I am selling my house to a friend or relative. Do we have to go through the formalities?

For the most part, yes.  In all likelihood, your friend or relative will be financing at least part of the purchase by getting a mortgage. Before a bank will issue a mortgage, the lender is going to require a copy of the contract and want things done a certain way, regardless of how you came to find your buyer. There are also government fees that will need to be dealt with at the state, county and local level and forms that need to be prepared.  A title company should be used not only to satisfy title insurance, but to help close the whole deal.  Don’t try to bypass the legal requirements, they could come back to hurt either one of you later. One place where you will be able to save some money if you are selling to a friend or relative is in commission to a real estate agent as their main job to bring a buyer and a seller together. 

Carol O'Connor Cadiz
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Attorney & Owner at O'Connor Cadiz Law: Injury & Accidents, Disability Insurance.