Buying Property as an Unmarried Couple

Christian: [0:00] Hello, hello, and welcome to another episode of the Awesome in Seattle podcast. This is your host Christian Nossum of the Awesome Nossum group at Wilson Realty Exchange, Inc and today I have an awesome guest with me.

Joanna: [0:11] Hi, I'm Joanna

Christian: [0:13] Beecher. It is Joanna. Joanna Beecher of the Awesome Nossum group.

Joanna: [0:16] Yes.

Christian: [0:16] Amazing for you to join me here.

Joanna: [0:18] Oh, it is amazing.

Christian: [0:19] I never would've guessed that you would be on a podcast with me. It's so crazy.

Joanna: [0:21] Surprise!

Christian: [0:24] So Joanna and I, if you don't already know, are both real estate agents, brokers, whatever you wanna call us, here- Mm-hmm … on the Awesome, Awesome group. And today, we are talking about buying before you get married, and if that's a good idea or not, or, or I guess and also, should you buy with friends, and how does that all work out? So that is what this episode is all about.

Joanna: [0:45] Yeah.

Christian: [0:45] So Joanna, does it make sense to buy before you get married, or is that like a no-no for some reason? Oh, it

Joanna: [0:53] sure does.

Christian: [0:54] You get a better… Yeah, it does?

Joanna: [0:55] I think it does, and we're, you know, we're gonna break that down as to why it's totally okay.

Christian: [1:00] Okay.

Joanna: [1:00] Okay? It's even smart.

Christian: [1:02] Yeah,

Joanna: [1:02] I would agree. Let's be real, because to buy before marriage or to buy with friends, you're actually gonna get into something probably sooner than you would if you were trying to do- Mm-hmm … this all by yourself- Yeah … in a market that does seem to price a lot of people out.

Christian: [1:15] Yeah. Yeah, and it's not weird or risky or even really all that complicated, as long as you understand kinda the rules. So let's, let's kinda get into it. Yeah. So one of the reasons why you want to do it is because like you said, you start building equity sooner. Another reason is you lock in your housing costs. So it, you know, how rents are going up.

Joanna: [1:36] Yes.

Christian: [1:36] Property taxes also go up. So when you own, you have to factor that in. But that said, property taxes aren't going up nearly as much as sometimes rent goes up.

Joanna: [1:45] No, it's really volatile, rent. Mm. Because you also have to keep in mind that you're not the landlord of the place you rent- Mm-hmm … obviously, and they can make up their minds as to what they want to charge. And- And

Christian: [2:00] some cities have regulations saying how much and all that stuff, but still, they're-

Joanna: [2:04] But still, it can change they're

Christian: [2:05] generally going up.

Joanna: [2:05] Yeah.

Christian: [2:06] Another reason why you'd wanna buy sooner than later is because you don't throw away your money on rent. You can get into a neighborhood that maybe if prices are going up, which generally in the Seattle metro area-

Joanna: [2:18] They are … Speaker: home prices are going up. Mm-hmm. So you can afford to be in an area that maybe if you wait another year or two or three, you might not be able to afford there. Yeah. And then you're also investing in your shared future, which is important. Yes. That is very important. And here's what surprises most people, that actual home-buying process, like touring homes, writing offers, inspections, closing, all of that is basically exactly the same- Yeah, there's no difference … as when you're buying, you know- Yeah if you're married or buying alone.

Christian: [2:49] Mm-hmm.

Joanna: [2:49] Yep.

Christian: [2:49] Mm-hmm. Yeah, there's some differences, but none of them are really all that scary. There's just some things that you need to be aware of. So the first one is, how are you going to hold title? Now, if you're unmarried- You need to choose how you want the ownership to be structured. Do you want it to be, and these are things you've probably never heard of, so we'll explain them, but do you wanna be joint tenants with rights of survivorship, survivorship? That means if one person passes away, Lord forbid, then the other one automatically inherits it. Or do you wanna be tenants in common, where you each own a specific percentage of the, of the home, and then you share, or your share can go to your heirs, whoever that may be. So those are kind of the two most popular ways that you can buy before you're married.

Joanna: [3:34] And your escrow team will talk you through all of that. Mm-hmm. Um, and that is an important early decision with whomever you're going to buy with-

Christian: [3:43] Yep … I

Joanna: [3:44] think.

