So I was trying to find the answer to this online but didn't see it anywhere but I eventually figured it out and thought that I should let others know how to do this.
If you find a townie kid and you want to add it to your household as something other than a sibling or roommate here's what you have to do.
1) Take the household that the kid is in, edit it in CAS, then save it to your library/ the gallery
2) Take your household, edit it in CAS
3) Merge the two households by pulling the first out of the gallery
4) Delete unwanted members
5) Edit the relationships how you want them (parents, siblings, etc.)
6) Enjoy!!
Hope this helps somebody!