Homebuying With Friends: Could Splitting the Real Estate Bill Drive Homeownership?

As the housing market continues to rebalance, alternative homebuying trends could help more people achieve homeownership.

Bob Dylan likely said it best: “The times, they are a-changin’.” This is especially true in the real estate market.

According to the January RE/MAX National Housing Report, the Median Sales Price currently sits around $385,000 – down 1.0% from December 2022 but still up 1.3% from a year ago. And Bankrate reports that the current average 30-year fixed mortgage interest rate is hovering around 7%.

Meanwhile, Statista reports that in February 2023, inflation amounted to 4.2%, while wages grew by only 3.2%, leaving some prospective homebuyers wondering how to make it all add up so they can purchase a house.

For some would-be first-time homebuyers who are emotionally ready to invest but struggling to save for the down payment or fret having high monthly payments, renting with a roommate can help split the costs, but it doesn’t build equity – a key component to building wealth. The prospect of buying a house with someone, even if it’s not a romantic partner, comes to mind. But is that a good idea? Will the benefits outweigh the potential risks?

What to consider in joint homeownership

Christopher Audette, an agent with RE/MAX First in Calgary, Alberta, says with inventory issues and the current cost of rent, it makes sense for people to come together and pool resources when considering becoming homeowners.

“It can be the launchpad that’s needed for people to get into homeownership so they can build equity,” he shares.

While it’s a less common practice to purchase a house with a non-romantic partner, the trend could start to emerge for homeowners – especially from younger generations – to co-purchase with a family member, or friend. Even parents and children are considering this route.

“The sooner one can get into real estate ownership, the sooner they can begin to build wealth,” says Joe Allen, an agent with RE/MAX Results in Edina, Minnesota. “If partnering with somebody to buy a home is going to allow them to do it sooner than later, I think it’s a smart avenue to explore.”

However, when it comes to purchasing property with a non-marital partner, there are also some risks to be aware of. Apart from the necessary finances, another aspect to consider is the emotional toll it can take.

“Homeownership is very emotional. If you go into it with a friend, it can be hard for some people to compartmentalize friendship and business,” explains Shannon Murree, an agent with RE/MAX Hallmark in Barrie, Ontario.

And while the friendship outside of the house might be a great fit, it doesn’t always transfer to homeownership. Murree advises those considering house hunting with friends to assess the compatibility of their lifestyles, including how they handle finances and their level of cleanliness.

Audette agrees, noting, “Buying with a friend can lead to resentment when one person is putting more into things like renovations or home maintenance, or even day-to-day tasks like cleaning. Or, they could both be single at the time they enter the agreement, but then one gets into a primary relationship and now there’s a third person who’s constantly there as well. These are factors that should be thought of upfront as they can lead to hard feelings.”

While some of these are also risks for any married couple, Allen believes they can be even more pronounced for non-married partners.

“If you’re married and then get divorced, there’s a court system to help you divide assets. If you’re not married and one homeowner decides they want out or want to sell, there’s no system in place to help you do that,” he says.

Consequently, Allen says one of the smartest things someone can do when they’re considering joint homeownership is to engage an attorney and come up with an agreement where the parties determine how they would handle a sale or buyout.

It is highly encouraged to take all considerations into account before purchasing jointly. And, as Audette clarifies, there’s no need to rush the process.

“Don’t be cavalier about the legal aspect of it. Don’t do it now and figure it out later. Figure out the logistics now.”

Handling finances and setting expectations

For those interested in this pathway to ownership, working with skilled and knowledgeable professionals – a real estate agent and a mortgage broker – is key. There are quite a few nuances and differences when purchasing real estate jointly versus as a married couple or individual.

Chuck Simmons, a mortgage broker with Motto® Mortgage in Ankeny, Iowa, explains when a married couple applies for a home loan there is one application that looks at both parties’ credit score, income, and debt. The process is typically an open book to both sides. When applying as two unmarried individuals, there are two applications looking at the same criteria, but the flow of information is not as fluid.