Christian: [3:44] And you're gonna need to have some sort of documentation written up. This is not a very complicated thing or expensive to do. We've done this. I've bought with, um, partners that are, my wife and I have bought with other partners. We have these written up when we do this, and it's, I don't know, 7 or $800 or something like that. And if

Joanna: [4:03] you're all splitting it.

Christian: [4:04] Yeah. Yeah. And it's, it's not expensive, it's not difficult. We have attorneys that we can recommend to you, so just reach out if you're in this situation, and we can refer you to someone to help you get this set up. So don't let that be a blockade, because I have heard people say, "Well, I don't know how to do it. I don't know what to do." You don't

Joanna: [4:19] have to know.

Christian: [4:20] I'm just gonna s- no, just lean on us. No. We know.

Joanna: [4:22] Yeah. Or we know who to, you know, recommend you to- Exactly … if we don't know. Exactly. So another piece that you're probably wondering about, well, how does the loan work? And-

Christian: [4:31] Mm-hmm … Joanna: um- Yeah, don't you get a better deal if you're married?

Joanna: [4:33] Yeah, I mean, no. Not at all, actually. Uh, you don't. Lenders look at each person's credit. They look at your income, debt-to-income ratios- Mm-hmm … and assets for down payment, and that's for every single person who is going to be on the loan, and that's whether you're married or not.

Christian: [4:48] Yeah, yeah. It does not benefit you at all-

Joanna: [4:51] No … Speaker: money-wise, financially, from the bank's perspective, to wait to be married to get a mortgage together. No, it does not. It does not. I think the only really big difference there would be if you're doing a VA loan, you have to be married if you're both gonna be on the loan.

Christian: [5:09] Mm.

Joanna: [5:09] But you can both still be on title, even if only one of you is on the loan. Let's say one of you is- A veteran … I just had this, actually. Yeah. If one of you is a veteran, and you're getting the VA loan- Only have the person that is a veteran on there, and then you can, you know, move forward-

Christian: [5:25] Mm-hmm … still being married. You both own the house. Yeah. It's just one of you is on

Joanna: [5:28] the loan. Is on the loan.

Christian: [5:28] Yeah.

Joanna: [5:29] Yeah.

Christian: [5:29] As long as you qualify f- with that one person being on the loan, you can do it. And like you said, you literally just did that. We just did that. They closed yesterday?

Joanna: [5:36] Uh, two days ago, actually.

Christian: [5:37] Two days ago.

Joanna: [5:38] Yes.

Christian: [5:38] Yeah. All right, so what happens if the relationship ends? Well, this is the part that scares most people, and I totally understand why- Well, yeah … ' Joanna: cause- A, a, a relationship ending is scary anyway- Yeah, it's not fun it's sad. Yeah.

Joanna: [5:51] But, you know, it's, there's, as far as, like, the sad part, we'll just put that here- Aside … to the side for a minute, but the solution is simple. Mm-hmm. Um, because of having that written agreement that you wrote up beforehand- Up front, yep … you just make sure that's in place before closing, and it's, that's not even showing that you have distrust in someone or in the relationship. Mm-hmm. It's just about clarity- Mm-hmm … and communication.

Christian: [6:15] Mm-hmm. Yeah, whether you're dating, engaged, or planning to be one day, you should have a co-ownership agreement up front. Um, and it covers things like who owns what percentage, how, who put what for the down payment down- Mm-hmm … who pays what every single month, how repairs and upgrades will be handled, buyout terms. If one person decides they want out, how does that work? Come up with that up front when you're still friends-

Joanna: [6:43] Yes … Speaker: and open to discussing- … these things. What happens if someone wants to sell versus the other one? What happens if the relationship ends, like we just talked about, or how to value the home if someone exits. It's gonna keep the relationship, uh, well, the relationships healthy- Mm-hmm … by, uh- You remove the assumptions, you remove the misunderstandings. Mm-hmm. And as someone who is big into, like, not necessarily defining things right off the bat- Mm-hmm … that does, that can play into issues. So- Yep … from experience, n- not necessarily with buying a home, but having clarity with who is going to do what, that's why, you know, landlords have leases and things- Mm-hmm like that, so that they try to cover everything that has come up in the past, and there's new things happening to those all the time. But it's the same if you're going to own something with someone. It's, just removes any, uh, gray area, really.

