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Do: Plan for the buyer’s home inspection and appraisal
Most buyers opt to have a home inspected before closing. And if your friend is using a mortgage to purchase the home, the lender will require an appraisal to determine the amount of funds they’re willing to provide.
Even if your friend wants to waive the inspection, it’s probably best to do the hard thing and politely insist on one. It’s extremely important for an inspector to evaluate your house for any major issues or safety hazards. A thorough evaluation empowers both parties to feel confident there are no hidden issues or agendas moving forward.
So far, selling your home to friends has allowed you to avoid the prep work involved in showings. But now, you should prepare for the home appraisal by spending some time cleaning up the yard, touching up the paint, and deep cleaning the interior.
These simple efforts can help show the appraiser that you’ve taken good care of the home. Clearing clutter allows the appraiser to easily access the parts of the home they need to see to form their opinion of value.
Don’t: Assume special treatment in inspection negotiations
Even if you and your friend have agreed on a price, the home inspection opens the door for further negotiations.
Now’s not the time to offer favors or ask the buyer for special treatment. As you negotiate, consider each request as you would if you had anonymous buyers — and expect they will do the same.
Like any buyer, they can request that you repair any issues related to water damage, structural issues, an old or damaged roof, electrical or plumbing problems, issues with the HVAC system, or essentially anything that poses a safety risk.
As the seller, you’re not required to provide any repairs, though major issues like those listed above may affect the buyer’s ability to secure their loan. More importantly, you must disclose material defects in the home, as mandated by your state law. When addressing repairs, choose to tackle the big stuff but reject any requests to fix cosmetic imperfections or small projects under $100.
“It’s important to understand what you legally need to provide to the buyer whether they’re your friends or not,” Kaminsky says. “You want to protect yourself as a seller, and you don’t want to ruin their friendship.”
Do: Get everything in writing
Did you agree to leave the washer and dryer for the buyers but plan to take the stove because it’s a $5,000 six-burner Viking range? Are you taking your pool equipment with you to your new house?
Did you agree to offer a $1,000 price discount to fix the driveway, but you don’t plan to get it repaired before you leave?
Did you ask your friend for a two-day extension after closing so that you have extra time to move out?
A verbal agreement means nothing. Be sure to document everything, even minor details, in the contract.
Don’t: Sweat about having to swap your financial details; it will stay private
As your friend updates you about the mortgage pre-approval process, you might worry about seeing too much of their personal financial information.
However, Ruth Wordelman, a top-selling agent in Colorado Springs, says not to worry about the disclosure of sensitive financial information among friends. The process is no different than if you were selling your home to someone you don’t know.
“Other than a pre-approval letter, the seller doesn’t see the full financial picture of the buyer,” says Wordelman, who is also a licensed real estate attorney. “All you see are the final numbers of what the lenders are charging them.”
By consulting with a professional, you’ll ensure that the financial information you and your friend swap is minimal and strictly for business.
