If you having trouble keeping up with the mortgage payments and could potentially lose your home to foreclosure, then it might seem like a smart move to sell your home to a family member. That way, they can get a good deal on your home, you can continue to live there and pay cheap rent, and, once you are back on your feet, you can purchase the home back from them without worrying about the rising market price. It sounds like the perfect solution right? However, unfortunately, in most instances, it will not work.
Family Short Sales in Minnesota and the Lending Company
One of the reasons why short selling to a family member will, in most instances not work is because short sales must be approved by your lending company. If your lending company discovers who the buyer is, they will not be too pleased in letting this happen. Why not? Well, first of all, because it could come off as fraud or a scam. After all, in a short sale, the lending company is not making any money – they are losing money on their investment – and thus they will not be too happy to know that you and your family could be benefiting from the transaction.
But what if it is an honest deal? Well, if this is the case, your best bet is to speak to a certified Minnesota short sale agent who can help determine if this will work in your case. In some instances, for example, if the offer is high enough that the banks cannot say no, then the short sale transaction may be accepted. However, you will need to get professional help in order to avoid being denied, or worse, being accused of real estate fraud.
Emotional Problems with Short Sales in MN to Family Members
Another thing to consider when it comes to short selling a home to a family member is that often the entire burden of the home is passed on to your family. This does not only include the new mortgage, but also any additional taxes and fees that you, the short sale seller, has been able to pass on. There is a lot more to consider in a Minnesota short sale than just the price of the house.
Finally, although family should always come first, it’s never a good idea to mix family with business. And, when you are dealing with real estate, it can often get messy when these two combine. What happens if your family has trouble keeping up to the mortgage? What happens if you cannot afford the rent or if something major goes wrong and there is a fight about who is supposed to pay for the cost of the damage? The real estate game is a slippery one and can often cause family feuds that could easily be avoided.
Furthermore, there is nothing worse than feeling like you owe your parents or your brother something huge. Holidays are often put on hold in order to make additional household payments and there is always a feeling of pressure and guilt, no matter how relaxed you think the transaction is. When you are paying a loan back to the bank, there is no emotional connection and thus, you often feel freer to spend your money as you see fit. With family and a MN short sale, this is not the case anymore.