Christian: [7:38] Personally, in my opinion, if you're scared to have this discussion with your partner, you probably shouldn't buy. Oh, yeah. That's, yeah. If you can't have this discussion and determine these things upfront, that might be a sign that you shouldn't buy before you're married- Agreed … if that's the plan. Agreed. Because that means that you're scared, and maybe you're not so sure about this. If there is no problem, where those fears don't really come up, and you're like, "All right, yeah, let's just work this out. Let's just put it on paper," then you're probably gonna be all right. So that's just my opinion. Throwing that out there. Yeah. Um.

Joanna: [8:10] I think that's valid.

Christian: [8:11] Yeah, yeah.

Joanna: [8:12] So.

Christian: [8:12] We don't want you to buy if it doesn't make sense for you. Like, that's not the point of this.

Joanna: [8:16] No. Uh, never, actually. Never. Yeah. Now, there is a trend of people buying homes- Yes with their friends. Yes.

Christian: [8:22] And we've seen more and more of this lately because of the high cost of-

Joanna: [8:27] Mm-hmm … owning a house. Affordability. Yeah. And people like living in a communal setting. I

Christian: [8:30] agree.

Joanna: [8:31] If you have people that you enjoy spending time with- Mm-hmm … and that it just makes sense to live in that community, Golden Girls type situation- Mm-hmm I love that.

Christian: [8:40] Yeah.

Joanna: [8:40] But it's, uh, I think it helps just, just feeling community. It helps- Mm-hmm … with just affordability. I mean, it's not only home, you know, af- like, it's not only home expenses- For the specific- Yeah … home that you're in, but it's like groceries. Yeah. It's those- All sorts of things … Costco runs. Yeah. It's everything. Mm-hmm. It's carpooling. It's all of that. Yeah. So yeah, like we were just saying, it's a huge trend in Seattle, and we just kind of talked about it, rising rents, higher home prices, desire to build equity earlier, that personal wealth. Yeah. Right? Yeah. That's huge, and wanting to avoid roommates you don't know. How bad does that suck when you're like- Yeah … "Oh, gosh, now look at this person just moved in with their significant other, and this person just decided they wanted to buy by themselves, and now I have no roommates to live with"? Mm-hmm. And that is a scary thing, uh, when you have to live with strangers. Yeah. I've done it. But community living is big, and investment opportunities as well.

Christian: [9:37] Mm-hmm. Yep. Yeah, we recently had a group of five friends that work together that want to buy more than one property together- Yeah … like, long-term, over the next three to five years, to buy, you know, two, three, four, five properties potentially.

Joanna: [9:51] It's like a business

Christian: [9:52] plan-

Joanna: [9:52] Yeah,

Christian: [9:53] exactly … is what

Joanna: [9:53] that is.

Christian: [9:53] Exactly. It's great. So it's, it's a fun way to look at this. It's a great way to kinda house hack. We talk about house hacking a lot. This is a fantastic way to do it.

Joanna: [10:03] Mm-hmm.

Christian: [10:03] We've helped people buy single-family homes, townhomes, homes with a, a separate unit or, you know, that had more than one floor. Yeah. They bought duplexes, triplexes, fourplexes. It just depends on what it is your goals are, and your price point, and the areas you wanna look in, and that's where it really helps to reach out to us. We can build out that sold search for you, which we've talked about numerous times- Yeah … where we show you what you can realistically afford. And where you can afford it, and that's what, at the end of the day, that's what you always wanna know. So once you get your budget figured out, which we'll help you with, we'll hook you up with a lender recommendation, then you figure out where can you afford what you want, and can you even do it? And we'll look at, you know, all your friend group, whoever is in this mix, add it all together and figure out what your budget is. Yep. So you can see if this actually makes sense. Let's talk about what friends buying together need to know before they actually do this. Yes. So you'll need a co-ownership agreement, just like couples. We talked about that earlier. This one might even be a little more detailed, because it's not like you're-

Joanna: [11:09] I would, yeah, I would think so.

Christian: [11:10] Yeah. Yeah. Yeah, so there's different thing, ways you need to figure this out. Like, what is the- There's more

Joanna: [11:15] than one person

Christian: [11:15] Yeah, exactly … that

Joanna: [11:16] you're buying with. Yeah.

Christian: [11:17] Yeah. So what's the ownership percentage gonna be? Is it gonna be split in thirds? Is it half? Is it 60/40? Like, whatever you wanna do, you can do it any way you want. That is gonna be determined based on who's coming with more down payment, who is paying more every single month, or less, or is it gonna be totally equal? You're just deciding all this stuff up front.

