Real estate deals with family

I never thought that buying properties from family members can get very complicated. Being a part of the family, these transactions involve a different kind of dynamics. You are expected to provide more leeway than you normally would.

The price for instance. Although people will not admit it, one of the reason they seek buyers within the family is that they expect to get a good price. For properties, the minimum price is their idea of its market value. Not the real market value but a valuation based on some questionable source - valuation from neighbors, unverifiable sales price for a property been sold in the area.

Others don't think of the transaction as a sale. The property is treated as a collateral for a loan. If they do decide they want the property back, you are expected to sell it back. Here's another kicker - they expect to pay the original amount you lent them regardless how long ago it was.

If these are not enough to put you off, then you must take steps to protect yourself. From my experience, these are the things you have to do.

Establish how much you are willing to pay for the property. This is the true value of the property for you. This may not be anywhere near the market value but you have to stick with it. Remember that by buying this property (which you may not be interested of in the first place) meant that you are foregoing better opportunities that may arise.

Make the transaction legally binding and final. Document everything like any business transaction. It may incur some additional cost but at least this can help manage everyone’s expectations.

Involve all stakeholders. This is important on conjugal properties and those that involves children.

Do not part with your money unless everything is signed and in order. I once had an experience of people wanting more money for properties supposedly paid for a few years back. Being so trusting, I thought everything was final even though I don't have any document on my hand. In these cases, you only have three choices - pay more, sue or walk away. Regardless which one you choose, all are disadvantageous.