not the best, selling at a lower price to a family member can create an undue financial burden for you.
An Owner-Financed Sale
If you’re trying to help your child get on their feet, the option exists for an owner-financed sale where your child will be making monthly payments to you. This provides the benefit of not having to worry about a lender and avoiding interest rates on top of the payment. While this can be a great feeling as a parent to be able to help your child, it’s important to weigh the decision carefully to determine that your child will not default on the loan and it won’t be tiresome for you to act as the lender.
Keeping It In The Family
For most people, the home they live in has sentimental value, whether they’ve lived there for a few years or it’s been in the family for generations. That’s why it can be a great comfort for many to sell to a family member who will understand the house’s history and the family traditions. If the deal is going to put a strain on relationships, though, it may not be worth the well-being of the family to keep the home among the relatives.
It can be a comfort to sell a home to a family member and secure their well-being, but there can be financial hurdles involved that can have an adverse impact on the relationship. If you’re currently considering purchasing from a family member, contact your trusted mortgage professional for more information.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.