Real Estate the Ramsey Way - What’s the Right Way to Deed a Home to Our Parents?

Episode Date: November 17, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, The Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate home ownership with confidence. Charlotte is in Richmond, Virginia. Hey, Charlotte, welcome to The Ramsey Show. Hi, thank you so much for speaking with me. Sure, what's up? Well, my husband and I have a home that his parents are about to move into in a few months,

and we want some advice as well, whether it's better for them to just be deeded to house, or if we do have them just pay us the mortgage amount, what should we put in a contract just to keep our family relationship healthy, but keep everything legal and just secure? Wow. Well, the reason you're calling is because you know you're skating on thin ice asking for trouble. Yes.

And you're asking how to avoid falling through the ice, and the best way is don't skate on thin ice. Don't do the deal this way. Why aren't they getting a mortgage and buying it from you? We all, we're kind of doing a house shift. His sister's coming from a very expensive part of Washington, D.C., and she will move into the parents' home and be deeded their house. And the parents will move into our smaller home and downsize.

And all of the mortgages are so cheap because the homes were purchased years ago compared to refinancing and adding about $100 to $1,000, well, hundreds or thousands of dollars more. The sister gets a free house. The parents get your house free. What are you getting? My husband and I have two homes. When we got married, we both brought a house into the marriage. So this would be the house that we've just had renters in.

I know. You missed my point. You're giving the parents a free house. They're giving their other daughter a free house. What are you getting? That's why I'm calling. Nothing. Okay.

So I'm confused while we're doing this. This is going to cause resentment real quick. She's not a house swap. This is a sister got a house. They got a house and you didn't. That's different. So, all right. So you want them to move into the house and pay you for the house.

Is that right? Yes. And they're fine with that. Okay. Why don't they get a mortgage and just take the house, pay you with a mortgage, like, like, like, a normal buyer of a house would do and just pay you and you sell them the house. Okay. I'm writing everything down.

Well, I mean, I'm asking, is there a reason you all hadn't done that? Because that's kind of the obvious way to do it. What's the price you would sell it to them for? That's the issue. Where we are, the home would go for $3.80, and we only owe $1.90. But I am aware that if they purchased it at the market value right now, we have a, I think it's an $1,100 mortgage on that house, and it probably knocked them all the way up to $1,800, if not more. Yeah.

So that's... And you're saying that's too much. So if they're going to buy a $380,000 house, they're going to have a mortgage amount that they pay. What's wrong with that? They can't afford it? Oh, they can. I guess we just want to, we want to be a blessing to family and not make anybody have to pay, you know, 800 plus more a month. if we already have the homes in our name.

Well, you can't transfer the deed with that mortgage in place. That mortgage that you have is not going to survive this deal. Okay. There's a due-on-sale clause in the deed. Would it be better then just to have the contract for a renter? No, it would be better if they went and got a mortgage and bought the house from you. If you want to discount the house to be a blessing, instead of selling it for $380, sell it for $300, I'm fine if you choose to do that.

still confused why you need to do that. But if you want to do that, and that's what you want to do, just sell them the house a little cheaper and let them go get a mortgage and hand you a check. Okay. If they buy it for 300 and you owe 190, they're going to hand you a $110,000 check, right? Right. Right. And that's a deal. I'm making up the number. I don't know what the number is, but I don't care what you sell it to them for. And they're giving a deal to your husband's sister, right? Mm-hmm. Okay. And so really, and then you give them a deal.

So really the truth of the matter is when all the smoke clears, you actually gave your husband's sister a deal. Mm-hmm. Yeah. If you trace it back. Yeah, because you didn't use, they didn't use, because they're getting a deal on your house, and that enabled them to give the deal over there. So it's much like you did it for the sister instead of for them.

So I don't know. I don't know what you want to do. I would not have them pay you a monthly rent, and I would not have them pay you a mortgage. And I wouldn't do it for free because now you're actively losing money every month because you still have to make your mortgage payment. Right. We wouldn't do it for free.

They would cover what we would owe monthly. We just want to make sure there's no legal repercussions, and we definitely don't want to do a handshake deal. We want to have a contract. I would not have a contract because, all right, let's talk about it. I'll go one more step, okay? There's two or three principles going on. One, there's a legal principle.

