Buying a house with a friend or roommate? There’s a lot to agree to

Unmarried partners often buy a house together, but there has been an increase in friends or roommates buying together as well, and for those buyers, there is plenty to work out ahead of time.

Home purchases by roommates are still a small fraction of total sales, but in the second quarter of 2021, their share rose to 3% of all buyers, up from 2% a year earlier, according to the National Association of Realtors in D.C.



NAR cites a couple of likely reasons, including a drop in marriage rates and people getting married later but not wanting to miss out on homeownership, and, with home prices so high, the significant increase in buying power and saving power two people have.

It might be a good financial arrangement, but there are a lot of “what ifs.”

“Certainly if someone does partner up in a romantic relationship and wants to move out, or that partner wants to move in, you suddenly have a house of three. Or what if one person gets a job on the other side of the country, what happens to that property?,” said Jessica Lautz, vice president of demographics and behavioral insights at NAR.

Such buyers should treat their purchase together as a business partnership.

“Are both of you contributing the same down payment and the same closing costs? Are you earning equity in the same way? Also, are the rooms the same size? Are the bedrooms the same size? Do both have en-suite baths? How is that going to work out,” Lautz said.

NAR recommends all potential scenarios, including how long-term of an investment it is and how equitable the partnership is, should be addressed with a legally-binding, attorney-drafted agreement before the purchase is made.

Roommates and friends buying a home together are not just young buyers. Some are widowed or single seniors.

“It is very expensive to actually downsize by yourself. And maybe you want companionship. So it becomes a great option for perhaps the ‘Golden Girls’ scenario,” Lautz said.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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