How to sell property to a family member
Buying a Home from a Family Member
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hello welcome back thank you for joining
me again
and i want to explain to you how you can
buy a house from a family member
in the most cost effective and efficient
way possible
so i think what what most people believe
is that they need to
go through a formal purchase process and
and maybe for you
depending on your scenario that might
end up being the case
but there are other ways to to make this
happen so
for example the the easiest way
would be if your family member does not
have a mortgage on the property right
now and owns the property outright
if that's the case the best way to
handle this would be
in a couple of steps one you get this
family member
to add you to the deed so you're also an
owner of the property now again no
mortgage on the property first step is
they add you to the deed
right then what happens is then you can
refinance the property
in your name only and then during that
process
you change the deed and have the other
the family member's name removed and
you're the only one left
where that makes sense is if the
property is worth
a lot more than what you're buying it
for
let's take this example let's say
one of your family members has a house
worth 250
250 000 but they're willing to sell it
to you for 200 000
okay now if you're going through a
normal purchase process and you're
buying it for 200 000
now the lender's gonna ask you for a
down payment on that 200.
you can't just say hey well it's worth
250
because then you'd have to buy it for
250 and then have a down payment
so the best way to handle this would be
to refinance it
after already being added to the deed by
your family member
you can refinance it for 200 and
it's a cash out refi it's worth 250 no
problem
after closing you hand your family
member the check for 200 000
and you're done again that works when
you do not have a mortgage balance your
family member doesn't have a mortgage
balance
okay so now the other way is they do
have a mortgage balance
and they want to sell you the property
and they still might be giving you a
discount
so then you're going to go through the
traditional purchase process however
if they're giving you a gift of equity
meaning they want to
give you a discount on the property on
paper they're going to sell it to you
for the normal price that other example
250 okay so they're going to sell it to
you for 250
and they're going to gift you the down
payment let's say they might say they'll
gift you the 50
000. okay uh and then you're buying it
for 200. that's just another way to look
at it maybe it's not that much of a gap
maybe they're going to gift you 10
000. that helps with your down payment
because a lot of loan programs allow for
gifts
uh conventional fha va
for example you can get a gift a gift of
equity from a family member
so that's another way to uh to buy a
house from a family member
the good thing is it's very easy to and
you have more options when you're
dealing with a family member versus
a stranger or just a distant friend
there are a lot of different rules in
place they don't allow those types of
gifts when it's when it's a friend so or
or a uh
or a stranger so hopefully that helps
answer a couple of your questions on
buying a property from a family member
or home from a family member
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thanks for watching and i'll see you
next time
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