We’ve been involved in this process a few times over the past year, where our client is buying property from relatives. When family members buy property from each other, there can be serious conflict.
There’s a right way and a wrong way to do everything. If everyone can keep a level head, here is the right way:
Step 1: Organise Your Conveyancing/Legal Team
If you’ve already got a trusted conveyancer this is a good thing. They’ll prevent you from making any mistakes in the paperwork. If you don’t already have someone selected, this is not the time to make your choice based on price. You want quality and experience.
Step 2: Get a Building Inspection
That’s right. We’re not Step 1. That’s OK. Follow the process.
Emotional attachment sometimes comes into play where The Family Home is concerned. There are usually a lot of opinions floating around within families. A building inspection is a useful tool for reflecting the un-biased truth.
With a building inspection report, both parties have documentation about the actual condition of the property and it’s hard for either party to argue the value up or down depending on individual position. CLICK HERE to book us in!
Step 3: Get 3 Different Local Estate Agents In
Whether or not you decide to use an agent to broker the deal and help with negotiations, it’s a good idea to get in 3 different agents in to do a Comparable Market Analysis. The same way you would if you were listing your property for sale.
A good local agent is someone who has sold a lot recently. You want to see agents that hold a good reputation because at this stage, you’re zeroing in on accuracy. You want a true reflection of the market value of your property – not a fantasy price. TRY HERE
Real estate agencies have subscriptions to online databases (ex. RP Data/Corelogic) that help them search the area for recent sales. The agents also have their own finger on the pulse of the market – Going up? Going down? A property they know of that has sold but not settled?
They can compare your property with others – taking into account everything from position to condition – and work out a pretty accurate sale price range. In theory, if you average out 3 good local agents’ opinions, you should get pretty close.
Step 4: Start Talking Price
Try to have a completely neutral, fact-based conversation about the price with your family. This can be the hardest part of buying property from family.
If it doesn’t seem like you’re going to reach a peaceful conclusion together, think about enlisting one of the agents to broker the deal – before animosity flares.
Good luck and Godspeed!