Published: Sunday, May 6, 2007
The joint effort
A mortgage planner provides tips to ensure such arrangements work.
Fresh out of college, it didn't take long for Casey Price to decide he wanted to buy a house, not rent.
"I wanted to put my money into something that would appreciate, rather than mailing it away every month," the Everett man said. "I wanted to put my money to work."
Price lived with his parents and saved nearly all of his paycheck. To improve his credit rating, he spent frugally and paid his bills on time. He wanted a new car but made do with a 20-year-old truck instead.
Then reality hit. He realized his marketing job didn't pay enough for him to get into Snohomish County's hot housing market. So Price found a solution: He bought a house with his sister and her husband.
It's not the right decision for everyone, but it allowed Price, now 25, and his sister, Courtney Roach, 26, to jam a toe into a housing market that is shutting out more first-time buyers.
Consider this: A median-priced home in Snohomish County costs $355,000, according to the most recent statistics from The Washington Center for Real Estate Research at Washington State University. To afford that, a family would have to make $84,453 a year. Right now, the median family income in the county is $72,182.
The gap between the median price of a home and the median-income of a family has grown wider in the last several years. Home prices have grown rapidly, as much as 20 percent a year until last year, but salaries haven't risen at the same pace, said Glenn Crellin, director for the center.
While housing markets in other areas of the country might be cooling, demand for houses remains strong in the central Puget Sound area. Lots of jobs, a growing population and not enough new home construction are fueling the demand, Crellin said.
It's even more difficult for first-time buyers, who typically don't have the assets or income to save for a down payment or closing costs, he said. Mortgage rates, while not high in comparison to historic standards, have still risen enough to make affording a home more difficult.
First-time buyers are finding other ways to get into the market. Some of Crellin's students at WSU buy property jointly with parents. Others buy and then pay the mortgage by renting to friends. Some ask mom and dad to help with the down payment.
It's not unheard of for family members to buy a home together as Price did with his sister, said Crellin, who likened it to an unmarried couple buying a home. Doing so comes with risk.
"The problems come when one of the joint owners suddenly can't make their payment," he said. "It puts everybody at risk."
Buying property together gives buyers the ability to afford better properties and to consider buying homes at short sales and auctions, said Rich Sweum, a senior mortgage planner and branch manager for Homestead Mortgage in Everett.
He helped Price and the Roaches buy their home in Everett jointly. The three were able to borrow enough cash from friends and family to buy a home in foreclosure for $208,000 before it went to auction. Sweum gives all his clients who are considering buying jointly a list of musts:
Find a lender that is both a bank and a broker and make sure it offers flexible options for joint buyers. Not every bank does.
Educate yourself. Read and talk to others who have bought jointly.
Speak with a real estate attorney, an accountant and an experienced lender. Some people don't want to spend money consulting professionals but doing so can stave off disaster such as unexpected tax penalties and improperly vested titles. "If you're not willing to spend the money necessary to protect yourself and your partner, do not purchase property together," he said.
Identify a clear timetable for buying, owning and selling the property. The timetable ought to address issues such as what happens if one party wants to sell early or can't make payments.
Define financial responsibilities clearly. For instance, what assets or income is each party bringing to the sale and who will pay for maintenance to the property?
Both parties need to have solid credit and what Sweum called "relational stability." The process will be smoother if everyone involved shares similar goals and gets along.
By all accounts, Price, his sister and brother-in-law are ideal candidates to purchase a home together. They share the same financial goals and everyone involved had solid credit and stable incomes. Price had known his brother-in-law, Zeb Roach, for years and described his older sister as a best friend.
They developed a detailed plan for handling every possible problem they could think of, including what would happen if Price, who is single, decides to get married. The 1930s house they bought needed remodeling so the siblings had to negotiate setting up a joint checking and savings account for house repairs and make sure everyone was investing about the same amount of sweat equity.
The joint partnership has worked well enough that the siblings recently bought a second house in Seattle closer to Zeb Roach's job and rented out the first home. All three will share the home, with Price occupying a daylight basement and Courtney and Zeb Roach taking the upstairs bedrooms. They share the common spaces and split the costs 50-50.
