Home financing: Buy cheaper from parents, maintain compensation

Hello everyone,

we (my husband, our son, and I) are planning to buy my parents-in-law's house.

My parents-in-law want to move into a single-story apartment for their old age. This has now been found, and now it’s about the details.

Purchase price of the [ETW] including additional costs 500K
We would buy the house from my parents-in-law for 520K. That would cover the apartment and the kitchen to be purchased.
However, the house is worth more. We estimate 600-650K. As a reference value, we are using 580K, as this is the purchase price of the [ETW] plus the remaining debt of 80K.

Okay, written down it sounds complicated.

The market here is wiped out. We have been actively looking for a house ourselves for 4 years and simply can’t find anything. One or two interesting properties come onto the market per year, and then there are hundreds of inquiries.

My parents-in-law’s house is not our perfect dream house, but this way we would have the chance to acquire property. The hope would be to move into a more suitable house again in a few years.

We had thought about this together with my parents-in-law:

In the event of a sale in the future:
We take the purchase price (520K) and add our renovation costs (approx. 20K) and subtract that from the achieved sales price, and then split the profit (whether 50:50 or 60:40 is still to be determined).

We just haven’t come up with a really sensible idea of what to do if we do not move again. My parents-in-law are concerned about the difference from 500K to 580K. So it’s about 80K.
Do you have any idea how this could be handled?

My parents-in-law don’t need the money immediately and maybe never will. The remaining debt (80K) on their house will be paid off this year through a savings contract. We are all still quite young, and my parents-in-law have just under 6 and 8 years until retirement, respectively.

Maybe someone has an idea :)

Hello,
Who pays the ancillary purchase costs with the [Schwieeltern]?
And do you get the high loan?
Why should the parents waive €150,000?

Can be done. but is currently being sold why should the parents benefit from value increases? your debts do not decrease because of that

The problem for me would be:
House now worth 600k.
You sell in 10 years:
House worth 800k (with 3% appreciation)
What happens to these 200k??

So I would do it like this:
Pay 520k
Take 80k as a formal loan from the parents. Then over the years, you can see if they need it back or how much.

If your husband has siblings, it should be fair to them too.
And if you look for something new in 10 years, 800k will help you significantly more than 600k because all other properties will likely increase similarly to your house.

So I would do it like this:
Pay 520k
Take 80k as a loan from the parents very formally. Then over the years you can see if they need it back or how much.

I actually find such ideas, like private loans between children and parents, quite charming and many people don’t realize that this is possible. However, the active age of the parents is still an issue here – also or especially because they are "downsizing," I assume that they still, or precisely because of that, have their own desires where money plays a role (travel, motorhome, car) or especially the mental aspect of retirement planning plays a big role (early retirement, what can one afford there?). As a "child," one often forgets that needs for security and provision that the parents themselves have also play a role. That’s why the house was purchased in the first place, so that something can be gained from its sale, which can then be enjoyed from age 60+.

My parents-in-law are concerned about the difference between 500K and 580K. So it’s about 80K.

So the parents currently have nothing to give away, which is absolutely understandable.
These 80k were more or less arbitrarily created through a "reference value," it could well be 20-40-60-80 more or less?
Question: Are there siblings? This was already asked.
Something similar, but only similar, we had earlier, an identical textbook case unfortunately never exists.

What is clear to me today and one of the things I have always been glad about in hindsight:
Something like this has to be clearly and conclusively regulated, i.e., if you ever want to sell, you do so freely and without moral or other obligations. Otherwise, the issue is always burdened with wishes or expectations from both sides.
They could now sell it in the best possible way and give you money from the proceeds if they want to (loan or gift), sometimes the lifetime annuity topic (please go to a notary) is also an idea, that provides security. An internal loan agreement/promissory note can also be made, but that only works well as long as life is okay; what to do if someone needs their money quickly.
I realize I don’t like such complicated or intertwined solutions.
Now moving into a house that only fits you halfway, which might be sold again soon (high additional costs), and then possibly sharing any profit... never, such dependency solutions often lead to family dramas... 60:40 or 50:50 for 80k is probably the smallest problem in that case.
You’re not really free in your decision, that would not be an option for me, no matter how good the relationship with the parents is, I believe it’s not good for either side, since both sides legitimately still have plans for their lives.
I would tell my parents to sell their house in the best possible way and if afterwards they have something they can give me, they should tell me, then and only then would I start with my concrete planning.
Or they should tell me a price at which they would sell me their house, without later back and forth, and then I decide whether it’s interesting to me or not.
I can understand both sides, everyone thinks about their own life and that’s a good thing. Therefore, in my opinion, it should be clearly separated.