Home Selling in Alexandria>Question Details

Mary, Home Seller in Alexandria, VA

selling a house below market value to a family member

Asked by Mary, Alexandria, VA Mon Oct 5, 2009

I would like to sell a property I own to my son. The house is worth around 790,000 and I would sell to him for $617,000 which is what I owe on the mortgage. Can I do that? He would get his own mortgage and we would
go through the necessary steps to settlement.

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9
Mary
You have some very good advice so far. I would recommend talking with a CPA regarding tax consequences...not only for you, but potentially for your son.

My experience is that most people act first and try to solve problems AFTER the fact. The BEST way is to get the advice of competent professionals to avoid future problems.
0 votes Thank Flag Link Mon Oct 5, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Hi,
Yes ,you can, or course this will not be viewed as an "arms length transaction". You and your son might also want to check with your respective tax persons to make sure there are no tax ramfications as a result of the sale.
S.Jackson Associate Broker
Americas Network Realty Group, Inc.
0 votes Thank Flag Link Mon Oct 5, 2009
Good point Cindy.
We are also taking for granted you know your homes true worth. Quite often Sellers percieve their homes value higher than it really is. I would recommend you get an independent appraisal to determine the "gift" amount. This is one time where you don't want to press too much all the wonderful improvements to your home. The lower the home appraisal the less the gift.
Good luck
Kathy Stark
Weichert, Realtors
0 votes Thank Flag Link Mon Oct 5, 2009
The only thing no one else mentioned is the potential "gift" amount which is the difference between the market value and the mortgage amount. You may want to check in with an accountant to determine how this "gift" might be viewed by the IRS. Will it ended up exceeded your maximum lifetime gift as allowed by law for your estate if so it could be a taxable event to your son.
0 votes Thank Flag Link Mon Oct 5, 2009
I agree with the previous agents but my concern is your son's mortgage. Does he have VA eligability? If not he will likely not be able to do a no money down loan. Does he have the funds to pay the downpayment? Besides speaking with a good Real Estate Attorney, he should also speak with a good lender about his mortgage options.
Kathy Stark
Weichert, Realtors
703-201-9656
0 votes Thank Flag Link Mon Oct 5, 2009
The transaction really won't be any different than if you were selling to a non-family member. Your son can obtain his loan through traditional means. The lender's main concern is the appraised value of the home, not the fact that you're selling to a family member or even that your son is purchasing at less than market value (per you comments).
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Mon Oct 5, 2009
You should be able to do that. I recommend you speak with a real estate attorney or settlement company to set up your necessary paperwork. There are a number of good companies around. I'd be glad o share with you the names of some with which my past clients have been pleased.

Sincerely,
John
Web Reference: http://www.JohnMentis.com
0 votes Thank Flag Link Mon Oct 5, 2009
Yes, you can sell it to him for whatever you want. If you need an attorney to help you with the transaction/paperwork I can give you a good referal for one here in Alexandria that has helped me with similar types of transactions. So your son will get a loan for the $617,000, your mortgage gets paid off, and he gets a nice house with some equity going into it. Nice parent. Will you adopt me? LOL.

Delaine Campbell, REALTOR
Long and Foster Realtors
(703)932-6542
delaine@lnf.com

PS: How long have you owned the home? Has it been a rental or have you lived there? You may have some tax payment implications associated with the sale of the home, so you might want to look into that to make sure you have the information you need to make good decisions and to ensure the transaction goes as well as you want.
0 votes Thank Flag Link Mon Oct 5, 2009
Sure you can...you should have no problem as long as you are not asking the bank to forgive any debt you owe them. His lender will run an appraisal on the property so if it comes in lower than $617,000 then you would have to deal with that then. Otherwise, it is just like any other sale and he just gets the family discount!

Jimmy Mulhern
0 votes Thank Flag Link Mon Oct 5, 2009
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