Selling your home is a major undertaking, even in a seller’s market. Sifting through offers and deciding on the best buyer can be more stressful than you realize. If you have a family member or a friend who’s in the market for a home, then it can seem like a great shortcut to simply sell your home to them. While this can be a great opportunity for both sellers and buyers, it can also come with its own set of challenges. If you’re thinking about selling your home to family or friends, then this is what you should know beforehand.
Don’t feel like you need to accept a lowball offer
As a buyer, purchasing a home from someone you know may seem like the easiest way to get the best deal on a house. This is especially true in today’s market where housing prices continue to skyrocket. But as a seller, don’t feel obligated to take a low offer on your house just because the buyer is someone you know. While you can certainly give them a good deal, don’t put yourself in a position where you take a loss on the transaction. This is particularly true if you need the sale to fund a down payment on your next home. Don’t cut yourself short. If you want to know what a fair market price would be, then hire an appraiser to evaluate your home’s current value.
Be upfront about your relationship with the buyer
When you’re selling to a family member or friend, the best policy is to be upfront with everyone about your relationship. This means your buyer’s lender should know that you are already acquainted with one another. While your buyer probably won’t be denied a mortgage because of the relationship, not disclosing it is considered mortgage fraud. That’s a situation that neither of you will want to deal with.
Ask for pre-approval
Money is one of those things that can really wreak havoc on any relationship. It’s a touchy subject that not everyone feels comfortable discussing. But just because you’re selling your home to someone you know doesn’t mean you should skip over this important part. You need to feel confident that you’re selling to someone who can actually afford your home and will indeed qualify for a mortgage. So don’t be afraid to ask for pre-approval. This way, if they don’t get pre-approved, you aren’t wasting your time and can find another buyer more quickly.
Don’t waive the inspection
Transparency is key when you’re selling your home to someone you know. Don’t assume that they know everything there is to know about your home, even if they’ve spent tons of time there. Any problems that arise after the sale can potentially damage your relationship, and we assume nobody wants that. So you should insist that your buyer get a home inspection as part of the closing process. This will uncover any possible issues that your home may have so that they can be addressed before closing.