7 tips for selling your home to family



Dear Real Estate Adviser,
— Colleen

Dear Colleen,
First off, don’t let your haste jeopardize your financial future, especially if you are nearing retirement. Secondly, know that two commonly overlooked “musts” in selling a home to a family member are getting all agreements in writing and reconciling unclear expectations between buying and selling parties. There’s a reason the old saying, “Don’t mix business with family,” has thrived for decades.

That aside, there are several ways to execute this sale and the most strategic or most expedient ones may depend on your financial circumstances. Let’s look at a few scenarios:

No. 1: One of easiest and least expensive approaches is a private “owner-financed” sale. That’s where your son makes monthly payments to you instead of having him go through a lender. This can be arranged pretty quickly and could save your son thousands of dollars in interest. Make sure the payments are tailored to your income needs, assuming you’re not set for life financially. If you do go this route, arrange it so that if your son does default, the home returns to you automatically, whereupon you can sell it on the open market.

No. 2: You can also file a “quitclaim” document and add your son’s name to the title. Even if he doesn’t have the upfront money to pay you, you can still file the quitclaim, and he can take out a second mortgage and make payments to you.



No. 5: Instead, you can help him out by giving him the maximum allowable annual tax-free gift of $13,000 per year to defray his housing expenses and by paying for your son’s closing costs in the deal.


No. 7: There’s one other area where you shouldn’t scrimp: the hiring of a real estate lawyer or similarly qualified attorney who can assist in the transaction and advise you of the pros and cons of gifting the house and the other scenarios discussed here.

Remember, protect yourself first. Don’t jeopardize your retirement! Good luck.

Ask the adviser

