So my mom is going to move into a retirement community, since she’s lonely and starting to have some memory issues. My brother and I are all for this- we worry about her living on her own.
Anyway, she’s thinking she wants to sell her house to her next-door neighbors’ daughter, who are fantastic people, and who hail from somewhere in Central America. They all want to live together- one son already lives across the street, and this daughter wants to buy Mom’s house.
Which is also fine with us, just so long as we sell it for a reasonable market price. My question is, how do we go about doing that? Do we engage a realtor to give us what that reasonable price is and help us get all the paperwork, etc… in place? Or is there some other person we should get to help with that? We’re already going to consult with an elder-law attorney for the estate implications, but I’m talking about the actual nuts and bolts of selling the house.
An elder care lawyer would be a good place to start. The lawyer may well be able to handle the legal paperwork to sell the house or have a colleague who is experienced at real estate work. You may not need all the ancillary services a realtor charges commission for.
I am no expert, but I think a realtor’s job is to either find a home for a buyer or a buyer for a seller. You already have this (potentially) sorted out, so you do not need a realtor.
What you need is a lawyer who is experienced in residential real estate to draw up the documents and protect your interests.
I’m happy to be corrected if I am wrong about this.
You can hire a person to give you an independent estimate of the house’s market value. A bank would be a good place to enquire at. Banks use their services sometime to make sure the mortgage on the house is always lower than the market value.
I honestly don’t know the difference, but I’ve been told Texas is different because we use title companies for a lot of functions other states use attorneys for, and it’s very standardized. It’s probably a good idea to see a lawyer, but think you can likely get away with consulting with one, not needing one to represent you every step of the way. It’s quite DIY-able. But remember, states vary a lot so advice from people who bought or sold in different states apply.
Sounds like you have a buyer already lined up. Excellent! All you need do is contact a real estate lawyer. As should the buyer. You’d have to do this anyway - even if you hired a realtor. Much of what a realtor does for you is marketing (advertising) and meeting with & bullshitting prospective buyers. In fairness, this can turn into a lengthy & trying process and it can cost the realtor a good amount of time & money, which is one of the pros of hiring a realtor. But you already have a buyer.
Sure a realtor will have you & buyer fill out forms, which the lawyers generally need to correct.
Forms are available online, or you can write down terms of the sale on a scrap of paper and have the lawyer convert it to a more legal type document. For example, buyer might want appliances included or mother might want to keep a particular lighting fixture. This stuff needs to be noted to head off any future disagreement. Lawyer is also responsible for deed search and property survey.
Sounds like you have no need at all for a realtor. Unless you enjoy sitting around listening to bullshit.
Establish a reasonable market value based on recent sales in your area. Same as a realtor does, except realtors have lobbied to make this information hard to come by for average folk in many areas. There are property assessors not related to realty companies, however they assess differently. It’s not what you’d get as market value.
The quickest, easiest thing to to would be to pretend you’re thinking of selling your house and have a couple realtors come in & assess a value. Average out what they tell you and deduce a fair sale price from that. But you’d have to prepare for a couple hours worth of BS, be a strong willed person who won’t be swayed into listing with realtor, and have the fortitude to simply tell them to FO when they get overly persistent.
I don’t know the specifics about Texas - but I do know there are states that require lawyers to set up escrow accounts and handle the closing and so forth while in other states that is handled by the title insurance company. But even in non-attorney states, there’s nothing wrong with having an attorney represent you, write the contract etc. As I live in an attorney state, I don’t know who prepares the contract in a non-attorney state - if it’s the real estate agency, that may turn out to be more expensive than hiring an attorney in the case of a sale where there isn’t any need to find a buyer. I mean, a 6% commission on a $500,000 house is $30K - the attorney’s fee even in NYC won’t be nearly that much.
I think realtors could well lie about this [they might give high numbers just to get you to give them the contract]. So I think you need a formal appraisal (maybe more than one). It wouldn’t surprise me if the would-be buyer loses interest when they find out how much the house is going to cost.
Procedures probably vary somewhat among different states.
Even though you know of an interested buyer how do you know they can afford to pay full price? Don’t let the neighbor friendship cloud your end of goal getting a fair or better than fair price.
Depending on your location this is a sellers market with many many desperate buyers doing backflips to get offers accepted.
Do you have a good grasp of what the local market is selling at, never leave money on the table and given your Moms circumstances she may need every cent from the sale of her house.
My experience is in California through two transactions, so not Texas. But in each case, I wrote the contracts, had them reviewed by real estate attorneys, we engaged title companies to handle the escrow, title search and actual exchange of funds, and that was it.
