Q: I live in a suburb of Chicago and have two neighbors across the street whom I have met a couple of times at block parties. Both are a bit older than I am. My guess is that at some point in the next five to 10 years these neighbors will move out and sell their home. They have the kind of property that a developer would probably buy, tear down and build a large home there.

It's important to know the tax implications of selling an inherited property. (iStock)

It’s important to know the tax implications of selling an inherited property. (iStock)

My wife and I have the perfect home for our family of two boys, ages 10 and 12, but I know we can’t age in place in our multilevel 1950s brick ranch with stairs all over the place. I’d like to write these neighbors a tactful letter indicating my interest in buying their home. I would buy it privately, should they want to sell, based on three appraisals. I’d pay for one, they’d pay for the second, we’d share the cost of the third and then we would transact at the midpoint.


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My intention would be to either rent the home, tear it down or make it into our family home. Should I move forward with this plan? And if you think it’s a good plan, what should I include in this letter?

A: Nice idea. Buy your neighbor’s house, tear it down and put up your “forever” house. We feel that part of your plan (where you contact the owners) is well intentioned but you’ll need to handle the whole thing with finesse so it doesn’t blow up in your face.

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We see no problems if you want to reach out to your neighbors and let them know that you’d like to talk about buying their home when they are ready to move on. That’s a fairly common thing for neighbors to do. While covid-19 makes it somewhat difficult, we’d prefer you make your case in person, as it’s easier to chat casually with your neighbors and get an instant read on how open they are to this suggestion.

You’d say, “If you’re ever thinking about selling your home, we’d love to talk to you about buying it.”

We’ve done that with neighbors (it doesn’t always go well, by the way), and we know of a number of other people who have done it successfully.

Sending a letter could be more awkward. You don’t know what is going through their lives these days with covid-19 and won’t know if your correspondence will hit them at the right or wrong moment. If it hits at the wrong moment, it could cast a pall over your neighborly relationship. And if you suggest you want to tear down the house, it could set them off if they love their home and don’t want to see it replaced.

We don’t mean to suggest that written inquiries aren’t done; they are. Frequently, real estate agents in hot neighborhoods will blanket homeowners with letters letting them know that they have an interested buyer looking to move into that neighborhood and asking those homeowners to let the agent know if they are interested in selling. We’ve also heard of agents going door-to-door with the same information.

While that can be off-putting, there’s nothing wrong with you bringing it up with your neighbor in friendly conversation.

However, we don’t love your proposal for three appraisals. It’s too soon for that and, frankly, if you approach them now with that concept, they may disregard your entire proposal. Even if they do entertain the idea of getting an appraisal, we doubt your neighbor would agree to be bound by what appraisers might think of the value of their home. For example, if they think their home is worth $500,000, they may not want to risk being forced to sell their home for less just because several appraisers tell them their home is worth $450,000. Even if they’d save on the broker’s commission.

Many years ago, we approached a neighbor about his home. When the time came, he let us know he was planning on selling his home, but the price he wanted was almost double what we thought his home was worth. We declined to buy it at his price, which soured our relationship. He ended up listing the home and it languished on the market for several years until it finally sold for even less than what we thought it was worth at the time.

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We think that if your neighbor wants to sell and is reasonable about what properties in the area are selling for, you’ll probably end up at a price that makes you both happy. Otherwise, you’ll either have to raise what you’re willing to pay or walk away.

In any case, local market demand will factor into the pricing. In much of the U.S., home prices are skyrocketing, and your neighbor might factor that into their price. But if the market is considerably slower when the time comes to sell, you might be able to make them an offer (backed by local sales data) that is less.

Remember, your goal is to own the property. Right now, a casual conversation is the smart way to open the door to the idea of buying your neighbor’s home.

Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through her website, ThinkGlink.com.

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