Home Selling Among Family: What You Need to Know

You put your home up for sale on the Tulsa market. Suddenly, you find yourself a buyer. It just so happens to be a family member. Yay! Smooth sailing, right? Well, hold on. Home selling among family can be a little smoother in some areas. But it also may involve some bumpy spots, too. And with family, those rough patches might end up hurting your relationship.

Home Selling Among Family: What You Need to Know

Do You Need an Agent?

A Tulsa real estate agent helps you sell your home by marketing it and showing it to potential buyers. They provide valuable insight into current market trends. This helps you prepare your home to showcase it in its best light. But, when a family member already says they want to buy your home, you bypass all the marketing. The buyer is already at your door! Transactions between families may be the only time you may not need an agent to broker a deal. However, assistance might still be required.

Will I Need an Appraiser?

With cash deals, an appraiser may not be necessary…especially when home selling between family members. However, if the buyer needs to obtain a mortgage loan to pay for the home, the lender requires an appraisal. If the property does not appraise for at least the sale price, the lender will not approve the loan. Therefore, hiring an appraiser right away comes in handy for all parties concerned. Knowing what your property is worth before you sign any paperwork lets you know 1) that you will overcome that hurdle with ease, and 2) if your asking price is too low. After all, you do not want to shortchange yourself too much, even when working with a family member. The deal needs to be fair to all parties involved. Plus, too deep of a discount could cost you money at tax time. (More on that later.)

Consider Hiring a Real Estate Lawyer

To keep feelings out of this home sale, you might still want to work with a real estate agent. If not an agent, consider hiring a real estate lawyer. First, they can provide you legal guidance as to the transfer of ownership. Next, they can conduct a title search to look for liens, all legal owners (past and present), and zoning restrictions for the property. Any of these might trip up a sale or hurt a smooth transfer of ownership. Down the road, this could harm your relationship with your family member(s). And no one wants that to happen.

Tax Implications of Home Selling Between Family Members

When selling your Tulsa property to someone you do not know, you most likely want to receive the highest price possible for your sale. However, when home selling to a family member, you may be more inclined to give them a break on the price. Unfortunately, the IRS sees this discount as a “gift”. Thus, you could end up paying a gift tax for your generosity. When selling your property below the fair market value to a family member, pay attention. If you sell it for more than $14,000 under the fair market value, you could end up paying a gift tax on the difference come tax time.

Lori Cain, REALTOR®, Serving Midtown and the greater Tulsa, OK area. Call 918-852-5036.