We did as we were directed by each entity and were completely honest about the homes.
Have you discussed with your mother her granting a power of attorney to you or your brother for the sale? Selling a house is stressful under the best of circumstances, and if she’s having memory problems that only makes it more complicated. It could also be better to have y’all responsible for decisions regarding the sale because you’re removed from the immediate situation with the neighbors and can make more objective decisions.
This is quite possible, but I’m assuming most people have some sort of idea what properties in their neighborhood are going for.
This can vary by location. It’s more difficult to establish a worth of a rural property with acreage and a structure wildly different to a neighboring home 100 yards away than it is to estimate the value in a suburban area of tighly packed homes, each one not being too different than the next.
Of course upgrades must also be taken into consideration. I have no intention of selling but I do have a reasonable idea of what I would get for my home.
As well, I think public pressure, internet etc., has helped keep those such as realtors & car dealers a little more forthright than they once were. Most well established realtors didn’t get there by being dishonest. At least not overly so
Tax rolls can also be a valuable resource. Often available at City Hall or online. While it may not be representative of current market sale conditions, it can perhaps give you the fluctuation in property tax assessments within a 2 block radius or so of the property in question. Can be useful, particularly if one doesn’t reside in a ‘cookie-cutter’ type subdivision.
Between my wife and I we have bought 5 houses, either the ones we had before we were married or rentals we have purchased. We have never used a realtor and went through a lawyer.
We knew the sellers, offered a price reminding them they are saving 5-7% commission, we cover the legal/courthouse costs as buyers, and buying it “as is, where is”. They were responsible for current property taxes, any liens, and bring the title up to date.
For the O.P. agree on a price using something like Zillow and maybe a discount as you are not paying commissions as you found the buyer. Get a lawyer to handle the paperwork on your end, and they should have one on their end (their cost) representing them. In our instances we covered the all the legal/lawyer fees as they agreed to go though our lawyer also.
We just did this. Actually we just bought a home in a private sale.
The key resource is a Title company. Find a friendly and reputable company and they can advise you on what is necessary. As for the price, a good suggestion is for the buyer and seller to agree on a property appraisal. Whether that will be the sales price is up to the participants. But it gives both a reasonable starting point. Note that such an appraisal is not acceptable to a lender, they will arrange their own appraisal and charge the buyer for that. OTOH, the second appraisal gives both parties a good cross-check on the appraisal they purchased. Depending on the details of the property, plan on the buyer spending more time than expected on getting a mortgage.
As I see it, the realtor is to a) advise you on how to present your property to potential buyers, b) find potential buyers and c) provide expertise to both sides on the challenges of completing the transaction. You don’t need a or b, and the Title company seems to be able to hand the challenges.
It does vary by state, but in my state a “private sale” means simply that you don’t use the services of a realtor and don’t pay the 6% commission to the realtor. You still need the title services, an attorney to draw up the paperwork, the recording fees, and all of the other miscellaneous stuff that is escaping me at the moment.
But, you pay for all of those things in addition to the realtor in a “normal” sale, so you aren’t really reinventing the wheel (although the realtor normally would coordinate these other individuals’ services). It also depends on whether the buyer is financing the house, because the bank will be more than happy to ensure that everything is done.
I would start by calling a real estate lawyer. All of the ones around here take their fee out of the sale price of the house, so there is no upfront money.
ETA: For the seller–the buyer will still pay the lawyer the closing costs in addition to the purchase price. There are certain fees that are customarily paid by the seller and others by the buyer. You could negotiate a different arrangement. The lawyer would know those things in your locale.
I will second (third? Fourth?) use a lawyer. They can handle the details with land transfers, etc. That’s how I bought my first house from the parents of a friend. They charge a LOT LESS than a realtor, who will involve a lawyer anyway (usually) to ensure all titles are transferred and taxes satisfied, etc.
Just be sure to do so while your parent is still “of sound mind”. My father went into a home (as did my stepmother). he’d been looking after her in an advanced state of dementia until he could physically no longer do so. Once that happened, it was almost impossible to sell the house for two years until she conveniently (???) died. Since it was marital property, and she was deemed incompetent, in NJ a judge had to sign off on any sale to ensure the price was fair and not a means to exploit her, even though my father was just fine mentally. Having a judge review any offer, and all the legal entanglements and delays that entailed, meant it was very difficult to close a sale in a timely manner.
Whatever lawyer you involve, be sure he meets her often enough that he can attest that she was selling of her own free will and competent to do so… unless DEFINITELY nobody in the family will be contesting the details of the sale.
