Selling your house to a friend or family member can be a pleasant, smooth transaction . . . or it can be a painful, enemy-making disaster. Keep in mind that you will be transferring ownership of your most valuable asset, one that you may have strong emotional ties to from living there for years. And friends and family often expect you to cut them a good deal, often an outrageously costly one from your end. A lot of times, then, it doesn’t take long for these kinds of deals to go south. It doesn’t have to be that way, though, if you go into it forewarned and prepared. To help you out in that way, we offer these 3 steps for selling your house to a friend or family member in Metro Detroit .
Retain a Real Estate Attorney Early On
One of the first things you’ll want to do in selling your house to a friend or family member in Metro Detroit is to get a good real estate attorney. You may not think this is necessary, but it can head off a lot of trouble later. Real estate pros explain: “If you value your relationship with your loved one [or friend], then you can’t go into this kind of home sale thinking of it as a typical transaction. . . . Because of the emotional connection involved in selling a home to a family member [or friend], it’s a good idea to have a lawyer involved from the beginning of the process.”
When selling your house to a friend or family member in Metro Detroit , it is absolutely essential to get everything in writing in case things begin to sour. And it’s best to have it in writing in formal, legal, attorney generated documents. In addition, an attorney can provide clarity to avoid legal issues in the event they do arise during the course of the sale. Further, your attorney can perform critical functions like title searches and can deal with possible zoning or improvement issues.
Set a Fair Price (and Stick to It)
When it comes to setting a sale price when selling to a friend or family member, all the experts agree that you should set a fair price – not one that is way below market value. This is a great way to keep everything on a business footing and all expectations aligned with that.
It is best, then, to hire an appraiser so that both you and the friend or family member can know pretty accurately what the fair market value of your house is – rather than just guessing or letting the friend/family member determine what they’d like to pay. Then you should price in line with that appraised value. Cutting your friend or family member too big a break on price may have unpleasant tax implications for you.
Use a Real Estate Agent Anyway
Unlike with a typical house sale, when selling your house to a friend or family member in Metro Detroit , you already have a buyer, someone you know and trust. So it’s tempting not to hire an agent and do it all yourself. But that, according to real estate experts, is often a mistake. “It can be tempting to bypass the regular process of hiring a real estate agent to broker the deal. And indeed, this is one of the very few home sale circumstances when it could be an acceptable plan . . . Then again, even seemingly simple and straightforward real estate transactions can get contentious, especially when the buyer is a family member.”
A qualified local agent can help smooth out the process when things get contentious, especially during negotiations, and help keep the peace between you and your friend or family member. Without the cooler objective view and guidance of your agent, relationships could be permanently damaged. And your agent will know all the legalities involved in selling to a friend or family member and can steer you clear of tax and legal issues.
Typically, agents work on a commission basis, usually around 6% of the sale price. But in this kind of transaction where you already have a buyer, often with an already agreed on price, your agent may be willing to work for a flat fee because she won’t have to invest time and effort in marketing the property. You save money, and the process is smoother.
Selling your house to a friend or family member in Metro Detroit can be either a pleasant transaction in which both buyer and seller get what they want or a painful disaster after which the parties are no longer speaking. If you would like it to be the former, follow these steps, especially this last one. Hiring a qualified local real estate agent can make all the difference.