Simmons says when married couples apply for a mortgage, they ultimately give permission to talk to both sides, but single applications are closed to each individual applicant. So, if there’s an issue with one person’s income or credit, the mortgage broker can’t openly talk about that issue with both parties – they can go directly to only the applicant.

“Depending on the disparity, I will call the person and say, ‘Are you okay with me having this conversation with everyone?’ just so that they understand there might be some personal things we need to work through but it’s going to affect if they can get approved or not,” Simmons says.

When two applicants file for a home loan, the lender must use the lower of the two credit scores, which can affect the interest rate and ultimately save or cost thousands of dollars.

Allen says to consider looking at this joint venture as a business partnership.

“Build a business partnership around the property and choose your partner well,” he advises.

The planning portion of this venture should be a high priority and extremely thorough. Partners should create a business plan and have everything laid out on paper from the get-go, from who will take which room to what happens if someone wants out, and everything in between.

“A lot of homes are set up for families,” explains Jeff Feldman, an agent with RE/MAX Results in Edina, Minnesota. “So, there will be tradeoffs – one might get the owner’s suite while the other gets the garage. Other agreements will come when something goes awry. What happens if the furnace needs to be replaced? You’ll need to agree on which brand, the cost, what contractor to use, and level of efficiency. Putting certain guidelines on paper up front will help down the road.”

The process – and agreements that come in tow – can also differ depending on the type of property one is purchasing, be it a primary residence, vacation property, or payment partnership.

“There’s a difference between an occupant co-borrower and non-occupant co-borrower,” Simmons says. “If it’s two brothers buying together and both plan to live in the house full-time, there are standard [loan] programs available. If it’s a parent who’s helping a child with a down payment, they may not be able to take advantage of certain programs.”

Real life application

Homeowners Michael Smith and his wife purchased a secondary property in the mountains with good friends and co-owned the home for over a decade. Smith says there were definitely learning curves, but overall, it was a great experience for them. He believes things worked out so well because they laid out the ground rules right away and had parameters around arrival and departure times, who cleaned what, and even appropriations of the slush fund for repairs and replacements.

“I think it really helped that both families were in similar financial positions, and had similar lifestyles and mindsets,” Smith shares. “From the beginning, we chose a bank that neither of us previously belonged to so any mail that came from them we knew was in reference to the property. We opened a joint bank account which each family fed to be able to pay for maintenance and repairs. We even had a small cash deposit made to the property bank account of $10 or $20 if we had extended friends or family with us, just to account for additional wear and tear.”

Friends Dan Kenney and J.T. Williams purchased a primary residence together in a Northeast Minneapolis neighborhood in 2005 when they were just 24 years old. They lived together as co-owners for a number of years and took a less conventional route to figuring things out.

Admittedly easy-going guys, Kenney says that while some things – like deciding who got the bigger room – came down to rock-paper-scissors, other more important things were taken seriously.

“Our personalities complemented each other and we were able to decide in the moment what was needed or not needed. If we needed it, we did it together, 50/50.

“We also always wanted to make sure our friendship stayed intact. We knew there were going to be ups and downs, but we kept our friendship paramount.”

Just as important as figuring out what living arrangements will lead to the best living experience is asking what happens when one partner wants to exit.

Implementing an exit strategy

For the Smiths and their co-owners, life evolved and they found themselves using the mountain home less and less. When they all decided to sell, they chose to unload on the whole.

“When we purchased the home, we had to furnish it from the ground up and so when we sold it, we sold everything and split the proceeds 50/50,” Smith says.

Alternatively, for Kenney and Williams, they decided to transition the property from owner-occupied to a rental and use it as an investment property – a situation that worked well for them until they eventually sold.

While buying a house jointly with a non-marital partner is not as common of a route, and does come with some risks, Murree says it’s still worth it.

“It’s unconventional. It’s creative. It’s risky. But if you need a place to live, you might as well earn some equity,” she says.