Joanna: [11:35] Yeah, if it's gonna be a business, and one person is like, "Well, I, you know, just wanna rent my piece out"- Mm-hmm I mean, why couldn't that be an option as well? Yeah, you can do it- It's your agreement … any way you

Christian: [11:45] wanna do it.

Joanna: [11:45] Yeah.

Christian: [11:46] Yeah, yeah. And again, we have recommendations on attorneys that we can refer you to. Sometimes if you work at some of the tech companies, they have representation, they have attorneys on staff that you can talk to for free, and help you do these kinds of things. So again, just reach out to us. We'll help you. We'll hook you up with who you need to talk to about this. So don't let that be something that stops you. And again, going through this upfront, if this is uncomfortable or your person that you're talking about buying this with isn't open to creating a co-ownership agreement, that is probably a deal killer. Yes. So don't do that if that's the way it is. So keep that in mind as well.

Joanna: [12:27] Exactly. I mean, we're talking about getting as specific as, you know, knowing how the arrangements are gonna be when you live there, like if you guys can even use the same entrances. Mm-hmm. Like, what if you really wanted to get that, you know, specific? Are you gonna do an HOA? Mm-hmm. If there is an HOA already in place, like- Mm-hmm … what does that mean? How does it all break down? Yeah. And to avoid future conflict, also planning an exit strategy is very smart. Mm-hmm. Um, and if y- if you sell the whole property, or if you wanna- Someone buys

Christian: [13:01] out … Joanna: buy someone out- Yeah. Yeah. That's, that's a big thing, like knowing what that cost is upfront, and how that would work if you're gonna buy out one person or the other. Or let's say someone gets a job transfer- Are they just gonna rent out their half? Are they gonna buy it out? And a- again, you don't need to think about all the what ifs. The attorney- They will help … has been through this all. Mm-hmm. More than once, and they've answered all these questions upfront, so they can figure this out for you. They'll talk you through it. They'll, they'll ask all the questions that you need to get answered. It's not hard, so again, don't worry about that part. Just get it done. And the last one is, understand who's responsible for the loan. If everyone on the loan is responsible for the full amount, great. If one person stops paying, the lender doesn't care, though.

Joanna: [13:48] No,

Christian: [13:48] they don't. So you need to understand that you're, if you're on the loan, you're both on the loan, just because one person didn't pay doesn't mean the loan doesn't have to get paid the whole, in whole. You still have to pay the other parts. You need to have that discussion upfront.

Joanna: [14:01] Mm-hmm, and this is why written agreements and open communication matter so much.

Christian: [14:06] Mm-hmm.

Joanna: [14:06] Okay. How do we, as the Awesome Nossum group, help with this? Well, we've worked with, uh, many an unmarried couple- Yes … and friend groups, and like we said earlier, we will help guide you through this, okay? We can help you structure your ownership. Like, most of this should be talked through with an attorney- Mm-hmm … who is going to help you write this up, but we can also talk through it before you even get in there. We'll connect you with the attorneys for the agreements, choosing the right title structure that makes sense for the, your situation, navigating your lending requirements, finding homes. That's, I mean, that's our bread and butter- Mm-hmm … finding homes for your co-living space, right?

Christian: [14:47] Mm-hmm, and knowing what you can expect and where you can expect it. Yes. We will help you figure that out. Exactly. Is this even possible for what we want?

Joanna: [14:53] Right, exactly. And then, you know, setting your expectations early, I think the sold search kind of sums that up. Mm-hmm. And then that way you can avoid the common pitfalls of what could potentially go wrong in this type of scenario.

Christian: [15:07] Yeah. Yeah, and a home is the largest financial decision most people make in their entire life, so having that clarity and protection upfront is really important, and it removes a lot of the fear when you are proactive about it. Yep. So we highly recommend, after helping numerous people through this exact situation, just do the prep work. It removes the fear. It makes it less scary. It makes it more fun. Like, 'cause this process can be fun. As we talk about in the Beers and Home Buying class- Mm-hmm … which is a free home buying class we do every single month, beersandhomebuying.com (opens in a new tab), uh-

Joanna: [15:44] Come and have a beer and learn.

Christian: [15:45] Yeah, exactly. As we do that, we talk about how this is an emotional rollercoaster, buying a house. Doesn't matter how many times you've done it. I've bought numerous homes. I've sold num- well, a few. Haven't sold as many, which is great. I try to keep them. Yeah,

Joanna: [16:00] and no, keep them.

