#houseoffer #appraisal #realestate #familyhome
Considering Grandma’s Offer
So, Grandma is offering you her house for significantly less than the appraisal value. It seems like a sweet deal, but you have some reservations. Let’s break down the pros and cons of this offer to help you make an informed decision.
Financial Considerations
- With both you and your husband receiving significant raises, owning a home may now be within reach.
- The house is in a nice neighborhood, and you would not be able to afford it at market value.
- Grandma is covering all transfer costs and expenses, making the offer even more enticing.
Lifestyle Changes
Moving to a rural area an hour away from your current metropolitan location can be a big adjustment. Consider the following:
- Both of you working from home allows flexibility in terms of commuting.
- Your husband’s concerns about committing to an area you didn’t specifically choose are valid. It’s essential to weigh the pros and cons of the location.
Investment Opportunity
Owning a home, especially at a discounted price, can be a great investment. However, you need to consider if the location aligns with your long-term goals and lifestyle.
Making the Decision
Ultimately, the decision to accept Grandma’s offer is a personal one. Consider discussing the following:
- Would you be willing to move to a less nice/fun area for the opportunity to own a property?
- Have an open conversation with your husband to address both of your concerns and come to an agreement together.
Remember, this house not only represents a financial opportunity but also carries sentimental value as Grandma wishes to keep it in the family. Take the time to weigh all factors before making your decision. Good luck!
Buying a home you don’t want (especially one you can’t reasonably sell if you decide you really don’t want it) becuase you’re getting a deal is really no different than buying something you don’t actually want or value just because its on sale.
Grandma isn’t treating this like an investment. If you want to buy this to sell it in 5 years, tell grandma now so she can offer to another family member who will actually value this option.
It sounds like the only thing you value here is the discounted price/not the house itself and you’re very disconnected from how grandma is treating it.
I wouldn’t do it if you value the relationship the grandma at all – it sounds like you already have both decided you don’t like this area and wouldn’t be happy here and would be itching to move
If the only thing stopping you is that you didn’t choose the area, give it more consideration. You will not have another opportunity for homeownership that is that easy and cheap. If you could enjoy the area, take the cheap house and live there for a while, see if you can pass on the favor of selling it for an affordable price to another family member later on.
Is there a middle ground where you rent the place from her for a couple of years with an option to buy afterwards?
Place is a huge part of life.
I bought a house for triple what I bought my previous house for, 10x what I bought my first house for, because I didn’t want my kids to be from the cheap place, and my wife wanted more access to shopping and ethnic restaurants. The bigger place just had more opportunities for everybody and every thing.
There’s more to life than hording money.
That said, cheap housing turns down the noise on life, which is why I was living where I was. That first house I had completely paid off, and could work part time at a gas station and still live.
Moving from one area to another, I’ve lost friends from the previous area, and vice versa, when friends move away, I don’t see them but once every couple years. Even if it is just an hour or so, it just doesn’t happen.
First three rules of real estate are location, location, location.
I like the house I’m in, but it’s just a thing. The kids will either want it, or not. We’re set to inherit a place from my in-laws, a house I helped build, but my wife doesn’t want it for the location so I doubt I’d ever live there, even though it’d suit me just fine, esp. in retirement as it has suited them. By the time it comes around, I’m betting the kids are going to want the bright lights of the city instead of that place.
We are where we are because of the schools, and the oppurtunities for the kids after school. And because if need be, there’s more opportunities for jobs where we are vs. where we were. Buying a house, you need to think long term, like the next decades. A few thou now is small compared to what your life will be like for the next couple decades or next generation.
What if you buy and rent it? With the option to move in.
Also, ask your lender about doing a “gift of equity” If your grandmother is basically giving a discount you can use that as your down payment and potentially cover closing costs that way.
I’d do it and commit to five years. If you both can’t stand it, sell it for a nice profit. Too good of an opportunity to pass up
How’s Grandma’s health? You’re not going to be able to sell it as long as she’s alive, and even after she’s gone, the rest of the family is going to resent you if you do. They’re going to see it as you taking advantage of her.
If you don’t want to live in a rural area long-term, don’t buy it.
I live in Chicago suburbs. There’s nothing between us and downtown Chicago except city streets and the occasional park or forest preserve.
