How complicated do you want to make this transaction?

Very simple:
• Agree on a price – you could get an appraisal to help you set the price – or perhaps a REALTOR® would agree to do a CMA (comparative market analysis for you for a fee)
• Make an agreement to pay the parents
o Monthly – Quarterly – Annually
o What will be the payment amount?
o At what interest rate
o Over what period of time
o Will there be a down payment – how much?
o You should have paperwork done by a professional (attorney?) and you should obtain title insurance. In addition to a debt instrument, a deed of trust or mortgage needs to be prepared. These things may be done differently where you are than they are here in California. Local professionals should be consulted.


Or – are you going to get a conventional loan and buy them out in full? That will make it more complicated. You will need to qualify for a loan. The lender will probably want you to have a down payment, so that you will have “skin in the game”, no matter what price you agree to pay for the house. Forget 100% financing. You will need an appraisal as part of the loan…your lender will arrange this.

Have the parents sought tax advice about the ramifications of selling this home which is not their primary residence? Do they need a lump sum from the sale or would regular payments be more to their advantage?

Consulting an attorney, one with estate planning expertise, may be a wise investment. Contact me if you want a recommendation for such a person in the Hayward (Southern Alameda County) area.

John Juarez, REALTOR
Windermere Properties of the East Bay
John@CarlMedford.com
510-673-0686

Jaebaby:

I agree with Tim – hire a REALTOR who can help you. Find one who has done similar types of transactions before. They can:

(1) Explain the entire process,
(2) Help evaluate the condition of the property and set a fair price,
(3) Help with all of the necessary disclosures and other paperwork,
(4) Help with financing,
(5) Ensure that title is transferred correctly and more.

Properly handled, this can be a very smooth process.

.

Jaebaby,

I'm not sure why this transaction would work any different then another:

1) Have the parents agree to sell it to you.
2) Get pre-approved for financing.
3) Go through with the sales and loan processes.

The complications that may arise (and what I can foresee from past experiences) is that:

A) This is not an "arm's length" transaction.
B) You may be hoping to not have to make a down payment because the home is owned by someone you know and they're selling it to you.
C) You're not sure how the home would appraise given its condition.

If you think I can help, just get in touch, but my guess is that your ideas will meet reality where the unconventional aspects (sale within the family) meet the conventional (need for bank financing).

You know more than you think,

Rob Spinosa
RPM Mortgage
rspinosa@rpm-mtg.com

Hi Jaebaby,

I would suggest you hire a Realtor to run comps on like properties in the area. By doing so you are looking at fair market value to make the purchase. If her parents want to offer you a discount so be it. In this case I would suggest using one Realtor to save on fees and since it's family you all can agree on the price, terms, taxes, inspections etc. That said make sure you and your fiance can qualify for a loan and move forward with the purchase. I hope this helps.

Tim