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Can I Sell My House to a Family Member at Below Market Value

When it comes to selling a home, the process can oftentimes be stressful. Whether you’re selling for the first time to the market or just selling to someone you know who is already interested, there are a lot of factors that can go into the process itself. If you are considering selling your house to a family member, and want to do so at below market value, you might be wondering what the pros and cons of this might be. We’ve got the answers to the questions you’re currently asking yourself.

Do You Have a Mortgage?

If you’re selling your house to a family member but you still have a mortgage to pay off, you might want to reconsider your offer. While selling a house to them for under market value might seem like a generous act, it could easily put you under on finances if you still have a lot to pay off. If selling your house is urgent, and this family member is willing to buy it from you soon, come up with a compromise for the overall cost so that you don’t have to continue paying. For example, you can offer to let them have some of the current furniture or even allow an earlier move in date.

What is the Value of the Home?

Before you decide to sell your home to anyone, you’ll want to gauge what your home is currently valued at. If its value has increased since buying it, then selling at beneath market value, even to a relative, would likely be a poor financial decision. Home equity is important these days, and understanding that your home’s value will likely increase instead of decrease is crucial. You can find the value of your home through an appraisal. From there, decide how much of a financial impact it would make on you if you decided to sell for under value.

Is the Family Member Taking Out a Mortgage?

If the family member who is planning on buying your home is going to take on a mortgage, understand that this could add some levels of difficulty. To start, taking out a mortgage depends on quite a few financial factors including credit score and income. If this family member isn’t doing the best financially, they may not be able to take out a mortgage to foot the cost of the home, even if it’s below value. Assess how they are doing financially and if they are able to successfully be approved for a mortgage.

Will This Be Benefiting You as Well?

In many cases, selling a home to a family member for under value could actually benefit both parties involved. For instance, if the house needs some work that you don’t have the time to complete or if your ownership of the house is a result of a death in the family, then selling it for under value could be beneficial to you. Not only will it rid you of the burden of having to clean and complete renovations, but it also ensures that the home can stay within the family.
At the end of the day, there are a lot of pros and cons to selling a home to a family member for below value. If it’s a home that still has a lot of value or if you are still paying off your mortgage, it might be better to hold off. However, if the home needs some work, it might make more sense to just sell the home without a realtor to them even if it’s under value. Every situation is different!

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