Buying a house with multiple owners is an excellent way to get your foot in the door of the real estate market, allowing you to buy a share in a resale or a newly built property. This practice can get people into homeownership even if they wouldn’t otherwise be able to afford the entire property on the market. Co-owning property can also help cover any additional costs like repairs or maintenance costs. Some people decide to sell their share, either because they have outgrown it or need a financial boost. Either way, you might find yourself considering whether selling shared property is the right move for you and thinking about how to make it work.
Owning a home with multiple people can also lead to disagreements since everyone can have their own ideas on what to do and how to go about it. Try to avoid going to court to save yourself money, time, and the stress and hassle of a legal battle. Selling any property is a monumental task, and it’s okay to feel lost. Try to inform yourself how real estate sale works and take it one step at a time. Of course, there are additional things to consider when selling shared property, and we will give you some tips on how to make it work for you.
Set up an ownership agreement that will cover the future sale of your property
You can do some things even long before you need to sell the property, like making sure you have an ownership agreement for a future sale. This can be set up when you initially buy a property with other owners to avoid problems down the line. Figuring out what happens when someone wants to sell should be an essential first step when purchasing a property with others.
When selling shared property, determine a realistic value for your property.
Carefully determine the market value of your property
This can help or hinder the sale immensely because if you overvalue the property by as little as 5% to 10%, you can turn away a large number of prospective buyers. The real estate market is continually shifting, and choosing the right time to sell is always tricky, especially with coronavirus concerns that are still present. You can look at the market beforehand and consider average prices and similar property values.
Don’t invest too much in home improvements if you are planning on selling shared property
Improvements you have made to your home can affect the market price. Unfortunately, not all of the work you have put into your home goes towards increasing its market value. Therefore, carefully reconsider any work on the property you might do prior to the sale. It could just lead to you putting in a lot of effort and losing money in the end. Hiring a professional to appraise your property can settle any disputes you might have with other owners. Still, any research you have done into the real estate market will give you a better idea of what to expect and help avoid surprises.
An empty home will look more spacious to potential buyers.
Make your home look nice
Set your house up for sale by making it look presentable. You want potential buyers to get a good feel for what the property could be. The best way to do that is to clear any possible mess and to leave the rooms vacant so buyers can get a better sense of space. Co-owned homes can serve many uses, from timeshares to investment properties, and sometimes all of the parties who own the house – live in it. Clearing the home of people and possessions can seem like an impossible hurdle. But obviously, you will need to organize a move for everyone living on the property. Try to make this task simple and avoid making it another point of contention between the multiple owners. Since you will need everyone moved out of the property to sell it – be sure to discuss this with the other owners and plan accordingly.
Have one owner buyout the others
Offer a buyout if not everyone wants to sell. This situation is very common when it comes to selling shared property. It allows some owners to opt-out of the property, while others can retain their ownership. For a buyout to occur, all of the owners need to agree on the value, and the owner or owners who plan to keep the property need to have enough funds to buy out the other owners who wish to sell. Here is where determining the value of your property comes in handy. In the case of a buyout, hiring an outside professional to do the appraisal will leave no one feeling like there was a conflict of interest. A fair and objective evaluation is essential because the owners who are selling will be hoping for a higher market price to make more money. On the other hand, the ones who are buying out the shares will be looking to pay less.
Instead of selling the entire home, perhaps you can just sell your share.
Sell your share to a third party
If none of the other owners have sufficient funds for a buyout or are simply not interested in increasing their share in the property, you can get rid of your share by selling it to a third party – to someone who is not one of the owners. Your sale can be made regardless of the other owners’ approval since it does not influence their ownership privileges. This is, of course, more difficult if there is a joint tenancy when the owners are living on the property. Finding a third party to sell to can also prove to be a difficult task. Not everyone wants to own property with strangers, so perhaps finding someone that the current owners already know would be the easiest solution.
Selling any property is stressful, but selling shared property comes with its own set of problems. You could take the route of a court-forced sale, but that will probably end up causing all of the owners to lose money. A friendly buyout is a much better option giving all of the owners time to prepare and agree on the price. The goal is to reach a mutual agreement with the other owners to avoid souring your relationship with them.
CTTO Lisa Roberts.