home in the family has advantages
Are there specific advantages or disadvantages to selling a home
to a family member as opposed to a stranger?
Keeping things all in the family in a home
sale has several advantages, plus some potential downside. But the pros generally
outweigh the cons, so let's start with them.
seller already has a buyer lined up and an agreed-to price, there's no need for
an agent, so the two parties are saving about 6 percent right off the top.
approach is also a great way for older sellers -- who may be moving to warmer
climes, downsizing to smaller digs or segueing into a retirement community or
retirement facility -- to keep the place of their cherished memories in the family
and ease that often emotional transition.
In fact, sales of
homes that go from parent to child, known as "legacy home" sales, are
becoming increasingly prevalent these days, particularly as soaring home prices
have made it tougher for young people to enter the housing market in many parts
of the country. So if you're selling at an under-market price, you could be helping
younger family members to circumvent years of economic struggle and afford them
more time and energy to tend to their own families and careers.
realize that selling a home at significantly less than fair-market value to a
family member carries with it some gift-tax
ramifications, so I strongly suggest use of an attorney or financial adviser to
sort that out, as well as potential capital-gains
and estate-planning issues.
Also, there are several alternative
means of transferring ownership, such as quit-claiming
the property, having the family member finance it or placing the home in a trust
(so an ex-spouse can't grab it in the event of a divorce). These also merit the
help of a professional.
Good will and emotions aside, don't
jump into a family-sale arrangement without thinking it out very thoroughly.
will also need a title company to help you manage the closing. Some municipalities
also require a point-of-sale inspection, which you also can't get around. Additionally,
any state- or city-required disclosure forms for home transactions will still
have to be filled out.
Realize that whichever family member
you're selling the home to will henceforth be its owner and that his of her house
rules and decorating tastes will prevail. While you can ask the family member
to respect the integrity of the place, don't expect a sense of indebtedness to
you to govern "nesting" and remodeling decisions.
if executed correctly, such sales are usually a win for everyone because they
keep the dear old homestead a family gathering place for years or even generations
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