Friends or family members who say, “We’ll work it out later” set themselves up for trouble. The time to “work out” solutions for unexpected problems is before the purchase, not after.

CHICAGO – A growing number of consumers are exploring unconventional pathways to homeownership, including co-ownership – buying a home with a friend, family member or partner, according to the National Association of Realtors®’ (NAR) 2021 Home Buyers and Sellers Generational Trends Report.

With rising costs, homebuyers may find pooling their money together can put homeownership more within reach.

“This strategy can help ease the financial burden of purchasing a home to some degree,” says Glenn Brunker, president of Ally Home. “But buyers should be prepared to navigate the potential risks.”

Brunker recommends that buyers considering a co-ownership arrangement with friends, family members or partners keep these points in mind:

  1. Finalize and stick to a budget. Buyers should set their budget before starting a home search. The budget should include how much home they can afford but also how they will manage the additional expenses of homeownership, like closing costs, taxes, lawyer fees, utilities, maintenance and more. Each co-owner should consider how a lower budget may offer a chance to save more or even handle the mortgage payment on their own.

    “Ideally, the division of these costs should be put in writing to avoid any future conflicts as a result of planned or even unexpected costs,” Brunker says.


  2. Establish how the property will be titled. A legal professional can help both parties determine how they will title the property, Brunker says. For example, four friends may be purchasing a home together, but one makes the majority of the down payment. These buyers might structure a tenancy in common agreement so one party owns 40% of the home and the other three each own 20%.
  3. Consult with a legal professional. Along with a lender and real estate professional, buyers should meet with a title agent or real estate attorney to ensure all buyers understand the legal options available and implications of the agreement they choose, Brunker says.

    “This professional can help answer important but often overlooked questions like, what is the exit plan if one party wants to move? What are the rights of survivorship?” he says.

Source: Ally Home

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