Selling your house to a friend may sound like the perfect way to skip headaches and keep things simple. But even when you know and trust your buyer, you’ll still need to follow the same legal and financial steps as any other home sale.
Handled the right way, selling to a friend can be smooth — and even save you money. Handled poorly, it can strain your relationship and cause expensive legal trouble.
A trusted real estate agent can help you avoid costly mistakes.
If you don't have an agent yet, consider using Clever Real Estate to find one. This free service can help you connect with a top-rated local agent — and save thousands in realtor fees. Clever agents charge a low 1.5% listing fee (half the traditional rate), while still providing full service.
Can you legally sell your house to a friend?
Yes — you can legally sell your house to a friend. From a legal standpoint, the process looks the same as selling to anyone else.
You’ll still need to:
- Sign a purchase agreement
- Provide all required property disclosures
- Arrange inspections and an appraisal
- Transfer the title at closing
And while not completely necessary (depending on your familiarity with, or ability to learn how to navigate your state’s paperwork), getting a real estate agent or attorney may deserve a spot on that list as well.
Where things get tricky is price. No matter who you sell your house to, the sale must be an “arm’s-length transaction,” meaning both sides act in their own best financial interest.[1]
For example, if you tried to sell your home to a friend for $5, the IRS wouldn’t accept that as a valid sale price. They’d treat the difference between $5 and the home’s fair market value as a gift, which could trigger gift tax rules.[2]
In short, you can sell to a friend, but you can’t sidestep the normal rules. Keep the price fair, follow disclosure laws, and treat the deal like a standard real estate transaction.
Should you sell your house to a friend?
Whether you should sell your house to a friend depends on the goals of both parties: Speed? Convenience? Trust? In general, selling to a friend can seem simpler than dealing with strangers. But weigh the unique pros and cons before making a decision.
Pros
- Built-in trust. You already know each other, which can reduce suspicion and make negotiations feel friendlier.
- Simpler process. Fewer showings and less back-and-forth with strangers can save you time and stress.
- Shared motivation. Friends may be more flexible about move-in dates, repairs, or minor hiccups to help the deal close quickly.
Cons
- Friendship on the line. Disagreements over price, repairs, or delays can strain or even end your relationship.
- Skipping steps. Friends sometimes assume they don’t need inspections, appraisals, or detailed contracts, which can cause legal and financial headaches later.
- Price pitfalls. Setting the price too high can feel exploitative, while setting it too low can trigger IRS gift tax rules or resentment if one party feels shortchanged.
On the positive side, working with someone you know can be more comfortable. There’s usually a higher level of trust with smoother and less stressful negotiations. You may also be able to streamline the process since both parties already understand each other’s circumstances.
But selling to a friend isn’t always simple. Personal relationships can blur boundaries, especially when repairs, financing delays, or inspection problems arise. Pricing is another big sticking point: if you charge too much, your friend may feel taken advantage of; if you charge too little, the IRS may see it as a gift and tax it accordingly.
It's safest to treat the deal like any other sale. Maintain professional standards in paperwork, pricing, and communication, and use a real estate agent to serve as a neutral third party. That way, your friendship is more likely to survive the transaction intact.
How to sell your house to a friend
Selling a house to a friend may seem simple, but it’s still a legal real estate transaction. That means contracts, disclosures, inspections, and closing costs are all part of the process.
The difference is that you’ll want to balance the trust you already share with the professional safeguards that keep your friendship — and your finances — safe. Here’s how to do it right.
1. Hire a real estate agent
It's normal to see selling your house to a friend as a DIY transaction that will save thousands of dollars on realtor commissions and marketing.
While you might save money, it’s usually not the best move. Without professional guidance, you’ll be responsible for contracts, disclosures, and negotiations. That can put stress on your friendship and create expensive mistakes.
The better approach is to find real estate agents — ideally, one for each of you.
Separate representation means each person has someone looking out for their best interests. You can agree to use the same agent through dual agency, but it requires the consent of both parties. And keep in mind: one realtor can’t fully advocate for both sides at once.
If cost is the concern, consider using a low-commission agent.
