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Posted: 1/18/2015 10:07:27 AM EDT
[#1]
There's about a thousand ways this could blow up in your face and only a couple ways were everyone lives happily ever after.
I've seen it go both ways and I hope it works out for you. |
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Posted: 1/18/2015 10:09:04 AM EDT
[#2]
Just did this last year. Bought a home from my in laws for a good price and they financed it. Doing this certainly carries an increased risk to family relationships should something go awry, ie you are unable to make the payments in the future. Definitely hire a title insurance company to do the paperwork and have a proper title policy. It's worth the $1k it will probably cost. Also, do some reading on the Dodd-Frank law. It imposes restrictions on mortgage lenders including the use of seller financing. A one-time deal like this probably falls within the law's exemptions but you need to verify that. Good luck!
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Posted: 1/18/2015 10:10:29 AM EDT
[#3]
Quote HistoryQuoted:
There's about a thousand ways this could blow up in your face and only a couple ways were everyone lives happily ever after. I've seen it go both ways and I hope it works out for you. ETA: You're on the right track with the lawyer. Personally I think financing through the FIL is a mistake, but that's just a rule of thumb for me. It all depends on your relationship and finances. Does the FIL have any siblings? Does your wife? Anyone else out there thinking maybe they should be the one to get a smoking deal on a house? |
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Posted: 1/18/2015 10:15:37 AM EDT
[#4]
We purchased my FIL/MIL house about 5 years ago. We used an attorney and set up a mortgage with them as the holder. My FIL has since passed. My wife it to inherit the property so if something happens to her before it is paid of my wife becomes the holder and can forgive herself of the debt.
Other than you not paying the mortgage I don't see what else could go wrong if it is set up properely |
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Posted: 1/18/2015 10:19:53 AM EDT
[#5]
Negative ... Its got to be a clean cut deal . If he is selling the house to you there should be no strings attached. Rates are low go to the bank and get a loan. It sounds like he wants the option for himself just in case he needs a place to live.
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Posted: 1/18/2015 10:22:07 AM EDT
[#6]
I would personally finance through a bank. Large amounts of debt with family is bad juju.
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Posted: 1/18/2015 10:22:25 AM EDT
[#7]
Family+ business+ money= bad juju
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Posted: 1/18/2015 10:22:41 AM EDT
[#8]
Quoted:
FIL wants to sell us his mom's house for a very low price (approx 30k under fair market). It needs a lot of remodeling but the house is solid and is around 2k sq ft. We could even add on to it and increase it's value even more and still have a lot of equity in it. He also wants to finance it for us if we want. Figure it's better to pay him than a bank. We'll definitely go see a lawyer and write up a contract to protect everyone. I'm just looking for other's experience on something like this and what all we'll need to look out for. I've bought and sold houses before but to me this way seems easier to screw up. I've bought land that way. No contract, just went to the title company and paid them around $60 (plus the county's fees) to do the paperwork. My sister had a "pay me when you can" attitude about it, but I had just built her a small barn and didn't charge her for anything but materials. Didn't go as well with the attempt to buy land from my father. NEVER build a house on land that someone has agreed to sell to you, but hasn't drawn up any paperwork. Built the house, and he kept finding excuses to not do the paperwork. After several years of this, my mother was hospitalized for 11 months before she died. There is now a lean against their estate (including the land my house is on) for her medical bills. Sucks to be faced with a choice of walking away from a house, or paying somebody else fair market value for the house and lot, after you built it and paid for the materials. |
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Posted: 1/18/2015 10:23:11 AM EDT
[#9]
Yes to buying, thank him very much.
