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Life with siblings can be wonderful and challenging — and sometimes both can be true at the same time. As adults, siblings not only have the ability to become treasured confidantes but may also provide an accessible and meaningful way for first-time homeowners to enter the real estate market.
If you’re considering buying property with your sibling(s), I spoke to several real estate agents about best practices. Here are their biggest tips on what to have in writing, which assets to cover, and ways to find compromise. Be sure to share them with your brother or sister before the house hunt begins!
Prioritize your preferences.
“You should talk about what’s most important for each sibling if buying jointly,” says Parisa Afkhami, a Manhattan-based real estate agent with Coldwell Banker Warburg. “For example, I recently worked with siblings and for one sister, a good-sized kitchen was very important, and for the other, it was a walk-in closet for her bedroom.”
Afkhami recommends siblings also have a “realistic discussion” about how much each person can contribute to the down payment and the monthly mortgage payment, while Malisa Eakins, realtor and managing broker at West + Main Homes, also recommends discussing the division of labor as it relates to chores, upkeep, and repairs. “Chances are the siblings each had a role in the parental household regarding the division of chores,” she says. “What does that look like as adults?”
In order to fully envision what a home must include to make it right for everyone involved — beyond bedrooms, bathrooms, and parking — siblings should also consider commute times, office and study spaces, and personal needs like storage and pets.
Prioritize the cherished relationship with your sibling first and foremost, says Milford Adams, a Denver-based real estate expert and member of the Denver Metro Association of Realtors (DMAR). “The first question is, are you getting along with your sibling now? If you’re already having trouble seeing eye-to-eye, then a business relationship can magnify the difficulties you are already experiencing.”
Seek professional support.
“First, consult with an experienced real estate professional and engage an attorney if necessary to determine how you will take title on a purchase,” says Michelle Schwinghammer, a Realtor and Certified Negotiation Expert (CNE) with RE/MAX Alliance in Colorado. “This critical factor ultimately establishes legal ownership of the property. Take it seriously.”
Next, Schwinghammer recommends consulting with a trusted lending professional to understand what loan options are available for you. This will include reviewing your employment histories, credit scores, and assets, as well as considering the possibility of a parent as a cosigner to make things work.
“Various other scenarios should be documented by the attorney, too, such as if one party wants to sell and the other does not, or if one party loses their job and cannot make payment,” says real estate agent Karen Kostiw of Coldwell Banker Warburg in Manhattan. “All of these scenarios should be documented so the peace is kept and the financial payments are made timely.”
Afkhami says talking to a financial advisor about a trust and life insurance is also an important consideration, as well as whether one sibling will “rent” from the other one. “This will help with taxes, offsetting capital gains when selling, and demonstrating extra income, with the expectation that the sibling reciprocates in helping the other sibling purchase a home in the future,” she says.
What if someone wants — or needs — to get out of the arrangement? “I highly recommend working with an attorney to set up an agreement to keep things equitable and most importantly, to prepare a clear and concise exit strategy,” says Eakins.
That means considering everything from marriage to bankruptcy, says Adams. “You want to write a contingency in your agreement that covers all of this,” he says. “You want to have a solid plan that covers you if things go awry.”
Even considering the risks, there are many benefits to choosing a sibling as a roommate, Eakins says: “Living with someone who you have grown up with and already lived with can eradicate so many headaches involved when living with a complete stranger. They already know how you fold the towels and may even know grandma’s chicken soup recipe when you’re sick.”
Still, Adams says, the best decision may be to wait to own and save your money while you rent with a sibling so you are able to purchase later on, and know you can sustain the mortgage on your own if you have to.
“It’s important that siblings who choose to live together grow and learn together,” Eakins added. “Each should agree to help the other grow both financially and introspectively.”
