Home sellers are a busy lot. They need to put their house up for sale and have it advertised and marketed. Many sellers are preparing their house for sale and fielding inquiries while simultaneously researching other properties and neighborhoods that they would consider living in.
Some people choose to sell their homes to a relative. There are many reasons why this happens. The owner may want to help their family member who may be undergoing a change of jobs or financial difficulty. Some may feel that it’s easier to keep the property in the family. Other sellers prefer to deal directly with people that they know and trust.
Selling a home in Florida can take time, even if you have a buyer lined up. There are certain steps that have to be taken and different people that become involved at different stages. You could also encounter unexpected delays or issues at times. The process usually only takes a few weeks or months at the most. Patience, persistence and a proactive plan of action can help you accomplish your goal.
Here are a few things that you can do if you want to sell your home to a family member:
1. Establish a reasonable asking price.
The selling price for your home should be realistic according to current market conditions and its fair market value. It should be something that the relative can afford.
However, it shouldn’t be priced so low that it may seem that the family member who is buying your house may be viewed as having an unfair advantage over other people who have expressed interest in the property.
You can set an asking price that’s less than fair market value by gifting the house to your relative. This is also referred to as a gift of equity. Home sellers can gift as much as $15,000 in equity before having to pay a gift tax on the transaction. Just keep in mind that capital gains taxes may apply and a contract will need to be drawn up for the equity gift.
2. Work with a real estate agent.
Even though you’re selling your house to a family member, it’s still a good idea to hire a realtor. You could sell your home by yourself, but most people lack the connections, experience, and knowledge that most real estate agents have. Feel free to interview a few agents before selecting the right realtor for you.
Schedule a meeting and discuss your intentions. The agent should know that you plan to sell your house to a member of the family. They will work with you to help get your home sold in a reasonable time period.
3. Document everything in writing.
It’s a good idea to record everything. Your sale contract and any other terms or agreements should be put in writing. Read the sale contract carefully before signing.
If certain conditions or clauses contained in the sale contract are not met, one or both parties may legally be able to walk away from the agreement. Putting things in writing ensures that you have a good record of the proceedings. They can also be easier to prove than verbal agreements in a court of law.
4. Have the home inspected and appraised.
The house should be appraised. An appraiser will review the property and issue a report with its appraised value. The value should be at or near your asking price in most instances.
You should also schedule a home inspection. The inspector will examine the condition of the home’s interior and exterior. They will then issue a report with their findings. If there are significant items in need of repair or renovation, you can discuss them with the home buyer. They could offer to pay for those items, you could pay for them or you could agree to split the cost for those items evenly.
5. Know your tax laws.
You may want to do a little research into your state or local tax laws. Tax codes can vary from one region and state to another. The last thing you want to do is to get into trouble with the Internal Revenue Service as a result of the sale.
A tax attorney may be called on for assistance. Explain your situation to them in detail. They may be able to provide valuable advice or assistance to help you avoid any costly tax penalties. They can also explain any questions or concerns that you may have regarding gift taxes.
Selling property to a relative can be complicated. It’s difficult to keep emotions out of the arrangement at all times, especially if you are close to the person who is buying your house. However, it’s important to keep your end goal in mind. You want to sell your home, so realize that this is simply a business transaction – nothing more and nothing less.
You might not make as much money overall selling your home to a relative as opposed to selling it to a complete stranger. That’s something that you’ll have to take into consideration before putting the property up for sale.
You may also feel like you don’t have to have the house appraised, inspected or cleaned thoroughly. It’s still a good idea to go through with these tasks just like you would if you didn’t have an intended buyer in mind. You may even stage your home and have open house showings scheduled if you prefer.
After the offer has been accepted and the purchase agreement has been drafted and signed, it won’t be long until your house becomes your family member’s responsibility.
At closing, all final paperwork will be signed and filed. You’ll receive your payment for the net proceeds and the relative will be given the keys to their new home. They can move in whenever they want. You can close that chapter of your life and start looking forward to a fresh start in a new location.
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Give Liz Welch a call today to learn more about local areas, discuss selling a house, or tour available homes for sale.