I spent the previous month assisting my friend in searching for a home. She’s an immigrant from the Philippines who moved to Canada and bought real estate in Toronto from her family member. I thought the process would be easy since she’s buying from a family member after all, but it was more complicated than it seems.
A few issues came up which I didn’t expect to see in this kind of transaction. But after finally closing the deal, I realized that buying a home from a family member can be an emotional and difficult decision. You may worry about the effect of the sale on your relationship with them, or how it will affect your finances. This is on top of the legal procedures that need to be done.
On the upside though, buying a home from a family member can be an exciting and wonderful decision. The property is typically cheaper, and the seller has more flexibility with the payment terms.
So if you decide to go ahead, there are a few things you should do to ensure that the process goes as smoothly as possible. This may be useful in the future not only for purchasing a home from a family member but also for attempting to buy a property in general.
7 Tips for Buying a Home from a Family Member
1. Consider the pros and cons
As I’ve said earlier, one of the biggest advantages of buying a home from a family member is that the property may be cheaper. On the other hand, you should carefully consider how this will affect your relationship with the owner. The last thing you want is to start off on the wrong foot or create tension between all parties involved.
One other factor that makes buying a house from a family member tricky is whether there are any creditors involved, like mortgages and loans (for example).
2. Get a home inspection to make sure the house is structurally sound
You may not know this, but checking out the structural soundness of a home before buying can save you thousands in repairs. With so many people selling their homes for less than what they’re worth because it needs new carpets or roofs – don’t be one!
Get an inspection from qualified professionals who will point all these things out without breaking your budget and spare yourself any disappointment down the line.
3. Hire a lawyer to help with all of your paperwork
It’s crucial to hire a lawyer to assist you with all of your paperwork. Not only will they ensure that you comply with every regulation and law, but hiring them also means they’re available if something goes wrong along the road – which it might!
4. Be prepared for emotional challenges that come with purchasing a property from someone close to you
It’s possible that you’ll struggle with the emotional turmoil that accompanies buying a home from someone close to you. When it comes time for negotiations or handover, for example, there will almost certainly be some tight-knit family members participating in the process, which may lead to conflict along the road.
5. Don’t forget about taxes
There are several factors to consider in the case of a family sale. One crucial thing to remember is that both of you might pay for capital gains, profit margins, and estate taxes. So double-check beforehand whether these concerns have been addressed, and engage a tax professional if necessary.
6. Beware of unknown issues or hidden costs
You should also consider the fact that there could be any number of problems or unexpected expenses when purchasing a home from someone else’s estate. For example, if the seller has youngsters who are yet unaware of their inheritance and want it immediately before anyone else in the family can claim it as theirs, this might lead to an interesting conflict among multiple parties involved.
7. Be prepared with contingencies in case something goes wrong with the deal
When buying a house from a family member, be prepared for anything. Have contingencies and legal papers in place to safeguard yourself if something goes wrong.
You can’t go wrong with buying a home from a close-knit so long as you follow these simple tips and guidelines for buying a home from them. Give yourself plenty of time to plan, get your finances in order, know the market value of the property before committing, be prepared to pay cash or take out loans that allow seller financing if need be, and lastly but most importantly, remember this is not just about business, it’s personal!
Also, buying a home from someone who cares about you will make all the difference in how smoothly things go.