Christian: [16:01] Yeah. Yeah. Um, but every time I do, and this is all I've done for 21 years at this point- I still have the emotional rollercoaster. When you have all the information that you need upfront, that emo- emotional rollercoaster goes from a Six Flags, like, crazy, spinning, loop-de-loop crazy one, to, like, the Puyallup Fair, like- … kiddy rollercoaster, which mu- much more smooth. There's still some ups and downs, but it's not nearly as crazy- Right or as wild of an emotional rollercoaster. Um, but this all comes with preparation. So again, reach out to us. We will help you prepare all of this upfront. Yep. We know what questions to ask. We know how to help you so that this isn't as scary as you probably are feeling right now, and that's totally normal that you're feeling that way. Everyone feels that way.

Joanna: [16:51] It's just taking, you know, taking the steps that helps it feel way less like a big, scary wave. It's just, you know, take one step. That leads to your next step, to the next step, and that's why we're here, to help show you where those are.

Christian: [17:05] Yep. So if you are wanting to chat with us about potentially doing this, again, there's no pressure. There's no cost to chat with us. It is just a c- probably most likely gonna be a Zoom call. Yep. Like, it's so laid back. You can go right to our website, AwesomeNossumGroup.com. Uh, you can reach out on Instagram. Instagram. Yeah, Awesome Nossum Group. Mm-hmm. Um, or you can just call us. Our phone numbers are right on the website, AwesomeNossumGroup.com. So- Yep … it's very simple to reach out to schedule a time to chat with us. You can schedule it right on our website. It's by far the easiest thing. Like, we try to remove all the barriers to make it just simple for you, and it… Again, it's not scary when we're chatting with you. We're not selling you. It's not high-pressure. It's just answering some of your questions and giving you some guidance, and if you wanna continue moving forward, we'll take it one step at a time. And just because you're reaching out doesn't mean you're actually gonna buy.

Joanna: [17:59] No.

Christian: [18:00] Not everyone does, and that's totally fine.

Joanna: [18:02] Mm-hmm.

Christian: [18:03] Um, we're just here to help you so that you actually know the questions to the answer, or the answers to the questions that you have.

Joanna: [18:09] Um- Or find out the questions you didn't even know you had.

Christian: [18:12] Yes, which is what happens. Yeah. Like, you open one door, and there's three more doors of questions behind it. Exactly. And that's how this works. So stop assuming that you know what's going on, and, you know, reach out. We will help you- Yes … with correct answers versus assumptions.

Joanna: [18:26] Yes.

Christian: [18:28] Anything else you wanna add, or you, is that it?

Joanna: [18:30] I think that's, I think that's it for this, uh, topic- I agree … and my personal opinion. I just can't wait to talk to everybody who's listening who has questions.

Christian: [18:38] Mm-hmm. Mm-hmm. And again, it's not scary creating these agreements up front. We have attorneys that we can refer to you. They're not super expensive. It's totally worth it. It just makes sense. So that's it for this episode of the Awesome in Seattle podcast. Please share this with any of your friends- Yes … that are in similar situations that you think might be helped by this p- episode, um, 'cause we have, again, a lot of people that are in this situation.

Joanna: [19:07] Share it with the person you wanna buy with.

Christian: [19:08] Yeah. Share it with them, for sure. Yeah, I felt like that was an automatic, but I guess we do- … need

Joanna: [19:14] to say that. Yeah.

Christian: [19:14] Yeah. So it's, it's, this is an important one. I say that this myth that you have to be married or you get a better deal if you're married is one of the bigger myths that no one ever talks about-

Joanna: [19:27] Yeah

Christian: [19:27] because it doesn't help you any more being married or not.

Joanna: [19:31] No. So. No, it does not. And in fact, people that have come to us that say they're going to wait until after they get married, I fully encourage you to do whatever makes sense for you, but that is, it's not a must. Yeah. And in fact, once you really think it through, a lot of people who have said that to me in the past, very quickly or within a few months will be like, "Well, I don't know what we were thinking. We wanna buy now- Yeah. Yeah … because, you know, the sooner- That happens a lot, actually … you can get into the market, the better. Yeah. But yeah.

Christian: [20:01] Yeah.

Joanna: [20:02] Anyway.

Christian: [20:02] All right. Well, thanks for listening, and we'll see you next time on the Awesome in Seattle podcast. See you. Thank

Joanna: [20:07] you. Bye.

Christian: [20:07] Bye.