Getting a fair price on a home purchased from either parents or friends is an uncomfortable proposition at best and impossible at worst. Transactions like this are called non-arms length by the industry, which means that the market pricing mechanisms have not been used to determine a fair market price.
Usually, you can expect the winning side of the transaction to have far more interpersonal influence on the relationship. You're effectively trading dollars for personal feelings.
Since the whole point of getting a property from a known relationship is to get a better deal than normally possible in the market and save on commissions, if you're not comfortable with the price being offered, you should just back out of discussions right away. Otherwise, you just end up antagonizing eachother without necessarily coming to an agreement.
One solution that I've used in similar situations is to suggest that you get a real estate broker at a reduced commission, perhaps 1-2% instead of 6-7%. This way, you'll both have somebody who can make sure the contract paperwork is handled properly and can offer market comparables for a more realistic price. From my experience, a 1-2% commission is a very small price to pay when the buyers in self-negotiated transactions tend to over pay by 5-10% to try to keep the seller "happy".... more
Sounds like what you want is a 30 year fixed. If you plan to stay in the property for at least 10 years an adjustable rate mortgage is a risky thing to do. No one can predict what the rates will be in 5 to 10 years. You can always pay extra and turn a 30 year loan into a 15 if you wish.... more