When it’s time to sell your house to a friend or a family member, a great risk lingers around the corner. It’s essential to follow a neutral approach to prevent your personal relationship from damaging a critical and smart financial step. If you don’t want to ruin your friendship, follow the tips on how to sell your house to a friend.
We all know that selling a house is a strenuous task and requires immense time, patience, and energy. At this time, you must be thinking if you sell your house to a friend or family member, it will lessen the burden. Though you’re right to some extent, there will be different hurdles that you’ll have to pass.
Since the transaction is going on a personal scale, you might think you don’t need a real estate agent to close the deal. However, this can be a huge mistake!
Even among the closest of friends, disputes can arise, and here an agent can act as a third party to help resolve the issues before things run out of hand.
Are You Selling Your House To A Friend? Work With A Real Estate Agent
Working with an agent will minimize the chances of problems occurring soon or sometime after the deal. When it comes to friendship and business, never mix them up. Purchase a legal contract covering all the necessary aspects, including down payment requirements, escrow deposits, and the sales price.
Though you can draft a purchase contract looking at tons of information online, it can’t guarantee you specific details and clauses. You and your friend or relative can discuss with the agent can prepare the contract accordingly.
Taxation Issues
It’s nothing odd to reduce the price of your house for a friend. You can offer a discount on the selling price, but it can create trouble if you make it too low compared to the market value. Too much discount can irritate the Internal Revenue Service (IRS), and you’ll have to pay a certain amount of tax.
The Most Important Part.
The most ignored, yet the most crucial aspect of this scenario is a home inspection. A home inspection is necessary to uncover any hidden fault that may not be visible to the naked eye. Your friend must have visited your house a thousand times before, but some problems don’t appear unless a detailed inspection is carried out. If your friend finds out about any damages, it could deteriorate your friendship as it may seem that you intentionally hid the faults.
Another important thing to consider is the home inspection by mortgage lenders before the approval of financing. The mortgage lender also needs an appraisal; therefore, you should get your home ready in a way you would do if you had it listed on the open market. The value quoted by an appraiser directly affects the buyer’s ability to qualify for financing. Once the appraised value is disclosed, set a sales price.
If you wish to learn more about this topic or looking for home loans, contact the experts at Red Door Funding. Call us today at 832-539-1099.