For those interested in joint homeownership with a family member, friend, or business partner, remember to align with a like-minded individual, plan ahead, and put it all in print. Because the times, they are a-changin’ – and there are many routes to homeownership that may be the best fit.


4 Reasons to Fall in Love With Your Home All Over Again

Many homeowners enjoy the financial and emotional benefits of owning property. Here are a few reasons to swoon over your space.

Home sweet home. It’s the place that greets you after a hard day at work – or in your home office. The place where you relax, laugh, celebrate, eat, drink, and do the things you want to do. What’s not to love about a place like that?

Many buyers find love in their home search – “I love this kitchen!” “The dogs would love this backyard!” “I’d love to spend Friday nights on this porch!” – and even in the idea of moving on (“We’d love to have more space than our cramped apartment”).

Home is where families and friends share love for one another, and where everyone loves the dog (How can you not? “Who’s a good boy?”) And what makes this love affair with home even more rewarding and long-lasting? Homeownership!

Here are four reasons to love a home you own:

1. It provides shelter – and comfort

A long day or a trip away reinforces the idea that there’s no place like home. Not only does a home provide shelter by way of a roof overhead, but it also acts as a template for recharging. From lounging in a favorite recliner chair to snagging the best spot on the couch to gathering around the kitchen table for memorable conversations, a home you own is a sanctuary of comfort.

2. It helps generate equity

For many, homeownership is a significant way to build wealth that can span across generations. Equity is built by paying down a mortgage, plus completing regular maintenance, making necessary repairs, and even renovating the home over time.

By paying your mortgage rather than a landlord’s, you add to your financial wellbeing.

3. It allows room for personalization

Renting a home comes with strings attached – many of which involve following regulations with paint color, nails to hang art, landscaping, décor, and more. When you own your home, the opportunity to customize the place is virtually limitless.

Best of all, the style of your home can evolve over time. Knowing you have the freedom to shake things up at any moment means your home can grow alongside you and your family.

Additionally, many dog owners know the difficulties of trying to rent a property with a pet. When you own your home – short of some condo stipulations – Fido is welcome, too. And if your home has outdoor space, you can help make it as pet-friendly as possible.

4. It’s the backdrop for lifelong memories

In recent years, more of life happens at home. Across time, a house continues to be the center for gathering with friends and family, celebrating holidays, hosting neighbors, cooking meals indoors, enjoying sunshine outdoors, and so many other things you love to do.

Many people appreciate their home for its convenient location, proximity to family, nearby entertainment, and the surrounding community. When homeowners look back on the purchase of their house, they often fondly reflect on the memories that have since made it into a home.

6 Signs You’re Ready to Buy a Home

Whether you’re looking for a yard for a pet or bigger closets for storage, buying a home could offer more flexibility than renting – and it can be a long-term investment. Are you ready to be a homeowner?

With the housing market balancing in many places, many people are finding that now is a great time to purchase a property of their own. Renters looking to buy are usually in the pursuit of more living space, creative freedom to decorate, and ownership of an asset that can appreciate in value over time.

Renters, are you tired of spending money each month to pay someone else’s mortgage? It may be time to consider buying a home. Here are the signs to look for:

You need more square footage

Upsizing is a common reason renters venture toward homeownership. With more heads under one roof – from children to aging parents to pets and more – an extra bedroom, in-law suite, or garage space can go from being a want to a need. Whether you find a place that has everything you want or a fixer-upper that can be turned into your dream house, owning property offers the potential of adding more space.

You’re looking for outdoor space

Having access to the outdoors – especially for those renting an apartment – has become an increasingly more important factor to prospective homebuyers. This can be especially true if you welcomed a new pet into your life recently.

The options for your outdoor spaces are much greater when you own the property, whether you want to add a fence around the yard for the dog, put in a swimming pool, or lay out a patio for entertaining guests.

You want the flexibility to customize your home

One of the many luxuries of owning a home is having the freedom to do what you please with your space. Oftentimes when renting, tenants are unable to paint walls, drill holes, upgrade aspects of the kitchen, and more. Each household functions differently, so it can be comforting to live in a space custom-tailored to your needs. If you’re handy with DIY projects or can hire professionals, your options for making a new space feel like home are endless.

