Are you thinking about buying a new home? Are your parents thinking about selling theirs? Why not make the most out of the situation and simply buy a house from your parents? It can be a really smart strategy as this kind of home buying process is less money- and time-consuming than all other kinds. That is one of the biggest advantages, that is the pros, of buying a house from your parents.
But, we can all agree that the pros usually come with some cons, right? So what are the cons of buying a family house from your parents? Well, in some cases, mixing money and family matters does not work out well and sometimes the house ends up costing even more than planned when all the renovations are done. If you want to know more about this matter, keep on reading.
Pro - Both Parties Can Save A Lot Of Money
One of the biggest benefits of buying a family house from your parents is being able to actually save a lot of money and reach that savings goal with your family. And, the best part is - you will not be the only one saving money - your parents will be able to do it too! If you have ever dealt with real estate before, you know how expensive things like real estate agents, commission costs, closing costs, and similar, can be. But, when you are buying your parents' home, all of these, and many more, can be avoided. You can actually save thousands and thousands of dollars!
However, we do not advise you to skip all the costs - things like an appraisal, home insurance, and house inspection, for example, are of key importance. So, make sure you do everything necessary before you sign the papers and call Bluebell Relocation Services NJ to help you and your family move in.
Pro - You Can Buy the House Below the Market Value
Another great thing about buying a house from your parents is the ability to buy it below the market value. So, for example, if you wanted to live in New York City, instead of spending $500,000 on a house, you could get it for $300,000 or $400,000. For many new families living in bigger and thus, expensive cities, this could be a lifesaver, especially in today's economy. You and your family will save money and your parents will be glad to know that their beloved home is in safe hands. Again, it is a win-win situation.
So, consider doing this if you plan on moving from NJ to the Big Apple for instance, or moving anywhere where your parents' home is. With the rising property prices, be sure that your parents will be the only one who can help you out.
Pro - Gift of Equity
If this is your first time buying a house, your biggest obstacle is probably the downpayment. We agree, collecting that big amount of money is not an easy thing to do. This is where your parents can also help you out and prove why buying a home from them is a great idea. Namely, if you do not have cash for your downpayment, your parents can give you the so-called gift of equity. The gift of equity would be the value they have in their home. Thanks to this, your downpayment will be a lot lower, or you may not even need one. This is a great money-saving tip when buying a house, so take it into consideration.
Con - The House May Be Old and Outdated
As mentioned in the beginning, everything in life comes with pros and cons. And, the same applies when buying a family house from your parents. Until now, we talked about all the pros, but let us turn to cons as they are, in most cases, unavoidable. So, the biggest con would be that the 'cheaper' house you bought, comes with a big need for renovation. You may only need to undertake a smaller project like repairing the roof or replacing the appliances. But, if the house is older, you will probably end up with bigger projects like replacing the electrical or some mechanical system in the house. In both cases, you will need a lot of money.
Moreover, another con that comes with the previous one is that by doing all the remodeling and renovating, you will lose all the custom features that made that particular house yours. So, before you do anything, really think through how much is everything going to cost you and is it worth it in the end.
Con - Somebody Can End Up Feeling Guilty
We can all agree that when it comes to family matters, somebody always ends up feeling guilty. If you do not agree with this, then you have a perfect family. Otherwise, you know already know how this story will go. If you buy a house from your parents, there might be some disagreements, disputes, conflicts, etc. All of these could easily turn into a fight. That is why buying a house from your parents could be tricky.
There are many situations that can occur. For instance, your parents may ask for more money than you initially planned for. Or, they may sell it less money and then start experiencing 'seller's remorse'. In both cases, somebody will end up feeling guilty. So, again, before you do anything, have an honest conversation with your parents and make a deal that will please everybody. If that is not possible, you should reconsider your decision.