Buying or Selling a Home to Someone You Know? Here’s What an Agent Wants You to Know

Doing business with friends or family can get complicated. Here's what a professional real estate agent wants you to know before you seal the deal.

Does location still matter most? Should you remodel your home to suit your tastes or for resale value? Are starter homes still a thing? We all have plenty of questions about the ever-changing world of real estate. In our Ask an Agent series, we’re partnering with experts at Better Homes and Gardens Real Estate to answer your biggest questions about finding, buying, and selling a home.

While it might surprise some, many people buy homes from—or sell them to—people they already know. From friend-to-friend deals to family “gifts,” these home purchases bring unique complications. The most challenging aspect can be maintaining a healthy and stable relationship throughout the sometimes stressful process. Learn what a real estate agent says about this type of purchase and selling agreement before you engage in one yourself.

For this installment of Ask an Agent, we spoke with Kevin Clark of Better Homes & Gardens Real Estate Dream Partners to learn all about buying or selling homes to a friend or family member.

Ask an Agent: What Are the Risks of Buying or Selling a Home to Someone You Know?

As the homeowner selling it to someone you know, especially someone who is really close to you, your top risk is that they will blame you for unknown things that come up after the sale. If something goes wrong with the house right after it's sold, the buyers are going to think that you knew before and still sold it to them without disclosing the issue. To prevent this, make sure to have trust and grace in place with your friend or family member. Not having that is where you can get into trouble in terms of close relationships.

If I were a homeowner and I was selling to somebody I knew, I'd say, "I'm telling you everything I know. And if I knew more, I would tell you, but I will tell you that something might go wrong, and possibly in the first year. I don't know what it is; if I did, I'd tell you." This way, they can't blame me if I'm right, which I hope I'm not.

An inspector would, of course, benefit the seller and buyer as well. Having a proper inspection would also aid with the legal aspects. For more protection, I think home warranties can really help with this type of transaction, as well as alleviate some stress. As a homeowner, you could offer to pay for a home warranty for the first year, then inform the seller that they are welcome to continue renewing it on their own after that. This kind gesture can offer peace of mind with this unique kind of sale.

This interview has been edited for length and clarity.