My mom (81) lives two hours south-west of here in the middle of corn fields. It’s a nice town and her house is nicer than ours, but I’m used to living more urban and I wouldn’t want to live there despite it being where I grew up.
She’s probably going to die in the next decade, and I’d like to retire in a decade or less, so maybe wife and I will feel differently when we’re in our sixties. It is a better house in almost every way, in a more walkable area, than the house we currently live in, and I think she has it mostly paid off.
I could see retiring there and being the only Uber driver in town or something.
you know what they say about real estate:
location, location, location
Where you physically live is a huge factor in what your life is like. Can you get to jobs? Are there activities you’ll value? Who will your neighbors and potential friend group be?
How much time will you spend on travel?
Gosh what a quandary. Location is always a big deal but so is a paid off house. And what a kind grandmother you have.
My adult son wants me to think about living with his family in the near future (I’m 60) and on a farm yet where I’ll be car dependent for everything. I’ll either live in a grandma suite or an ADU and have zero housing bills (aside from basics and food) for the first time in my life. And money to travel and gift others as my pension will more than cover my life. That sounds so amazing to me. But my current home is my home and I love it. Its location is literally near every single thing I need, including hospital, and high walkability. It’s also a big family home for grandkids and gatherings. And my kids’ inheritance (either someone lives in it or they sell for big equity).
Just another person’s experience to add to the discussion.
Good luck with your decision.
You could move into the home and see how it goes. You would likely be able to save money while you are there.
Then if you do decide to move just sell it to another family member at the same type of discount. At the end of the day you would have paid almost nothing for your rent for as long as you live there
Or you may love it and stay forever
I’m a rural area, make sure you have access to the internet required for your jobs. Many rural areas don’t have fiber and that may pose a problem.
This is a rare opportunity, take advantage of it. You can always move back and rent if you decide it’s not for you.
Location matters a lot when deciding where to live.
Moving an hour away from your current location may mean you have to start fresh with friendships and your social life. If you are moving from a somewhat major metro area to a fairly rural area, you will lose out on a lot of amenities that only exist in major population centers. Your options for restaurants, museums, parks, stores, specialty gyms, etc. will probably shrink quite a bit.
This might not be a big deal if you are introverts who don’t often leave your home, but it’s something to consider.
> It wouldn’t affect our jobs as we’re both WFH.
It will impact your future job options. You may not want to stay with your current employers for the indefinite future, or there could be layoffs.
> We’ve never been in a financial picture where owning is a possibility with the cost of housing and significant cash offers where we live.
Are you still in your twenties? You may not be able to buy a home in your current location right now, but I would think about whether your career trajectories will make that more realistic given another 5-10 years.
Location is the most important aspect of real estate.
Rural can be good, but usually in the United States a rural area will have pure car sprawl zoning.
It means every building has a big parking lot and the roads are wide and fast. Walking and transit are basically impossible in such a place and every trip is a car trip.
I lived in car sprawl for many years and it had a serious impact on my health (mental, physical, and financial).
Using walking as my main transportation changed everything. Now if there isn’t space for walkers, I won’t consider living there.
It is a shame because rural living has a lot going for it. Not enough to overcome car dependence in my mind.
I am in this boat right now.
Wifes mother helped us buy a house near her. I had misgivings about moving to a rural area because there are zero jobs available for me, but I was able to go remote with my company. But if I lose this job, I will be driving 2 hours to the nearest company in my career field. I suggested that we need to perhaps get a place halfway between work and her mom’s.
Then they found a nice house that was by a park, and short walk from the moms, and then my wishes were tossed away and now we live 5 minutes from her mom and 2 hours from available work and my job is having issues. And I know nobody here with no idea how to meet friends since I don’t leave the house often and the only meeting places would be at the bars or something.
Keep this in mind, today you both have remote work, but would you both be able to meet friends? You have family I assume, but will you be leaving him at home with the chance of having mental health issues from the lack of friends? Will you be able to find work remotely if your jobs fall apart?
So you can’t afford a house, your family is offering you one below market, and you don’t want it because it’s not in an area you can’t afford to buy a house in anyway?
I dunno sounds like your husband has champagne taste on a beer budget.
