Equity Gift Letter

[Hugh Hill]

Hi All,

I've got appraisal request and the seller is giving the son equity in the house he is buying from the parents. What verbage would you use in the report? I'm not sure how to write this up.

Thanks in advance for taking my question.

Hugh Hill

 

[Karl]

Hi All,

I've got appraisal request and the seller is giving the son equity in the house he is buying from the parents. What verbage would you use in the report? I'm not sure how to write this up.

Thanks in advance for taking my question.

Hugh Hill[/QUOTE The seller which are the parents is giving the son equity in the house he is buying .

 

[Randolph Kinney]

Heading - Analysis of current sales agreement

Buyer and seller are related parties. Seller only wants to sell to buyer. No other buyers are sought by seller. Seller gifts to buyer any remaining net equity at the close of escrow.

 

[Tim Hubbel]

Include the gift letter in the appraisal report to make sure everthing is on the up-and-up.

 

[Jerry Bone Jr]

Not an arms length transaction.

 

[Randolph Kinney]

In addition to non arms length transaction, it is an off market sale. It should be obvious the market value is going to be higher than the sales price. Otherwise, there is no gift of net equity. But in advent that the difference is small or does not exists, any seller assistance needs to be disclosed as well, such as payment of buyer's closing costs by seller.

And yes, if there is a document that describes the parents intent and assistance in the transaction, it should be included as an addendum.

 

[Judy Whitehead (Florida)]

We just had one of these, too. The parents were giving $40,000 in equity in the sales contract. We just stated that the contract was not considered an arms length transaction as it was between family members and a $40,000 sales concession of equity was included in the transaction.

 

[Joshua Fookes]

Appraise the market value of the house based on the data in the neighborhood, etc.

Separately from that, you need analyse the sales contract and make the appropriate comments.

It is not Arm's length etc.