If you do what's called a contract for deed and they move into the house and start acting like the owner of the house, you've had what's called equity of title has transferred and the due on sale clause and your mortgage can activate and your mortgage company could foreclose on you. So don't do that. Don't do that. Okay. And if they move in and just start renting from you, then they don't own the house and they're at risk. And you've got to figure out some kind of a deal someday when the house goes way up in value who gets that money. Them or you. I wouldn't get into all that.

I would simply sell them the house at a price and let them go get a mortgage, pay off the mortgage that you have, put the difference in your pocket. And they still got a deal. Okay. And then they have a mortgage payment and it's their problem just like it is today. Today they own a house. You're not involved in that house, right? Right. That's the way it should be.

that's that's the legal side of this now then the other side of it is the emotional and relational side uh the borrower is slave to the lender when you eat dinner with someone you owe money to it tastes different because it messes up relationships and no contract in the world makes that go away that's a spiritual principle a philosophical principle so please don't do the deals you're talking about your family is going to end up harmed, you're going to end up harmed, people are going to end up not liking each other, it's not a good idea. So just pick a price. If it's worth $3.80, we're going to sell it to you at a discount of X. Let them go get a mortgage for X.

And if they don't want to do it. And if they don't want to do that, then you really don't need to do this deal for sure. You don't need to do it for sure anyway. Hey, guys, thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting, and one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent who will rush you into costly mistakes, like the ones some of our callers find themselves in.

You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com slash trusted agent. That's Ramsey Solutions.com slash trusted agent. Shantay is in Atlanta. Hi, Shantay. How are you? I'm doing well. How are you doing?

Better than I deserve. What's up in your world? Okay, sir. About the year ago, my daughter was killed and a murder suicide by her husband. Whoa. I'm going to try to get through this. Oh, so sorry. I have custody of my grandchildren. They love three children.

One, he had from a previous marriage, but I have two, which was theirs. Wow. Because of this, they have a house in Texas. I've been paying on this house for almost a year. I'm trying to figure out. if I should keep paying for it because it has to go through probate or continue to take care of myself and pay off my debt, which I have a student loan that is about $80,000. But I had to put that on pause in order to take care of this house. What is the house worth?

Well, according to a young man I had to go evaluate it, it's worth. It has about a little over 100 in equity, 100,000 to 130 in equity. Why is the probate not clear a year later in Texas? Well, I believe that's my fault because I'm living here in Atlanta and the houses in Texas. So I had to travel back and forth, of course, to take care of things there. The babies are with you now. It was hard to find a lawyer. The babies are with you now.

in Atlanta, right? Yes. Okay. It was hard to find a lawyer. Well, $100,000 is a great part-time job. Sir? I said, making $100,000 for your new part-time job called getting this house probated and sold.

That's a nice part-time job, $100,000. I'm already $20,000 in, and I'm getting nervous. You're missing my point. If you sell the house, you get $100,000 in your pockets, what you told me, right? Yes. Ain't nothing else you're doing going to pay you. that. So I'm going to make this a priority. But you're $20,000 in, meaning from lawyer fees, travel, all of that. That's what you're saying. And you're like, I'm nervous. You've been paying

the payment. Taking care of the house to make sure it's still. Yeah. Yeah, you need to go, you need to, do you have any time off available from work or have you used it all up with this tragedy? Okay. I'm also a caretaker from my mother-in-law, so I'm home. So I have to You're married? Yes, sir. Okay. Listen to me. If I wave a hundred thousand dollar check under your nose and say, go get it, that's

where you're sitting. You need to go get the $100,000, which means you need to prioritize and say, someone else take care of mother-in-law for a week. I'm going to haul my butt over to Texas, get a lawyer, get this thing run through probate, get it on the market with a real estate agent, get it sold, put $100,000 in my pocket for the good of you, your family, and these babies. Okay. May I say something else, sir?

Sure. So when it goes through probate, a lot of the fees will eat into that. Am I correct? There's not any big fees in probate in Texas. Okay. No big deal. Okay. It's a few hundred dollars to get a lawyer and get the thing before the judge.