No to ever financing anything with family. I have a great relationship with my Dad and financed my first car with him when I was 15-19 and will never do it again. |
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Posted: 1/18/2015 10:24:29 AM EDT
[#10]
Purchased land from family. We used a escrow service. No problems
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Posted: 1/18/2015 10:25:23 AM EDT
[#11]
Quote HistoryQuoted:
Yes to buying, thank him very much. No to ever financing anything with family. I have a great relationship with my Dad and financed my first car with him when I was 15-19 and will never do it again. He taught you well |
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Posted: 1/18/2015 10:25:39 AM EDT
[#12]
Quote HistoryQuoted:
Rates are low go to the bank and get a loan. Quote HistoryQuoted:
Rates are low go to the bank and get a loan. This. Quoted:
Yes to buying, thank him very much. No to ever financing anything with family. I have a great relationship with my Dad and financed my first car with him when I was 15-19 and will never do it again. LOL I financed a loan with my mom back when I was young & stupid. She charged me five points over what the banks were offering at the time. I paid her off ASAP! |
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Posted: 1/18/2015 10:28:38 AM EDT
[#13]
"Through a lawyer" doesn't mean shit...
If you have any love for yourself or your family, DON'T DO IT. ...ask me how I know. 
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Posted: 1/18/2015 10:37:50 AM EDT
[#14]
Buy it sure... Sounds like a good deal.
Finance through him? No way in hell... Having bought and sold about 10 houses over the years I have been through many many different scenarios. Forget the usual bad ones. Think about these: What happens when you fix it all up. Decide to sell in 5 years and make a killing on the house? That will cause bad feelings. Trust me. Or someone ends up in the hospital? Needs money or can't make a payment. You would be surprised at how often houses in family ownership are looked at as assets for everyone. Especially if there is money in them. What about survivorship? Your initial loan is to him. So he isn't around, who does he pass that onto? Nightmare situations. Even if everyone acts like adults it still can get really expensive to unravel in court. Added costs you just don't want to get into. |
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Posted: 1/18/2015 10:47:00 AM EDT
[#15]
Quote HistoryQuoted:
Buy it sure... Sounds like a good deal. Finance through him? No way in hell... Having bought and sold about 10 houses over the years I have been through many many different scenarios. Forget the usual bad ones. Think about these: What happens when you fix it all up. Decide to sell in 5 years and make a killing on the house? That will cause bad feelings. Trust me. Or someone ends up in the hospital? Needs money or can't make a payment. You would be surprised at how often houses in family ownership are looked at as assets for everyone. Especially if there is money in them. What about survivorship? Your initial loan is to him. So he isn't around, who does he pass that onto? Nightmare situations. Even if everyone acts like adults it still can get really expensive to unravel in court. Added costs you just don't want to get into. Bill collectors are going to look for any assets that they can latch onto. They won't care that a family member has a verbal agreement to purchase, or has already partially paid for it (with no receipts, because "it's family"). |
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Posted: 1/18/2015 10:48:48 AM EDT
[#16]
Quote HistoryQuoted: Buy it sure... Sounds like a good deal. Finance through him? No way in hell... Having bought and sold about 10 houses over the years I have been through many many different scenarios. Forget the usual bad ones. Think about these: What happens when you fix it all up. Decide to sell in 5 years and make a killing on the house? That will cause bad feelings. Trust me. Or someone ends up in the hospital? Needs money or can't make a payment. You would be surprised at how often houses in family ownership are looked at as assets for everyone. Especially if there is money in them. What about survivorship? Your initial loan is to him. So he isn't around, who does he pass that onto? Nightmare situations. Even if everyone acts like adults it still can get really expensive to unravel in court. Added costs you just don't want to get into. This. OP. If you want to buy the house, get an appraisal and finance through a bank. KISS
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Posted: 1/18/2015 10:56:00 AM EDT
[#17]
There can be Tax implications if it is sold under appraised value as well.
This may work for some people, but generally family and large sums of money typically don't go well.
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Posted: 1/18/2015 11:06:16 AM EDT
[#18]
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Posted: 1/18/2015 11:09:13 AM EDT
[#19]
Quote HistoryQuoted: There can be Tax implications if it is sold under appraised value as well. This may work for some people, but generally family and large sums of money typically don't go well. Yeah I'm worried about capital gains taxes if we sell it for a lot more than we bought it for. I was thinking one way to offset that would be to have the purchase price at fair market value, then he will gift us the 30k to use as a down payment (and make sure that 30k down payment gift has a receipt and maybe even put it in the closing docs). From what I understand, that's still under the limit for gifting to a family member and spouse. I don't know though, that's where an attorney would come in.
