Jay Sondhi, Real Estate Pro in San Francisco, CA

What is the best way to facilitate an intrafamily sale?

Asked by Jay Sondhi, San Francisco, CA Tue Dec 8, 2009

I have some clients who live in their father-in-law's home. He wants to sell it to them with a gift of equity for the down payment. Is a realtor necessary here?

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Answers

11
Attorney and CPA. Make sure that the gift of equity is not considered over the limits of what the IRS will allow, otherwise the IRS could consider it income.

This is probably going to be outside the realm of an attorney's expertise. Also, one can run into trouble of the home is sold for less than market value, as the IRS can then consider the difference between sales price and FMV to be a gift, which again can be subject to income tax.

So, again, a CPA is all but mandatory here. I've seen quite a few people burned in attempts at good deeds and with the deficit we're facing, the IRS is auditing just about everyone these days.

Good luck!!!
Eric M. Abrams
510.332.6314 Mobile
510.428.1224 Fax
Executive Sales, Leasing, and Investment

EricMAbrams@gmail.com
California Real Estate Broker
DRE License# 01862927

Highland Partners Prudential
342 Highland Avenue
Piedmont, CA 94611

*Mr. Abrams was the selling agent for the most expensive residential property to close in the history of Oakland, California, breaking the previously held record by a wide margin. Having done so in a distressed real estate climate, makes this feat all the more impressive. Mr. Abrams has also set numerous other real estate records, and has personally represented the most expensive residential listing on the Island of Maui when he listed the private sale of a $120-million estate. As a technology leader in his field, Eric has been able to assist his clients with their real estate needs from thousands of miles away, in locations such as Kenya, East Africa, Bogota, Colombia, Kosovo, and Kazakhstan. While an expert in the field of high-end real estate, Eric maintains an active cliental of first-time home buyers and sellers and treats each one of his clients with professionalism and allots unlimited time to answer all of his client’s questions regardless of their position financially or whether or not they’re actively searching for a home. Mr. Abrams is an expert in finance, was a top-ranked professional road cyclist, and is known by his colleagues and clients to be one of the most approachable and patient real estate brokers in the business. Not to be limited to working in the Bay Area only, Eric routinely assists clients throughout the United States and this year alone has flown to New York, Arizona, Maui, Virginia, and throughout California to assist his clients with their real estate needs. Mr. Abrams can be contacted by phone, e-mail or visited in person at his office, where he is happy to discuss your real estate goals, speak about the market in general, or assist in you and your family in identifying and accomplishing your financial goals as they pertain to your investment in your home or multi-unit commercial building. Having participated in numerous TIC formations and large-scale new construction projects, there are few areas of real estate that Mr. Abrams is not intimately familiar with. Residing in the Bay Area with his wife Andrea and his Dog Berkeley, Mr. Abrams also enjoys running, cycling (although no longer competitively), motorcycling, aviation, hiking, backpacking, and camping. On a personal note: “If I may be of assistance or offer you a second opinion, if you’re already working with a realtor, please feel free to contact me at any time, and have a fantastic holiday season!
1 vote Thank Flag Link Fri Dec 18, 2009
With the help of an attorney.

Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)225-9894
gregory.garver@gmail.com
http://www.gregorygarver.com

Web Reference: http://www.gregorygarver.com
0 votes Thank Flag Link Fri Dec 18, 2009
An attorney can draw up the documents. The only thing a Realtor would bring to the table is market value knowledge.
If the father-in-law is comfortable setting the price and other family members won't object then an attorney and a title company are all that they need.
0 votes Thank Flag Link Wed Dec 9, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
I agree with Jefferson and Guy, a realtor is not needed but an attorney would be a good idea. I am an attorney and a broker and do intrafamily transfers regularly, mostly as an attorney for clients referred to me getting a divorce. From time to time, I get a situation similar to yours and I charge a low hourly rate as an attorney to facilitate the transaction, ensure the agreement is put on paper, and do it as an attorney real estate consultant.
0 votes Thank Flag Link Wed Dec 9, 2009
Jay,

I don't think a realtor is necessary or warranted in this case. However, in my experience it is often necessary to have your i's dotted and t's crossed even more so when it comes to business transactions with friends and family so that there are no misunderstandings. I've seen too many instances where friends and family expect things that are not reflective of a normal business transaction, and one or both sides subsequently get angry.

To determine value I would have it appraised by two separate reputable appraisers. This should insure that neither side feels taken advantage of on price. To make sure all the paperwork is right I would hire a real estate attorney. Trust me when I tell you the combined cost of hiring these professionals is insignificant to avoid misunderstandings that can damage or destroy relationships.

Best Regards,

Lance King/Managing Broker
lance@fixedrateproperties.com
415.722.5549
0 votes Thank Flag Link Wed Dec 9, 2009
If the purchase price is already agree upon and they are taking the house as-is, I don't think there is a need. I never did a gift of equity where there was a Realtor involved.

JUST CLOSE THE DEAL!!!!!!!!!!!
0 votes Thank Flag Link Wed Dec 9, 2009
If there is total trust and understanding as to how to perform the task at hand there is no need for an outside source to facilitate.
In the real world families do not always agree or capable making decisions regarding money matters . A facilitator could be a welcome answer. There is a misconception that realtors and lawyers are only additional expense that should be avoided at all times . It is indeed in matters so significant they serve a greater purpose.... experience. Miss-understandings that could destroy relationships even in close nit families.
Consulting with a reputable and experienced professionals is always the right choice when in doubt. You will be surprised how little the cost and how it buys you a peace of mind.
0 votes Thank Flag Link Wed Dec 9, 2009
I'd recommend your clients hire an appraiser or a Realtor to verify the propert value. If that's already known, a real estate attorney, title company and CPA would be the professionals to consult and work with.
Web Reference: Http://insidesfre.com
0 votes Thank Flag Link Wed Dec 9, 2009
Jefferson is absolutely correct...no realtors necessary in this scenario...it would be a total waste of money.

The two parties just need to meet with an attorney and get the details on paper. The parties may also want to talk to a tax professional about tax implications.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Wed Dec 9, 2009
Of course not. Why would family need or want to pay a realtor for a mere intra-family transaction? A real estate lawyer can draw this up on the cheap.

I see that you are a real estate professional, not a consumer, so why the provocative question? Just interested in a cat fight among the agents :-)
0 votes Thank Flag Link Wed Dec 9, 2009
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