Should I sell my house to a family member at cost?

Archived in the category: foreclosure investing
Posted by admin on 16 Feb 09 - 9 Comments

We got an incredible buy on a house (it was a foreclosure.) We have invested some time and "sweat" in it, and now we are going to sell it. We want to sell it at the appraised value so we can make a profit. My brother really likes the house and wants to buy it, but he only wants to pay what we paid for it…he says he doesn't believe family should make a profit from family. I love my brother, but we would be giving up a profit of about $100,000 if we sell it to him for what we paid for it, versus what we can get for it on the market. We did buy it planning on making a profit when we resold it, as an investment. He thinks we are being terrible about this, but I know he would not give up that kind of money for us. This has become a very tense issue between us, and he will probably never speak to me again if I sell the house to someone else.

You brother is putting you in a terribly unfair position. My sister and I are very close and I would never ask her to throw 100,000 dollars down the drain just because she "really likes the house". Is he destitute? About to be put out on the street? Really down and out and needing your help? It doesn't sound like that at all. He merely wants to profit from your potential windfall. After all, when he sells the house in 10 years at a profit, do you think he's going to write you a check?

I'd sell it to him at a fair price but not at a $100K loss.

9 comments for “Should I sell my house to a family member at cost?”

1
copguy

I'd tell him to go find a property in his own price range. You are the one who made the decision to buy that foreclosed property and invest into it. You took a chance and it paid off, so YOU reap the awards…not him. Will he sign a deal that states YOU recieve ALL proceeds above the price he purchased it for when HE sells it
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February 16th, 2009 at 7:15 am
2
vsgemp

your brother is being incredibly selfish, why after all the time money and effort that YOU put into it should he benefit!! Put it on the open market and get your just rewards, if he wants it that much he can pay the same as everyone else and if he never speaks to you again(which I doubt will happen) thats his loss
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February 16th, 2009 at 7:27 am
3
Debra P

You brother is putting you in a terribly unfair position. My sister and I are very close and I would never ask her to throw 100,000 dollars down the drain just because she "really likes the house". Is he destitute? About to be put out on the street? Really down and out and needing your help? It doesn't sound like that at all. He merely wants to profit from your potential windfall. After all, when he sells the house in 10 years at a profit, do you think he's going to write you a check?

I'd sell it to him at a fair price but not at a $100K loss.
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February 16th, 2009 at 7:47 am
4
Daniellr

If he won't speak to you again because of this, that in itself is messed up. I would sell it to him at 50,000 instead of 100,000 profit. You're going half way, so should he. Look, business is business and family matters should never mix, if it does then why not compromise. Why would you take the loss and your brother the gain. If he tuned around and sold it for a profit how would it make you feel…….. I know like you've been shafted. Anyway he said that "he doesn't believe family should make a profit from family", but that's exactly what hes doing if he buys it from you. I say go half way, and so should he. Good luck. P.S. Don't give in, you'll only regret it in the future.
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Family experience, and I still have a great relationship with my brother….even though it wasn't always that way.

February 16th, 2009 at 8:11 am
5
triviatm

Have you kept a copy of the receipts for the work you've done on it? (I hope so – they can be deductible at tax time!) Figure out what you actually paid for the repairs etc, add that to the price you paid for the house, and then split the difference between the money you've actually spent and the appraised value.

For instance, if you spent $130,000 to buy the house, and you've put $30,000 into fixing it up, there's a $70,000 difference between the amount you paid and the amount it's appraised for. Half of $70K would be $35K + $30K +130K = $195K. You still get a profit, your brother gets a deal, and things should smooth out.

Mind you, that's what *I* would do – your relationship with your brother may not be the same as mine. (Heck, for mine I'd probably just drop the profit part, because he's been really good to me when I really needed it.) But if he has the money to pay the little bit extra for the profit, and he hasn't done you some major favors over the years, then why should you take a loss?
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February 16th, 2009 at 8:51 am
6
Judy

Tough. Why should your brother reap the profits from your work and expense in fixing up the house? Frankly he sounds like a self-centered jerk. I know, he's your brother. But where was he when you were doing the work on it? Was he right there sweating beside you? Even if he was, he shouldn't get ALL the benefit, although if he has a lot of work invested too, you might give him a bit of a discount in buying the house.

He's trying to lay a guilt trip on you. Your call whether you let him do it, but he's very much in the wrong to ask what he's asking.

Did he take your toys and your treats when you were a kid? What he's trying now is just a grown-up version of that.
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February 16th, 2009 at 9:17 am
7
Diane

Your brother is being unreasonable. He's treating the home like it's not a business investment. Perhaps you could sell it to him for the appraised value less the normal cost of sales which is approximately 9-10% of the value of the house.
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February 16th, 2009 at 9:58 am
8
godged

Where does this sense of entitlement come from? Did he do some incredibly generous thing for you at some point? If he sells the house, will he give you the $100,000 you would have made on the house?

Sell your house for fair market value.

Your brother is being selfish and stupid, no one in their right mind would do what he is suggesting. If he never speaks to you again, it is his loss. He doesn't believe family should make a profit from family? I bet his opinion would change if this situation was different!

Gosh, this sort of nonsense just irks me. (Probably because I have know someone who want the same sort of treatment your brother does)
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Oregon Realtor

February 16th, 2009 at 10:42 am
9
Terry S

You brother is a knucklehead.

He's playing the guilt card.

Don't buy it.

What does his need to steal your house have to do with you?

Don't be surprised if 6 months after you sell it to him, he will put it on the market for $100,000 more than you sold it to him.

Tell him to go find his own house.

I have a sister that is exactly the same. If the tables were turned she would tell me to "go fly a kite"

Hope this helps.

Terry S.
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February 16th, 2009 at 11:32 am

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