Tell the lawyer to tell the judge the story. This is a tragedy. These children, these babies are dependent upon this asset to take care of them with their granny who's taken them in. We need to fast track this thing right down the radio. sales judge and the judge will go oh yeah i'm gonna take care of this one this one ain't dragging out stamp stamp stamp boom houses on the market and you're out of here texas is not a difficult texas is not a difficult state okay i mean i've been i call like 10 lawyers or hopefully i found one hopefully i have not okay here's what here's what you do let's stop let me let me help you with i'll

guide you through it but what i need you to do is make this a huge priority if i told you you, I would hire you for one week and pay you $100,000 and you had to go to Texas for one week, you would go do that. Yes, sir. That's what's in front of you, okay? So I want you to go to ramsysolutions.com. I want you to find one of our smart best, I mean, one of our ELPs for real estate, or Ramsey trusted real estate ELPs.

What city in Texas is this? Is it a city called Temple, Texas? All right. And what's that outside of? I believe, oh my gosh. What's it close to? Because I don't know that one. What?

Austin. Austin is like an hour and a half away. Okay, all right. So I want you to get one of the Ramsey trusted real estate agents and I want you to get on the phone with them today. I want you to ask them to help you find a probate attorney. Tell them this story. They will help you run this to ground. They can help you find an attorney.

You can get on the phone with an attorney and the real estate agent will help you if you're going to list the house with them, right? Yes, I have a little bit. And they'll know somebody in the area, and they'll know an attorney that does probate work, and the probate attorneys know the judge in probate. They can pick up the phone and call the judge and go, look, here's what we got. We got these two babies in a murder-suicide, horrible situation. And when these babies are about to lose their only asset, if we don't get this done, because granted he lives over in Atlanta and can't get this household.

Judge, we need a little help. And boom, we're going to get this thing done, girl. Well, thank you, Dave. I hope so. You're going to get it done. I'm saying you're going to lean into it. This is your new part-time job that pays $100,000. This is your part-time job that pays $100,000.

And this is more important than taking care of your mother-in-law for the next week. Believe me, I've been there five times trying to get this done. Yeah, so I'm curious what you said, you know, I've been trying, you've been down there. What holdups are you finding? Like, what are they telling you? Trying to find, I believe I found a lawyer finally. I paid the fees. I haven't heard from them yet, unfortunately.

I don't know what's been done. How long ago was this? About a month ago. Your jobs called them every day until they get their finger out of their ear. Okay. Yeah, okay. This is like my 10th lawyer. I'm telling you I've been trying.

Okay, all right. You hang on. Are you jump on Ramsey? solutions, I'm sorry, and get a hold of one of the real estate agents to see if you can get some help over there. Because the thing is, your job is put pressure, heavy pressure on this whole situation so that it spits out a $100,000 check. And you've kind of hit or miss, well, the lawyer didn't do it, and well, I did it a month ago and I hadn't followed up. So you're not putting the pressure on. I want you to put the pressure on. Be mama bear. I want you to lean in and take

care of this situation. And you've got to have to have. I mean, this happened to your, I'm like, you're probably coming out of this fault. I mean, I can't even imagine. I can't imagine how much pain is involved. I mean, it's just, yeah. I'm like, there's so, there's so much. But I hope, I hope this call for you gave you more of the confidence and the motivation to say,

okay, I am doing the right thing and push forward. Because sometimes, and I could feel this. Like, you hear probate, you hear, I mean, it's a very intimidating idea. If you don't deal with lawyers and you don't deal with judges on a regular basis, right? I'm like, there's a level where this can feel very intimidating. And you almost can outsource it, which I think is what she's done. She's yielded a lot to these lawyers. But what you're giving her the permission and the mandate is to be like, you can, you can, not that you can quote, go do more, but like you can step into this role with more aggression.

And that's, and you should. Most lawyers need desperately need someone to tell them what to do often. often. And that's like my goal in life is to tell lawyers what to do often. You need to boss them around. They're not used to it and it's really good for them when somebody finally does it. So, and it's good for you because this needs to get done. This needs to get done because you're paying a payment that thing's sitting there eating you alive instead of blessing you. And it's eating these, you know, when it's eating you alive, it's affecting these babies instead of blessing them. This $100,000 dollars go a long way to take care of your family and therefore you being able to take

care of these babies. I'm so sorry y'all been through this, Shantai. It's horrible. But get one of the real estate agents over in the area to help you run point on this and then you lean into it. Growl, Mama Bear. Go get them. There's a $100,000 check laying there.

Don't let anybody keep you from it. Go get it. Go get it. Don't walk away from this.