It’s a huge relief, isn’t it? You have a friend or family member who is interested in buying your house. That means you won’t have to go through all the hassle and headache of listing and showing and waiting and negotiating. But selling to a friend of a family member has its own set of pitfalls and drawbacks. It can even turn that good friend or beloved family member into a bitter enemy if things go sour – and could even land you in legal battles. So to help you avoid that, here’s how to sell your house to a friend or family member in Essex County.
Have the Buyer Get a New Mortgage
When you sell your house to a friend or family member in Essex County, you will, naturally, be tempted to grant all kinds of favors and concessions. But this path is paved with peril, especially when it comes to the mortgage. It is often a temptation – in order to make things even easier and because you know and trust the person – to simply transfer the current mortgage. That, however, is often a mistake with all kinds of negative ramifications. So make sure your buyer gets her own mortgage and is pre-approved before you get very far into the process.
Get an Appraisal
You also need to keep everything on a business footing, so don’t just guess at your home’s worth or accept your friend’s or family member’s opinion about it. Hire a professional appraiser so you can get an accurate idea of the true market value. This will not only keep you from underpricing but also overpricing, which could alienate that friend or family member. Besides, if your buyer applies for a mortgage, the lender will likely require an appraisal anyway.
Don’t Discount Too Far
Of course, when you sell your house to a friend or family member in Essex County, you will want to give and the friend or family member will probably ask for a discount. After all, the whole point is that you are saving time and money so you can afford to do that. But don’t go too far in the discount direction. If you discount more than 25% below the appraised value, you could wind up with IRS problems because the transaction may be viewed as a gift rather than a sale.
Get EVERYTHING in Writing
The old advice that you should never do business with friends or family is still good advice. In order to you sell your house to a friend or family member in Essex County and avoid many of the problem assumed in that advice, just make sure to get absolutely everything in writing. Transparency on both sides and a written record of everything will go a long way toward ensuring a mutually beneficial transaction.
Use a Title Company
Because you likely won’t be using an agent in the traditional way when selling your house to a friend or family member, you should use a title company for the title transfer. Using a title company will ensure the transfer of the home in your name to the name of your buyer in a way that avoids legal or financial issues further down the road.
Engage Professional Help
Although you won’t be listing and marketing when you sell your house to a friend or family member in Essex County, it still pays to hire a real estate agent to help you navigate the process and get all the paperwork right – that is, if you want to avoid legal issues. An experienced agent and/or a real estate attorney can help you get the proper documents in order and ensure the transaction is done by the book.