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Posted: 1/18/2015 11:12:01 AM EDT
[#20]
Get a loan from a bank. Pay your family off and be out of that loop.
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Posted: 1/18/2015 11:42:48 AM EDT
[#21]
Quote HistoryQuoted:
Get a loan from a bank. Pay your family off and be out of that loop. This. Just get a normal mortgage for the house and be done with it. I have had help with a loan once. Never again and never will I co sign or private contract anything short of just holding a relatively small item waiting for someone to come up with the cash. |
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Posted: 1/18/2015 11:49:29 AM EDT
[#22]
Quote HistoryQuoted: This may work for some people, but generally family and large sums of money typically don't go well. Quote HistoryQuoted: Quoted: There can be Tax implications if it is sold under appraised value as well. This may work for some people, but generally family and large sums of money typically don't go well. Yeah I'm worried about capital gains taxes if we sell it for a lot more than we bought it for. I was thinking one way to offset that would be to have the purchase price at fair market value, then he will gift us the 30k to use as a down payment (and make sure that 30k down payment gift has a receipt and maybe even put it in the closing docs). From what I understand, that's still under the limit for gifting to a family member and spouse. I don't know though, that's where an attorney would come in. The max without paying gift tax from a couple is currently at $28,000 so they could give you and a spouse as a couple to $56,000 |
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Posted: 1/18/2015 11:54:06 AM EDT
[#23]
Quote HistoryQuoted:
There can be Tax implications if it is sold under appraised value as well. This may work for some people, but generally family and large sums of money typically don't go well. This, capital gains issues and I read somewhere that there is a potential for liability, as in lawsuits from neighbors due to bringing down the comp value of the neighborhood. Supposedly people have successfully sued neighbors for damage to the value of their property due to a below market value family deal in the neighborhood. Trying to navigate a similar situation with my house, inheritance, trusts etc myself. Thanks government for making something that should be simple and easy as difficult as possible. |
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Posted: 1/18/2015 12:01:25 PM EDT
[#24]
Not worth the drama imho. What if he has regrets selling, you find out the house is worse than expected, etc. I don't buy or deals with family.
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Posted: 1/18/2015 12:28:10 PM EDT
[#25]
Twenty five years ago I bought a house and land from my wife's grandfather. Did the escrow thing with him. After a year he tried to change the escrow details. Got a loan from the bank and paid him off. About 17 years ago, he died and the estate sold the property to a daughter of his. We have had 17 years of arguing about the property line and use of a road. Repeated threats of lawsuits until last year when the husband of the daughter died. His son sued us over the issue (using Dads insurance money), and we are in year two of a lawsuit and over 50K in legal fees.
Never buy from or deal with family unless everything goes through a lawyer. Our 1997 purchase went through lawyers on both sides, and while their lawyers tells them they won't win, they are just trying to bankrupt us with the costs of defending the suit. If you are dealing with family, document everything and get everything in writing. Also involve lawyers at every step. It will help you down the road when somebody decides to sue. Better Yet, NEVER BUY FROM FAMILY!!!! |
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Posted: 1/18/2015 12:40:39 PM EDT
[#26]
Do not finance through him
Rates are really cheap right now. |
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Posted: 1/18/2015 12:57:05 PM EDT
[#27]
Quote HistoryQuoted:
I would personally finance through a bank. Large amounts of debt with family is bad juju. This. |
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Posted: 1/18/2015 1:19:12 PM EDT
[#28]
From my experience, family and large amounts of money don't mix. I would rather go through a bank to finance the purchase.
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Posted: 1/18/2015 1:41:21 PM EDT
[#29]
it is all about maturity from both sides. if you are a mature responsible person who pays their bills on time every time,
and you father in law is a mature responsible person it will work out. most family business problems happen because one side or the other interjects emotion into the business. that said i have family i would never do business with, and others i would co sign the world for. always have a contract family or not, always enforce the fact this is just business. as always ymmv. |
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