You’ve saved up for a down payment

Many people start the homebuying process once they have saved up enough money for a down payment. With a budget in mind, check out available financing options (like first-time homebuyer or military housing grants) that may help determine how much you can afford.

The down payment isn’t the only cost associated with buying a home. Don’t forget to save up for additional fees associated with the process, including closing costs, a home inspection and other potential service expenses. When the time comes that you’re ready to put in an offer on a home, you’ll already have these funds set aside.

You’ve saved for maintenance, emergencies and repairs

Owning a home inherently comes with more responsibility than renting. When buying a home, it’s helpful to have money set aside for necessary repairs and unexpected emergencies. Being financially prepared ahead of time will make the inconvenience of a things like a broken appliance or leaky roof more manageable.

You’re looking for an investment (financial and emotional)

If you’re tired of renegotiating terms, paying higher rent, or moving each time your lease expires, then purchasing a home is a great solution. But in addition to peace of mind, owning a home can pose long-term financial benefits, too.

Likely the largest financial transaction a person will make in their lifetime, a home is an an investment that may, potentially, help you create generational wealth. Best of all, the money you pay each month to a landlord can be used instead to pay down your own mortgage.

If you’re done with renting and ready to buy a home, contact me, I’ll be happy to help you through the process!

Considering Buying a House? 6 Signs That Confirm You’re Ready

Are you sick of paying monthly rent that contributes to someone else’s mortgage payment? Are you craving the freedom to repaint walls? Or, are you looking to build wealth through what is often considered a smart investment? If so, it sounds like it may be time to start your homebuying process.

Consider these six reasons that help affirm you’re ready to become a first-time homebuyer.

1. You crave the freedom to personalize and renovate

Owning a home gives you the freedom to express yourself by completely customizing interior and exterior spaces. You no longer have to abide by regulations regarding wall colors or hanging art.

Additionally, you can remodel and renovate your home as you see fit. From small projects, like changing cabinet pulls, to big projects, like tearing down a wall or adding hardwood floors, you have the authority to make decisions regarding design.

2. You’ve outgrown your space

An obvious reason to move is when you’re tight on space. For many, this could be because you’re expanding your family – think a baby on the way, more pets, aging children who want their own bedrooms or in-laws that are here to stay.

A shift in lifestyle patterns, like working from home and online schooling, means you may be on the hunt for more quiet workspaces. And, if you have hobbies or own outdoor equipment, it may also be time to assess your storage needs – like an attic or garage.

3. You seek outdoor accessibility

In apartment living, outdoor space is limited – and sometimes crowded. When you buy a home, a criterion may be a grassy yard, deck or patio space. Whatever your preference may be, you’re likely seeking a way to enjoy the outdoors with privacy.

Having your own outdoor space means room for entertaining and room for exercise. Plus, you can accentuate the curb appeal of your home with exterior décor like potted plants, flower boxes, furniture and seasonal holiday flare.

4. You’re done with fees and rules

A major downside to renting is paying for a property that you do not own, and therefore is not your personal investment. Apartment fees go toward necessary services, like garbage disposal, but also may contribute to amenities you don’t use, like a gym or pool.

Additionally, apartment communities often have time restrictions and limited hours on resources you would like to take advantage of.

5. You’re ready to make an investment

Have you been saving for a down payment? Though the initial cost can often be a barrier to entry for first-time homebuyers, the down payment may not need to be as high as you think.

Once you’ve saved enough money for that initial investment, however, the monthly costs associated with homeownership can be similar to what you would have paid in monthly rent. Only this time, your payments contribute to your property becoming an asset. The more you pay off your mortgage, the more valuable your home is to your personal net worth.

6. Long-term happiness

One of the biggest reasons to purchase a home is for the stability and security it provides you and your family. You can truly settle into the space and life can slow down a bit.

