Tips for Buying a Home with Friends

With housing inventory low and prices going up, some people are making the decision to partner with friends and buy a home together. This scenario allows people who otherwise would not be able to afford a house to share expenses and achieve the dream of becoming homeowners. But how do you know if buying property jointly is the right move for your clients?  

It is important to remember that this is a business transaction, so your clients and their friends will have to approach it as such. You are going to have to have a very open, very frank conversation with all parties about their finances, their plans for the future, what to do if someone wants to sell, etc. If these are conversations they are uncomfortable having or they are worried about the effect they might have on their friendships, then buying a home with friends is probably not the right choice for them.

However, if your clients and their friends can come to terms, owning a home while sharing the burden of all the costs can help you build their savings while gaining equity in a home.

Here are some tips on purchasing a home with friends you can share with your clients.

Review your friends’ finances. This is most likely the largest financial decision of their lives, so now is not the time to hem and haw on questions of finance. They will need to be aware of everyone’s credit scores, income, savings and any other relevant assets. It is important to make sure that your clients and their friends are financially prepared to become homeowners.


Decide how payments and costs will be split. Questions to consider are how much each person will contribute to the down payment and if that will affect how your clients and their friends divide the mortgage payments? Will the utilities be split evenly every month or will they alternate who pays? It is important that these details be worked out and understood by everyone involved before the home is purchased.

Decide on the type of house. Are they planning on buying a single-family home or a multi-family home? Do they see themselves sharing a kitchen and bathroom, or are they looking to buy a place where they will each have your own private residence. Your clients and their friends should also decide ahead of time on everyone’s must-haves for the home. Knowing that the friends will only buy a house with a big backyard or that they will not buy a house on a corner lot can save you a lot of time house hunting.

Get everything in writing. It is important that all of the co-purchasers keep written documentation of all of the agreements regarding financial and other responsibilities. So many people think that because they are dealing with friends that there is no need to write up a contract, but it can help you to avoid conflicts and surprises down the road.

Work with a Realtor. Buying a home is an important decision, and whether your clients and their friends are doing it on their own or with a friend, using a Realtor® is a smart move. A Realtor can provide counsel, discuss listings, show homes in person, negotiate on your clients’ and their friends’ behalf and help them stay focused on the issues that are most important.

If your clients and their friends enter the arrangement educated and prepared, co-purchasing a home can be a great way to get your clients and their friends on the first rung of the homeownership ladder.