For example, with Clever, you can find a top-rated local agent who charges just a 1.5% listing fee (half the traditional rate) and still get full-service protection.
2. Set a fair price
Pricing is where friendships often hit a snag. If you sell too low, the IRS may treat the “discount” as a taxable gift. If you sell too high, your friend may feel taken advantage of, or the lender could reject the financing.
An agent can prepare a comparative market analysis (CMA) to show what similar homes are selling for. You can also order a professional appraisal for an independent number.
Even if you both agree on a price, the lender will require an appraisal if your friend is financing. Keeping the deal in line with market value protects both of you.
3. Put everything in writing
Don’t rely on verbal agreements, no matter how much you trust each other. The purchase agreement should spell out the price, what’s included in the sale, who pays for repairs, and the closing timeline.
A written contract removes guesswork and keeps the deal professional. It's also legal protection for both parties if disputes arise later.
It isn’t about mistrust. It’s making sure misunderstandings don’t test your friendship.
4. Don’t skip inspections and disclosures
Skipping inspections or disclosures may seem like a great way to save time or money, but it often creates more significant problems.
Most state laws require sellers to disclose known issues, like water damage, mold, or foundation problems. If you don’t, you could be liable down the road.
Inspections protect your friend and your relationship. They keep everything transparent, so no one feels misled after closing.
5. Work with a title company or attorney
Even if you skip agents, you can’t skip closing services. You'll need a title company or an attorney to verify ownership, clear any liens, prepare the necessary documents, and record the deed. These services have fees that are included in typical closing costs.
You and your friend may not want to share the same attorney, since each of you deserves independent advice. If you do use one professional for both, it should be someone neutral, such as a title company, rather than a lawyer representing one person.
Cutting corners here is risky. Without proper title work, your friend might not have clear legal ownership, and that’s a problem that can resurface years later.
6. Keep it professional from start to finish
Selling to a friend is appealing because of the trust, comfort, and potential savings on fees. But skipping professionals entirely is rarely worth the risk.
Negotiate fees where possible (such as using a lower-cost listing agent), but still bring in experts where they matter most. Agents, appraisers, inspectors, and title companies keep the process fair and legally sound.
Treat the deal like any other real estate transaction, and you’ll protect both your finances and your friendship.
Bottom line
Selling your house to a friend is absolutely possible. In many ways, it's easier than placing your home on the open market and selling to a stranger. But the friendship alone won’t protect you from the legal, financial, and tax rules that come with any real estate transaction.
Treat the sale like any other transaction. Set a fair price, put everything in writing, complete inspections and disclosures, and close with professional help.
Most importantly, don’t skip hiring an agent. The right agent will protect both your finances and your friendship.
- Answer 5 simple questions about your sale
- Get matched with 2 to 3 top local agents in minutes
- Choose the best fit and save up to 50% on listing fees
FAQ about how to sell your house to a friend
Can I sell my house for a dollar to a friend?
You can technically do it, but the IRS won’t treat it as a real estate sale. If you sell your home to a friend for $1 and the house is worth $200,000, the IRS assumes you gave your friend $199,999 as a gift. That “gift” is taxable under federal gift tax rules.
In other words, the discount isn’t ignored — it’s treated just like handing your friend a large sum of money. To avoid creating that kind of tax problem, it’s best to sell at or near fair market value.
Can I sell my house under market value to a friend?
Yes, but be careful. If you sell your house significantly under market value, the IRS will treat the difference as a gift to your friend. That “gift” could be taxable, depending on how large it is and how it fits into your lifetime exemption.
To avoid creating tax problems, it’s usually best to sell at or close to fair market value. That way, the sale looks legitimate to lenders, the IRS, and everyone else involved.
Can I sell my house to my friend without a realtor?
You can, but it’s risky. Without an agent, you’ll be responsible for contracts, disclosures, pricing, and negotiations, and mistakes can cost you financially or legally.
How to sell your house to a friend without a realtor?
To sell without a realtor, you’ll need to hire a real estate attorney, use a title company, and order an appraisal to protect both parties. In most cases, working with an agent is simpler, safer, and ultimately more cost-effective.
