When you see a $1M house that sold for $100k, why do people do that?

[Anonymous]

Occasionally, I will see a house that was never on the market, yet sold for a ridiculously below-market price.
It happened in my neighborhood in SF, and I just saw a neighbor's house beach community where we had a home.
I assume the house is sold within a family. Is it to keep taxes low? Are there other benefits?

[Anonymous]

Or, they might be refinancing or something else.

[Anonymous]

My friend’s parents sold their $2 million house to her for $200,000. It’s probably family transactions, also possibly divorce settlements.

[Anonymous]

Yes someone selling below value to family or friends. Im sure there’s tax implications also.

Could also be a business transaction of some sort. Selling to your own company.

[Anonymous]

There are rules for selling to family members and such. What you’re describing is probably a mistake, like maybe something quirky happened financially and Redfin or Zillow recorded it as a sale.

If you post a link we can look up the property record.

[Anonymous]

Such sales are typically divorce settlements or involving transferring from one trust to another. They're not really sales as the house isn't being sold but paper is being shuffled around.

[Anonymous]

It may be an easement that was sold, like a utility buying part of the land to put in pipes or wires, or a land subdivision where a chunk was sold to the neighbor to make a bigger yard. My mother sold an area at the end of the driveway to the neighbor in back of us and they did this. Our house was $100,000 but this deal was $25,000.

[Anonymous]

Anonymous wrote:Such sales are typically divorce settlements or involving transferring from one trust to another. They're not really sales as the house isn't being sold but paper is being shuffled around.

This.

[Anonymous]

Anonymous wrote:Such sales are typically divorce settlements or involving transferring from one trust to another. They're not really sales as the house isn't being sold but paper is being shuffled around.

This. 123 Main St LLC may own the home and transfer it to 123 Main St 2 LLC for a nominal sum. What doesn't get publicly recorded is the $2M that was paid to purchase the original LLC

[Anonymous]

Anonymous wrote:Such sales are typically divorce settlements or involving transferring from one trust to another. They're not really sales as the house isn't being sold but paper is being shuffled around.

Exactly. My ex sold my house to me for $150k, which was half the equity less some of the child support he didn’t bother to pay me for a year.

Zillow still thinks that was the purchase price of my house 5 years ago—you can see it on their history graph. It’s affected their valuation. But I don’t think that will be a problem if/when I go to sell at some point.

[Anonymous]

In this case OP you said listed for $1,000,000 but sold for $100,000

My guess is input error, they forgot one "0".

[Anonymous]

In Maryland, they're listed as "Non-arms length" sales, indicating it was not done as a free-market transaction.

[Anonymous]

Yeah I just noticed one of these with an house next door to my parents in Chevy Chase that just sold. The last sale prior to that was around the same price as when I bought my decidedly non Chevy Chase house in the same year. I asked my dad and he said the mom had sold it to her son.

This and of the other posts above have similar possible scenarios. Transactions like this are usually marked as non arms length transactions and not used as comps for appraisals or other real estate transactions.

[Anonymous]

Anonymous wrote:Occasionally, I will see a house that was never on the market, yet sold for a ridiculously below-market price.
It happened in my neighborhood in SF, and I just saw a neighbor's house beach community where we had a home.
I assume the house is sold within a family. Is it to keep taxes low? Are there other benefits?

In the beach house community that could be the price for someone who rented it for the whole summer.

[Anonymous]

Anonymous wrote:There are rules for selling to family members and such. What you’re describing is probably a mistake, like maybe something quirky happened financially and Redfin or Zillow recorded it as a sale.

If you post a link we can look up the property record.

The only “rules” about selling a house relate to the tax implications of the sale which apply to any scenario. You cannot try to avoid the taxes by grossly selling below value. There are no rules just for family sales.