What to consider about buying a childhood home?

May 25, 2019 7:56 AM

Is it a good idea to buy my childhood home from my parents?

My parents bought my childhood home in the late 80s. It’s in a suburb, with excellent schools and lots of recreation activities and parks. Two years ago, my father’s job was transferred about an hour away, in a more rural area. Since my parents just turned 60, and were looking to retire in that area anyway, they bought a very nice house which my dad has been living in during the week.

My sister (early 30s) lives at home with my mom to save money; she has a very good job quite close by.

I just learned that they are already meeting with realtors to start the process. My partner and I have been discussing whether we should offer to buy the house ourselves.

I really love the house and believe it would be a good investment regardless. I imagine we’d get an independent appraisal and pay what they say it’s worth. We currently own a 3-unit house about 6 miles away, much closer to the city, and rent out 2 of the units.

I don’t really know how to proceed from here. I am planning to bring it up with my sister first, to see her feelings about whether she’d even want to stay in the house or if she was hoping to purchase it herself.

How do people handle the finances of something like this? We’re almost done paying off our house and could afford a mortgage. What should I be considering, practically and emotionally?

This feels like a very long question but I wanted to get all the relevent details in. Thanks!

posted by anonymous to Home & Garden (9 answers total)

Talk to your sister ASAP
posted by Neekee at 8:17 AM on May 25, 2019 [8 favorites]

Once your parents sign with a realtor, they will owe a commission even if they sell to you unless that is excepted in the contract. For that reason, talk to them soon.

You will want to have title insurance even though you think you know the home and its history. There are always surprises that can appear.
posted by yclipse at 8:27 AM on May 25, 2019 [12 favorites]

Practically, if there's no messy family dynamics, it's just like any other real estate transaction. You qualify for your mortgage; you make your offer; you do the inspection (including the title inspection); renegotiate terms of sale; do your closing; take possession. Family dynamics can let you elide some of those steps (like the inevitable dithering over who will fix the wonky back stair or deal with the sick elm tree and how much $$ comes off the price for the fact that the dryer is on its last legs) but for the most part, it's just a real estate transaction. Have your real estate attorney approve the closing docs.

But in your situation, you really need to talk to your sister first, like you've noted Then your parents. Selling to you cuts down their hassle--no hiring an agent, no dealing with showings.

Emotionally, you might need to set ground rules. Like if you're buying it to move in, will you change locks and shift the rules about who can drop by unannounced? Talk about that upfront. Are you buying it as an investment? Will you want your sister to pay rent if she stays but does not want to buy it? Maybe you'd want to form a Real Estate Investment Trust with your sister which would actually own the property, instead of either of you, if you both want it as an investment property and not necessarily your long term home.
posted by crush at 9:41 AM on May 25, 2019 [6 favorites]

My parents have done private transactions a couple times in the past. To find the valuation, the parties have agreed in advance that they would take the average of two appraisals, and then each party would hire their own appraiser. It's seemed to work reasonably well.
posted by kdar at 10:00 AM on May 25, 2019

Would you buy the house if it weren't your childhood home? Not saying you shouldn't do it if the answer is 'no'. But it's worth weighing from that angle (as well), since it's a very major purchase.
posted by so fucking future at 10:19 AM on May 25, 2019 [1 favorite]

Are you planning on living there, or? What is your sister going to do?

Emotionally: I had a friend do this. They had a really hard time getting their siblings to clean their stuff out of the house because everyone still thought of it as their parents' house. Eventually they ended up doing a huge renovation to make the house seem different (and thus more "theirs").
posted by TwoStride at 10:19 AM on May 25, 2019 [3 favorites]

Friends who did this discovered a lot of emotional baggage, for them as well as the family members, around making changes to the home, like new paint colors or ripping out carpet. It was hardest on the spouse who had no prior affection for the home and could clearly see its shortcomings (and, to be fair, more possibilities) without benefit of sentimentality. It's worth a conversation to manage expectations.
posted by carmicha at 11:21 AM on May 25, 2019 [9 favorites]

I know a few people who have done this, and I will say that a hugely important part will be the sales price. They all paid significantly more than they should have paid as a result of their parents overestimating what the property was really worth and the children not negotiating as they ordinarily would have done (emotions definitely figured into both sides). You should absolutely find a neutral third party to valuate the house and set the sales price.
posted by slkinsey at 11:45 AM on May 25, 2019 [4 favorites]

A quick story from the friends I mentioned above... One night early on, after a few too many glasses of wine, the wife stumbled upstairs and, on automatic pilot, headed into her childhood bedroom instead of the master bedroom where she and her husband now slept. It was, no pun intended, a wake-up call that it was time to switch things up.
posted by carmicha at 1:41 PM on May 25, 2019 [1 favorite]