Investing in real estate made an impression on Price, who quit his marketing job and is now a real estate agent for the south Everett Windermere office. He committed to share the cost of the Seattle home for two years, and if he chooses to leave then, his sister and brother-in-law will buy him out.
The Roaches will stay in the Seattle home for the foreseeable future. Sharing the cost of the house allowed them to invest in the market and find a home in a good neighborhood, Courtney Roach said.
"This was a great solution to both our problems," she said. "We could not have afforded this alone."
Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.
"I wanted to put my money into something that would appreciate, rather than mailing it away every month," the Everett man said. "I wanted to put my money to work."
Price lived with his parents and saved nearly all of his paycheck. To improve his credit rating, he spent frugally and paid his bills on time. He wanted a new car but made do with a 20-year-old truck instead.
Then reality hit. He realized his marketing job didn't pay enough for him to get into Snohomish County's hot housing market. So Price found a solution: He bought a house with his sister and her husband.
It's not the right decision for everyone, but it allowed Price, now 25, and his sister, Courtney Roach, 26, to jam a toe into a housing market that is shutting out more first-time buyers.
Consider this: A median-priced home in Snohomish County costs $355,000, according to the most recent statistics from The Washington Center for Real Estate Research at Washington State University. To afford that, a family would have to make $84,453 a year. Right now, the median family income in the county is $72,182.
The gap between the median price of a home and the median-income of a family has grown wider in the last several years. Home prices have grown rapidly, as much as 20 percent a year until last year, but salaries haven't risen at the same pace, said Glenn Crellin, director for the center.
While housing markets in other areas of the country might be cooling, demand for houses remains strong in the central Puget Sound area. Lots of jobs, a growing population and not enough new home construction are fueling the demand, Crellin said.
It's even more difficult for first-time buyers, who typically don't have the assets or income to save for a down payment or closing costs, he said. Mortgage rates, while not high in comparison to historic standards, have still risen enough to make affording a home more difficult.
First-time buyers are finding other ways to get into the market. Some of Crellin's students at WSU buy property jointly with parents. Others buy and then pay the mortgage by renting to friends. Some ask mom and dad to help with the down payment.
It's not unheard of for family members to buy a home together as Price did with his sister, said Crellin, who likened it to an unmarried couple buying a home. Doing so comes with risk.
"The problems come when one of the joint owners suddenly can't make their payment," he said. "It puts everybody at risk."
Buying property together gives buyers the ability to afford better properties and to consider buying homes at short sales and auctions, said Rich Sweum, a senior mortgage planner and branch manager for Homestead Mortgage in Everett.
He helped Price and the Roaches buy their home in Everett jointly. The three were able to borrow enough cash from friends and family to buy a home in foreclosure for $208,000 before it went to auction. Sweum gives all his clients who are considering buying jointly a list of musts:
By all accounts, Price, his sister and brother-in-law are ideal candidates to purchase a home together. They share the same financial goals and everyone involved had solid credit and stable incomes. Price had known his brother-in-law, Zeb Roach, for years and described his older sister as a best friend.
They developed a detailed plan for handling every possible problem they could think of, including what would happen if Price, who is single, decides to get married. The 1930s house they bought needed remodeling so the siblings had to negotiate setting up a joint checking and savings account for house repairs and make sure everyone was investing about the same amount of sweat equity.
The joint partnership has worked well enough that the siblings recently bought a second house in Seattle closer to Zeb Roach's job and rented out the first home. All three will share the home, with Price occupying a daylight basement and Courtney and Zeb Roach taking the upstairs bedrooms. They share the common spaces and split the costs 50-50.
Investing in real estate made an impression on Price, who quit his marketing job and is now a real estate agent for the south Everett Windermere office. He committed to share the cost of the Seattle home for two years, and if he chooses to leave then, his sister and brother-in-law will buy him out.
The Roaches will stay in the Seattle home for the foreseeable future. Sharing the cost of the house allowed them to invest in the market and find a home in a good neighborhood, Courtney Roach said.
"This was a great solution to both our problems," she said. "We could not have afforded this alone."
Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.
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