Home Buying in Kennesaw>Question Details

Prljen, Home Buyer in Kennesaw, GA

I am thinking about helping a family member by purchasing their home so they do not go into foreclosure. Then when they are ready they will buy it

Asked by Prljen, Kennesaw, GA Tue Dec 22, 2009

back from us. I live in California and the current homeowners live in Georgia. Can anybody help with advice?

Help the community by answering this question:

Answers

11
I am currently working with buyers doing something similar. A family is going into foreclosure, so the mother is buying a different house and letting the family live there. They will be paying her monthly for the mortgage - as tenants. Once the mortgage is paid off they will stop paying "rent" and a title transfer will take place. If they sell the mother will give them (as a taxable gift) any profit made on a sale.

This may be an option for you. I know that a short sale can not be sold to friends or family.

You may also want to see if you can assume the current mortgage for them. This basically means you buy the house for what's left on the mortgage, and you become responsible for the payments.

I think your best bet is to have a meeting with your family member and the bank to discuss options. I'm sure they will work with you.
0 votes Thank Flag Link Thu Apr 7, 2011
Curious to know what you decide. Most everything has already been hit upon, most importantly if they are behind and most likely can't sell it for pay off... you will be buying an overpriced home and what no one has said yet is, how are they going to buy it back from you? They surely won't be able to get a loan and especially not one for more than the house is worth. Your biggest question should really be, "how much money am I willing to lose to help out a family member?" Because the question isn't going to be "will I lose money?" rather "just how much am I going to lose?" Good luck with this one.
0 votes Thank Flag Link Thu Apr 7, 2011
Keep in mind that family relationships will just feel different when you do this. First, they'll feel like they owe you. And, they may feel like they won't be able to repay you. So, to combat their emotions, they'll either get mad that you were able to help them out, or they'll just disconnect from you entirely. Are you willing to lose your relationship with this family member? Sometimes the acts of kindness are not worth the damage to your relationships.

A little tough love toward them would be to let them fall into foreclosure to underscore the dangers of home ownership and let them take better steps to manage their finances: buying within your means, building reserve savings for emergencies, and knowing how to care for their own family.

Good luck!
0 votes Thank Flag Link Sat Dec 26, 2009
I think Dan's answer was headed in the right direction but could be expanded upon. I would like to know the marketability of the house before I could consider this. Is the price owed high or low for the neighborhood? Are the lots of foreclosures and relos in the area? What is owed compared to what the home could be listed for? Whats the likely hood that I could sale the home if I had to foreclose on the property? How long can I hold the property without it going into foreclosure (in case you have to foreclose on your family, and then you need time to sell it)? I really agree with John on this. However, Hank had it right. Business is business (and business with family is a terrible idea!)
0 votes Thank Flag Link Wed Dec 23, 2009
I did not see one thing asked. although it was hinted at.

What is the house worth today?
What is owed on it?

subtract question 2 from answer 1 and maybe buying at the pay off would be financial suicide for you.

Q3 2009 U.S. Foreclosure Heat Map (YIKES!!)
http://www.foreclosurepulse.com/blogs/mainblog/archive/2009/…
Depending on where it is in Georgia this could be buying into a market that will drop a lot more. Be careful.
Below is a real estate market forecast for 2010. Look at the area they are in.
http://www.housingpredictor.com/better.html

Helping out a friend is a wonderful thing. But damaging yourself extensively in the process is not worth it. You need to find out the numbers and reasons that put them in this position and could place you in a similar one later on.
0 votes Thank Flag Link Wed Dec 23, 2009
Prljen,

it is very noble of you to want to do this. Taking on a mortgage would affect your ability to buy a new home if you ever decide to.

Good luck.
0 votes Thank Flag Link Wed Dec 23, 2009
Prljen,

Wonderful act of kindness on your part. Though not enough information. Are you planning to buy the home outright with cash or take out a mortgage, is your family member behind on payments, has the foreclosure process started, have you contacted your accountant or lawyer to find out the effect on you and your finances, etc., etc.

Great speculative advice so far. Hank, Lynn, and John bring up great points. If you do decide to go this route and purchase the home outright you may want to consider a lease purchase with guidlines set out in the contractual agreement to protect your investment and provide a vested interest in the home for your family member.

Chuck
0 votes Thank Flag Link Wed Dec 23, 2009
In agreement with John on this one. You are thinking of an act of kindness not an investment. Therefore, you have two choices throw money at them or find out the specifics. If you want specifics; ask why they're behind, how much and far behind? If you assist them will they be able to maintain or be in the same situation in three months. This situation may be the harsh reality that they will lose the home and go rent a place. Nothing wrong with that but you probably want to know how to best assist them. If they can't afford the house or if they just need a little help to get back on track are two totally different scenarios. best of luck.
0 votes Thank Flag Link Tue Dec 22, 2009
I'd get an accountant's opinion. I also think that John makes a point - if they're in trouble now who is to say you won't ulimately wind up stuck with this home and all the issues that brings? I'd structure a collateralized short term long (12-24 months) and have it drafted by a lawyer - business is business.

Hank
0 votes Thank Flag Link Tue Dec 22, 2009
The current lender would need approve your purchase.

Suggestion are they approved for a short sale by lender?

Some lenders may prevent other family member purchase a home

All transactions would need be in contractual form submit lender for you purchase, goes thru title transfer property in your name .

Are your approved for a loan? If no then you need complete all requirements for mortgage contact a loan officer where home is located. Insurance, tax could be higher you would not be primary resident for home however confer CPA for annual tax benefits.

Can your family member afford making payments back to you? Have income, can you break even. In some instances for repairs and etc. family member can become demanding you pay fix the home keep it up while they reside there.

I would have a contract between you family member if you need evict them "tough love" sounds harsh many times these kind jestures become nightmares you are stuck holding property. If they move due to employment you know have a vacant home with mortgage, tax, insurance, realtors fees sell property.

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911

http://www.lynn911.com
0 votes Thank Flag Link Tue Dec 22, 2009
I'd say unless you want to own a home in Georgia with people who live in it for free, don't buy it. Keep in mind if they will be selling it to you through a short sale that it is illegal to sell to a family member or relative.

If you want to help them why not just "loan" them the amount they are behind to bring it current. If you wanted the money back you could attach a Trust Deed to the house so if they don't eventually lose it to foreclosure and decide to sell it you'll at least get your money back.

That's a tough situation but buying it to save them does not sound like a good idea.

Good luck,
John
0 votes Thank Flag Link Tue Dec 22, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer