Selling Your Home to a Friend: 5 Survival Tips

Your home is one of the most personal possessions you own. Maybe you’ve raised kids and lived a large part of your life there. Maybe it was the scene of happy dinner parties or non-stop adventures in remodeling and interior design. Now, however, it’s time to sell. There’s great news, though: your best friend wants to buy it!

While selling a home to a close friend is an exciting prospect, there are also some major pitfalls current homeowners need to be aware of for the whole thing to go smoothly. With this in mind, here are five smart tips for selling a home to a friend – the right way:

Selling Your Home to a Friend? Follow These 5 Home Selling Survival Tips

Before you and your friend sit down at the signing table, follow these home selling survival tips to ensure the deal goes off smoothly for everyone involved:

1. Don’t lower your price because it’s a friend

While it might seem kind to give your friend a few thousand dollars off the asking price, remember that this is a home sale, and your property is priced the way it is based on the facts of the current real estate market. There’s never a good reason to put yourself in bad financial straits in the name of a friend’s happiness. What’s more, cutting down the purchase price can leave you feeling resentful if the friendship ever goes south, or if you find that you’re now short on the deposit for your new home.

2. Sort out the financial details upfront

Talking money with close friends can be tough, but it’s critical during the home sale process. Instead of just assuming your friend will be able to qualify for a mortgage, ask him or her about it directly.  If for some reason, your friend’s mortgage falls through, you’ll find yourself scrambling to find another buyer. With this in mind, treat your friend just like you would any other interested party and ask for a pre-approved mortgage before the offer.

3. Get a home inspection

Few things ruin a friendship faster than selling someone a house that has black mold or lead paint that went undisclosed in the purchase documents. To prevent condition-related disputes down the road, hire a professional home inspector to evaluate the home before the sale, and work around any issues accordingly.

4. Enlighten other professionals about your relationship

Anyone else involved in your home’s sale, from lenders to agents, should know that you and the other party are close friends. This is not only good business, but it’s also the law. The Federal Housing Authority requires people who have an existing relationship with a home’s seller to file an Identity of Interest Certification Form. You may also be asked to provide additional information about your relationship. Bypass this critical step, and you might be at risk of mortgage fraud allegations.

5. Keep the lines of communication open

Communication is critical to keeping both parties happy and satisfied. Develop a standard of communication and stick to it throughout the sale for best results.

When you follow these five tips, selling a home to a friend is exciting rather than stressful!