Home appraisal prior to gift of equity sale

January 11, 2024 3:56 PM

My spouse and I are preparing to purchase the condo we’re living in from her parents. From what I understand, to use “the gift of equity”, we need to have the condo appraised. Is this something that we can pay to have done ourselves, or would the appraisal need to be arranged by the owner?

I’m asking because the guides we’re seeing for this sort of purchase all mention the owner having the home appraised, but I’m having a hard time figuring out whether that’s a requirement of the process for [reasons], or if we can just arrange the appraisal ourselves to save the parents some work.

posted by not just everyday big moggies to Home & Garden (4 answers total)

I think the appraisal might (maybe) need the owner's consent but you can certain make all the arrangements and pay the bill yourself. Based on experience of getting my in-law's home appraised prior to sale. I don't remember if she had to sign something but certain that was the most that she had to do.
posted by metahawk at 5:06 PM on January 11

It’s not clear to me what you mean by using the gift of equity. You may want to clarify. Are you getting a mortgage to finance the purchase? The mortgage company will very likely require an appraisal, which, in my experience, they will arrange themselves. The appraiser does not necessarily need to come into the house - a lot of appraisals are done on computer and/or with a drive by.
posted by Mid at 6:48 PM on January 11

Ok, I googled gift of equity, sorry. The parents are selling you the condo below market value. Still, if you are getting a mortgage, your bank is going to do an appraisal, so I would look into whether you can just piggyback on that.
posted by Mid at 6:54 PM on January 11

As the previous responses mentioned, if you are getting a mortgage, the standard appraisal procedures would apply. If the equity exceeds $34,000, her parents will likely need to file a gift tax return, but an official appraisal is not required. From the IRS instructions: "Either a qualified appraisal or a detailed description of the method used to determine the fair market value of the gift." Unless they plan to leave many millions of dollars to you or others in the future, they won't owe any gift or estate tax, so there's no need to be extremely precise in the valuation: You can just take the Zillow value, and even bump it up to be conservative.
posted by Mr.Know-it-some at 6:27 AM on January 12