With the ability to personalize most aspects, and by thinking of it as a long-term investment, a home of your own becomes the place you cross milestones, celebrate holidays and create lasting memories.

Washington REALTORS® 2020 Legislative Day Recap

Almost 500 REALTORS® and Affiliates showed up for the WR Legislative Day event on January 22-23rd in Olympia. The sheer number of REALTORS® who came from all over our state to represent members and property owners is a statement to our Legislators in itself!

REALTORS® met with Legislators throughout the afternoon to discuss Washington REALTOR® priorities, including the following:

  • EXPAND LOCAL HOUSING SUPPLY EFFORTS Last session, the Legislature passed HB 1923 that incentivized cities to adopt regulations and plans to increase housing supply and affordability. This bill was part of REALTORS® Unlock the Door housing supply campaign, and now over 50 cities are implementing the law. In 2020, will expand this program by extending the deadlines for local governments, including additional types of housing ordinances, and increase the number of cities that are eligible to participate. A range of aggressive and sustained action on housing supply is needed from addressing homelessness and low-income affordability, to stopping the alarming trend of decreased of homeownership.
  • EXTEND MULTI-FAMILY TAX EXEMPTION The state’s Multifamily Tax Exemption (MFTE) has been successful in helping create thousands of new units of privately-owned affordable housing. This program has been central to urban redevelopment and housing supply efforts in both small and large cities. These bills extend the authorization for the MFTE and provide additional flexibility so the use of the MFTE can be tailored to meet the variety of needs at the local level.
  • PROTECT REALTORS® INDEPENDENT CONTRACTOR & AGENCY LAW PROVISIONS Recently, the Legislature passed bills clarifying independent contractor status for real estate brokers and reaffirmed the state’s real estate agency laws; to include the statutory duties of brokers and dual agency requirements. Despite this, conflicting employment legislation has been proposed that would negatively impact the real estate industry by altering the status of real estate brokers as independent contractors and real estate agency laws. The unique structure of the real estate industry should be acknowledged and protected in future employment legislation.

Aging at Home: Where Seniors Really Want to Live

Despite the allure of senior communities that offer a surfeit of amenities, such as pools, gyms, coffee bars, and cooking classes, most older adults—76 percent of Americans age 50 and older—want to remain in a home throughout their golden years, according to an AARP survey.

Often, when older adults do move, it’s for reasons other than the desire to live in a 55-plus community, such as high real estate taxes, ongoing maintenance tasks and costs, the absence of an accessible first-floor bedroom and bathroom, or a neighborhood that makes them too dependent on cars to get around.

Helping clients who want to purchase or update a home where they can age in place is a growing niche in real estate and ancillary industries. Agents and brokers who are Senior Real Estate Specialists (SRES) or Certified Aging-in-Place Specialists (CAPS) can help this cohort find homes or stay put and modify their homes to address physical or cognitive impairments.

Read the article on REALTOR® Magazine

Washington REALTORS® 2019 Legislative Day Recap

Over the course of over 140 different scheduled meetings with Legislators on Thursday, January 24, REALTORS® received encouraging and positive response from our Legislators to the following Legislative Priorities:

  • Reforming Condominium Liability Laws
  • Increasing Urban & Suburban Housing Supply in Urban Growth Areas
  • Aligning the Short Subdivision Process with Ecology’s SEPA Regulations
  • Supporting the Housing Trust Fund for HomeownershipState Funding Support for Housing, Homelessness & Infrastructure
  • Expanding the Multi-family Tax Exemption Program
  • REET & Lodging tax—Local Funding Tools for Housing & Homelessness
  • Read more details about Washington REALTORS®’ Legislative Priorities.

All of our Legislative Priorities are part of the Unlock the Door for Affordable Homeownership initiative. Partnered with other non-profit and for-profit entities, Washington REALTORS® will continue to work with our Legislators and lead the way to help create affordable homeownership opportunities for all.