You may not have another opportunity like this. A below market house with grandma paying all fees? She is gifting you positive equity which increases your net worth and you can use in the future. I would do it. Try it for a year. See if you like it. If you don’t, rent it out and go back to the city. I see no downsides.
My parents were in a similar situation. They ended up not buying the house so others could and it stayed in the family that way. Don’t be selfish, let someone else have it.
Whats “significantly less than appraisal”, like 10% less or 50% less? If you ended up hating it and selling it in 3 years would granny hate you?
Have a think about how and where you like to spend your time.
We moved out to the edge of the developed suburban ring to save money. My work commute is short, but I have to drive 30 minutes to get anything other than basic food, and for haircuts or fun stuff. Would you love the quiet? Politics and ways of interacting with new people are different than what we were used to coming from cities. There are no sidewalks, and it’s hard to go for a long bike ride from my house because the rural roads all have ditches and no one out here thinks bikes belong on the road.
All told, we’re happy with the shift. But it was a shift. Maybe go stay with grandma for a week or two and see how it feels.
Luck is being prepared when opportunity knocks. You may not have planned for this, but it could be tremendous. It could also be a terrible choice. You’ve got to figure out what you prioritize.
Be aware that the IRS could consider her selling the home for less than the market value a gift. Gift of equity I believe is the term. Speak to a tax professional about that.
If this is the only way you could afford to buy a home, absolutely take it. They’re not getting cheaper any time soon. Since you’re both WFH it seems like a no-brainer to me. And only an hour away from the city? What an opportunity!
If you’re not sure about the area, try renting an airbnb (ideally an apt or house with a kitchen, etc) or a hotel nearby for a while and explore. Go get groceries, check out some restaurants, invite your friends and see if they come. Spend a week there and get a feel for what it’s like.
If you could afford to buy a home and this one doesn’t do it for you, politely pass on the opportunity and thank her profusely. Invite her to dinner or something.
Buying a house with my wife meant moving an hour away from where I grew up. Yes, I miss that area, but when I look at all of the factors I’m very happy. It’s a nice house on a great street and there are good schools. My needs are more than met and I got most of my wants. The compromise has been more than worth it for me.
It sounds like your Grandma might want to consider putting the house in a Trust that way it stays in the family and there are specific and defined rules for who can live there, how long, who gets to profit from it and if and when it gets sold. Then everyone in the family who “needs” a home is able to have that interest looked after and you control for the “given a house at a discount just so you could sell it for a profit” perceptions. I think moving could be a huge boon for you and husband especially if that saved money gets you a good way toward the location you desire.
You would be regretting it if you were to give up the opportunity, especially because of your wfh jobs. If you had a long commute to work bc of the new house location then I would understand why you wouldn’t want the house. Look, I was lucky enough to buy my house at a deep discount from my grandparents because it was a rental. I’ve only had it for 2 years but already have $100k in equity on the house and I’m only 25. I would say take it, home prices will probably fall again which would put you potentially upside down on a more expensive home if you got a loan.
If Grandma knows you might sell it or rent it out, then it could be a good deal, but you may regret living in (and paying taxes and maintenance for) a place you don’t really like.
More importantly, **there are considerable tax implications to a home sale below market value**.
Please consult an expert before you make this decision, because these are just a few issues that could come up:
* The difference between the discounted sale price and the appraised value could be taxable to your grandmother as an excess gift. There’s an annual exemption, but if the difference in price exceeds that amount, she could owe tax on that difference.
* Purchasing the house at a discount reduces your basis. If you eventually sell it, that means your tax on the gain will be higher unless you exchange it for another similar property.
* In many jurisdictions, a sale triggers a reassessment based on market value, which means the property tax bill would jump significantly. Make sure you’re figuring that possibility into your cost of ownership.
I’m not a tax expert, estate planner, or lawyer, so please talk to one (or all) of those before making any decisions. They might suggest alternate structures that would make more sense. For instance, there may be a way to pay a certain amount now so your grandmother has the cash she needs, but not transfer the title until she has passed. In the meantime, you could live there and pay reduced rent or rent it out and keep some equitable portion of the income.
Good luck.
Give hubby a trial run….go there for a couple of weeks.
Big No. Real Estate is all about location. And grandma is being nice. Don’t take and sell it. Don’t take and rent it out.