First Property: Purchasing from Family Member
Hi All,
I am working to purchase my first investment property (single family home) located in Vermont from a family member.
The home is appraised at roughly $50k more than purchase price. I have been working with Rocket Mortgage (Quicken Loans) and they are accepting this "Gift Of Equity" as a 20% down payment to make this a $0 cash purchase and no PMI *fist pump*. We have already discussed the IRS forms etc and figured out the basics.
I have several questions as I have never even considered buying from family.
1. Do we have to have a real estate agent?
My brother has an agent that has listed the property and has been unsuccessful selling the property to date which is why he has to unload it to me. Is he obligated to pay this agent even though he has been unsuccessful selling and I buy the property? Is there a way out of this? Seems like giving 6% to the dude for failing would be lame.
2. Closing
Is there any additional complexity that I need to consider, or can we just find any closing agent/lawyer to help us through the process. Anyone have any experience with this type of thing? Any special considerations that need to be made? I have estimated closing costs to be roughly $2,000 out of pocket if we pick a local guy. Am I way off? I will call around after the holiday.
3. Rocket Mortgage
Does anyone have goo/bad experiences with these guys? They are making the process very easy but I want to make sure that I'm not going down the wrong path. Are there any hidden fees or items you can point out from experience? Is it normal to "over estimate" closing costs for running preliminary numbers?
4. Gift of Equity Mortgage
Is it true that the total amount of the mortgage is the appraised value, then the Gift of Equity is taken off as a down payment? In order for this to count as a down payment that sort of makes sense. I just don't want to setup a P&S stating that Ill pay $50k more than the actual purchase price if that is not how it is supposed to be done.
5. Family Purchase Tips or Tricks?
Any tips or tricks I should be aware of for purchasing from family? I will be heading up there after the purchase and sale is executed to get a proper inspection etc. I plan on making the purchase and sale agreement contingent on no major repairs required over $10k or something. Is that about right?
I'm super excited to get this done and joining your experienced ranks!
Thanks all!
- Alex