REALTORS join forces to make housing a top legislative priority in WA

With the Washington state Legislature scheduled to start its 2019 session on January 14 and Realtor Hill Day slated for January 24, Realtors and other real estate-related organizations will be coalescing around the housing crisis and strategies for improving supply and affordability.

Among legislative priorities are:

  • Condominium liability reform, specifically, language that would 1) prohibit individual HOA officers/board members from being sued; 2) modify statutory “implied warranties” that condo buyers receive from builders; and 3) require purchasers who sue to establish a “performance” defect.
  • GMA reform, including a requirement for cities to enact minimum densities in urban areas, thereby making more efficient use of available urban lands designated for jobs and housing.
  • Housing Trust Fund legislation that may be proposed to allow use of a portion of the monies for building owner-occupied housing in addition to publicly-owned housing.
  • Other budget and financial issues affecting tax collections; education funding subsequent to the 2017 “McCleary Fix;” expenses resulting from compliance with the “Culverts case” that required the state to improve fish passage on almost all culverts under state roadways; B&O and REET related proposals to increase those taxes; and a new capital gains tax (depending on the final number of Democrats in the State Senate).

To help focus attention on the housing crisis and its “real world impacts,” a coalition of nonprofit organizations, builders, Realtors and others joined forces to launch a multi-media campaign.

Using the theme “Unlock the Door,” the campaign invites members of the public and Realtor members to share stories on how the housing affordability crisis has affected them, and their family, friends, and clients.

The effort, now underway, is in response to the struggle families across the state and in all income groups are facing in their search for homeownership opportunities. Organizers cite research from the Rundstad Department of Real Estate at the University of Washington which indicates  first-time buyers in King, Kittitas, Pierce and Snohomish counties face home prices that area nearly double what they can afford.

The campaign’s primary focus is on affordable home ownership opportunities, but it will also contain elements related to homelessness and low income housing.

Questions? Contact Jennifer Gilbert-Smith, volunteer member of Seattle King County REALTORS and Tacoma-Pierce County Association of REALTORS Government and Public Affairs Committees

3 Tips for the Ultimate Staycation

The temperature is warming up, the kids are finishing school and plans for what’s next this summer are being made. Are you dreaming of unplugging from work and other responsibilities and, at the same time, looking to save up to make your next home purchase? You can do it all with a well-planned staycation that allows you to relax, recharge and enjoy some down time in the comfort of your own home. Here are three tips to get you started.

  1. Determine Your Staycation Style

Would you prefer to stay in all week, or get out and about and rediscover your hometown? Like you would do with a destination vacation, make a list of things you want to do, eat and see. This is the time to explore the new museum exhibit, hike the trail you have been meaning to check out or binge watch your favorite TV show.

  1. Prep like you are leaving town

The best part of a vacation is getting away from the day-to-day tasks of everyday life. Do yourself a favor and run errands and complete chores the week before your staycation. Do the laundry, fill the car with gas and clean the house (or, better yet, have it professionally cleaned). This way you can really settle in during your week at home without worrying about the clean clothes that need to be put away or the rug that needs to be vacuumed.

  1. Splurge A Little

One reason you chose to vacation at home is to save money, but that doesn’t mean you can’t splurge a little on small luxuries. Stock the refrigerator with items for awesome homemade meals or budget for eating out at restaurants when the mood strikes. Even a nice bottle of wine or high quality bubble bath can make you feel luxurious and relaxed without breaking the bank.

The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals

The National Association of REALTORS® (NAR) worked throughout the tax reform process to preserve the existing tax benefits of homeownership and real estate investment, as well to ensure as many real estate professionals as possible would benefit from proposed tax cuts. Many of the changes reflected in the final bill were the result of the engagement of NAR and its members, not only in the last three months, but over several years.

While NAR remains concerned that the overall structure of the final bill diminishes the tax benefits of homeownership and will cause adverse impacts in some markets, the advocacy of NAR members, as well as consumers, helped NAR to gain some important improvements throughout the legislative process. The final legislation will benefit many homeowners, homebuyers, real estate investors, and NAR members as a result.

Read the National Association of Realtors article…