Sell my house to someone I know?

kitchenwitchMarch 7, 2014

I'm about to list my house for sale next week - I have an appointment with my realtor on Monday. A friend of a friend, whom I've known for many years, contacted me today because she's looking to buy in my town, and she heard I was selling. She's coming to see it over the weekend. If she wants to buy it, what is my next step? Of course I would get a lawyer to work with, but should I still list the house with my realtor to show the house in case it doesn't work out, and somehow make the friend be outside of my contract? Should I offer the realtor a percentage to help me through the process? I will be looking for another place to buy, so the realtor could still get a sale through me. The friend would have a home inspection and an appraisal as usual, but I'm worried that selling a house to someone you know is a little like selling your used car to a friend - could there be issues down the road? I'm not hiding anything, and the house is in good shape, but it's over 100 years old, as are most of the houses in my town.

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kirkhall

Decide if you'd rather use a lawyer or a REA for the sale.

Then, wait to list until after the friend of the friend doesn't offer (give her a deadline--I intend to list it by 3/15, or...)

I had a friend do this. It worked out well for both parties. Saved some commission (because, frankly, the REA didn't need to market the house, spend any time prepping it, etc), and worked through the normal legal channels and normal legal contracts.

I don't think it is really like selling a used car to a friend. But, only you know what kind of friend you have.

    Bookmark   March 7, 2014 at 3:03PM
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rwiegand

This can work out very well for all concerned, just don't skip any of the steps. Getting an appraisal done to provide a basis for pricing is probably worthwhile. Most realtors will want their 6% if they touch the sale in any way, so tread carefully there. A realtor can provide help in pricing, but at a stiff cost to you. A good real estate attorney can handle everything that's needed to carry out the transaction at a much lower cost. We sold to a friend and saved considerable money, but had the advantage that it was a corporate relo and the relo company provided the appraisal and pricing services that a REA might have. Plus we got paid a bonus for not using an agent, a nice deal.

    Bookmark   March 7, 2014 at 4:34PM
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kitchenwitch

In the past two months I've been interviewing realtors, so I have a professional price opinion based on recent comps, but I know an appraisal is really the bottom line. It's been a while since I've sold a house - doesn't the buyer (or their bank) usually get the appraisal?

    Bookmark   March 7, 2014 at 6:45PM
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cmarlin20

If you feel comfortable knowing the value and what you are willing to accept, don't worry about an appraisal. The buyer will get one if they want or if they finance. Only concern for you is if it doesn't appraise for selling price.
If this person does buy, I wouldn't contact a real estate agent, you can consult with an attorney for legal protection for much less. Many agents can't make special arrangements for limited service. In my state, one can just open escrow with the agreed terms.

    Bookmark   March 7, 2014 at 10:42PM
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dadereni

To protect [the friendship] from issues down the road, consider buying your friend a robust home warranty. So if something does break right after the sale it can be addressed.

    Bookmark   March 8, 2014 at 8:00AM
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jrb451

The appraisal the buyer gets is for the bank mortgage. You need to know before hand what your price is. The advantage of this type of sale is that you don't have to factor in the commission into the selling price.

    Bookmark   March 8, 2014 at 10:11AM
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RooseveltL

Get a lawyer or closing authority and have your friend conduct all contact with that individual or resource. As you both need to understand this is a business transaction amongst acquaintances but it is a business transaction.

I would equate it to buying a used car from a friend - it can turn out well but if a flat tire two days after sell - can over extend the relationship.

Negotiation a price and ask your friend how quick they can close as you can use some of your savings from commission to give bonus for quicker closing (saving you more money of holding) or pay the taxes, etc. for another quarter as an extra surplus. It may not be much but good incentive for a buyer.

    Bookmark   March 9, 2014 at 8:35PM
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RooseveltL

Get a lawyer or closing authority and have your friend conduct all contact with that individual or resource. As you both need to understand this is a business transaction amongst acquaintances but it is a business transaction.

I would equate it to buying a used car from a friend - it can turn out well but if a flat tire two days after sell - can over extend the relationship.

Negotiation a price and ask your friend how quick they can close as you can use some of your savings from commission to give bonus for quicker closing (saving you more money of holding) or pay the taxes, etc. for another quarter as an extra surplus. It may not be much but good incentive for a buyer.

    Bookmark   March 9, 2014 at 8:38PM
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