Buying a house can be the biggest, and often most difficult, financial decision anyone makes. And it can be even tougher in such a hot housing market like Seattle, where rising prices are pushing a lot of people out and driving buyers into competitive frenzy.
Increasing prices and competition have sent buyers scrambling for alternatives. More unmarried people, and even married couples, are teaming up with family and friends to overcome affordability issues. According to U.S. Census information first cited by The Seattle Times, 12.5 percent of unrelated adults live together Seattle, the highest percentage in the nation. Approximately 60.6 million people in the U.S., or about 19 percent of the population, live in multi-generational households.
CoBuy, a startup based in Bellevue, Wash., wants to help those groups formalize their partnerships and make it easier for them to buy a house.
“There are a lot of moving parts, and it’s easy to spend a lot of time and/or money and still not get it right,” Holmes said. “Any purchase involves risk, and a joint purchase adds a layer of complexity. Failing to address certain issues could have financial consequences. That said, approached intelligently, co-buying can be financially rewarding.”
Mother and son team Pam Hughes and Matthew Holmes came up with the idea for CoBuy about a year ago and launched the site about three weeks ago. Hughes brings experience in every facet of the real estate industry, from realty to investment to development. Holmes spent the last few years in finance in London, where he saw some of the same problems we are facing in Seattle: booming population, skyrocketing housing costs and a lack of supply.
In Seattle, home prices rose more than 14.1 percent over the past year to a median price of $594,600, according to Zillow. Price increases are expected to slow down a bit, with Zillow anticipating another 6.4 percent rise next year.
CoBuy’s main goal is to simplify the process for non-traditional buying groups, such as friends and relatives, looking to go in on a house together. CoBuy wants to get involved early in the process and help people fill in the blanks about home ownership because real estate remains an opaque industry.
Then CoBuy helps the buyers hash out important decisions like how much each person will pay, title details, respective responsibilities in the process, and what happens if one of the owners wants to sell. CoBuy formalizes these decisions and helps them find financing and connect with the right professionals in the industry.
“If you have some of these things decided ex ante, you’re more likely to have a smooth partnership,” Holmes said.
CoBuy bills itself as a “brand new approach to living,” but, the concept of non-traditional homeownership groups has been around for some time. Holmes said his company has no direct competitors and is trying to add simplicity to the process, not change particular parts of it. While there are lawyers and lenders with knowledge of co-buying type agreements, CoBuy considers itself a facilitator for the entire process.
Additionally, Holmes said, lawyers working on these types of agreements are going to cost more than CoBuy, which charges $99 per co-buyer once the group makes an offer on a home.
Holmes didn’t want to talk about CoBuy’s finances. CoBuy’s website only launched a few weeks ago, and the company has yet to complete an agreement with a buying group, but Holmes said, numerous groups have expressed interest in the service.
He said the company is based out of a small startup space in Bellevue, and CoBuy has one other employee. Holmes added that CoBuy is growing and he anticipates the company will soon need for a bigger office space.