I just bought my first house last week! I bought from my parents and it worked out really well because they gave me 14% as gifted equity. It worked out for both of us because if they wanted to get full price for the house they would've had to wait for a buyer and pay a realtor. In the end I ended up getting 50,000 as a down payment but after the associated costs for them to sell to someone else (negotiating and realtor fees) they didn't lose nearly 50,000. I have an uncle in law who also sold to someone (not family) with gifted equity.
Maybe Travis can shed some more light on how it would work doing an arms length transaction with gifted equity.
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