Divorce and Housing
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Selling a home in the midst of a Divorce
This is not a topic anyone likes to discuss. However, almost all divorces necessitate a home being sold. There are a lot of questions that both spouses need to ask before this process:
What are the real estate assets that need to be addressed and how can we avoid excessive litigation in doing so?
How we divide the assets? This question is best answered by engaging a real estate agent, financial planner, attorney and accountant.
How do we choose the right real estate agent to sell our home?
I believe the home is a huge piece of leverage over my spouse; how should I use that leverage in this process to negotiate my best personal terms?
What options do we have with our primary residence?
One spouse may wish to buy the other spouse out and keep the home. By calling a real estate professional or accountant, the spouse wishes to keep the home can assess the affordability of this decision. Many spouses find that it’s best (even if they can afford it) to ‘move on’ from the marital home, full of painful memories.
Both spouses can agree to sell the house and split the proceeds. This is usually the easiest option especially when there is substantial equity in the home. Sometimes one spouse or the other can get too emotionally attached to the home and not realizing what a huge burden it is. By burdening themselves with a house that two incomes previously supported, their ‘new beginning’ becomes a ‘new nightmare.’ It is very important to make certain you know all of the costs and emotional aspects of keeping a marital home alone after the divorce.
Usually when one spouse buys out the other, the selling spouse wants their name off the title and mortgage. This usually requires the buying spouse to create a new home loan unless there’s substantial cash assets within the marriage. This process can be complicated and can create a huge financial burden/conflict for both spouses if not handled correctly in the beginning.
In some cases, spouses own properties as investments with other partners or as tenants-in-common. This can be a massively complicated process to resolve in the context of a divorce. Doing so requires a very experienced real estate professional who is not only a problem-solver but who can also mediate a multitude of competing interests and agendas that likely result in such a transaction.
Let’s assume that both parties have decided they need to sell the home, was the next logical step? Choose a real estate professional.
What are important steps divorcing couples must take in choosing the real estate agent? A: When selecting an agent, look for one with at least several years of experience in your marketplace or neighborhood and preferably with plenty of experience handling divorce related sales.
Finding an agent with experience juggling the emotional and financial needs of a divorcing couple is incredibly important. Inexperienced agents within these situations will tend to unintentionally side with one spouse or the other or not communicate effectively with both parties – not realizing the gravity of the situation and how important communication is to its success.
It is extremely important for both spouses to attend the listing presentation with the agent. If this is not possible then the agent should strive to present to both spouses individually and outline the sales process so that both are on ‘the same page.’ To do otherwise can create the impression that the real estate agent is taking sides thus destroying the trust that’s necessary for success in this home sale transaction.
Once the home is sold, how does the couple split the proceeds? The costs associated with the sale will be deducted at the closing. We highly suggest that if one spouse is going to do work or invest into home repairs before the closing, that they keep a detailed record, receipts and discuss it transparently with their spouse prior to the expenditures.
Generally, if one spouse replaces the carpet, paints the walls or similar this amount will be deducted from the gross proceeds (and reimbursed to the paying spouse) before the net profit is distributed at the agreed percentage.
What makes a great real estate agent for divorcing couple besides similar experience? As with all sales professionals, you want them to be enthusiastic professional and well prepared.
However, you also want to sense that they are both empathetic and understanding of this complex divorce situation. You should expect such an agent will ask a lot of questions about the divorce-background, some of which may even be uncomfortable. An agent who plans to serve both parties fairly will spend a reasonable amount of time attempting to understand the dynamics of the situation, any court orders that may be in play about communication and sharing of financial data along with both parties mutual and competing preferences.
Your agent should be a neutral party in frequent communication with both spouses even if you are not doing so with each other.
Managing these necessary demands isn’t easy but it is necessary for a successful home sale transaction.
Look for someone who makes a professional presentation about marketing and outlines how you’ll both be represented (agency relationships) in the transaction in terms of real estate law and agency.
Always be suspicious of agents that don’t seem to have answers to basic market questions or that seem unfamiliar with the neighborhood or the general legalities of your divorce or family court situation.
Re: They should know to ask if there are any confidentiality, communication, or homes sale orders in place as ordered by the family court judge (so they do not commit any action that might violate the spirit of those orders).
Divorce-Agent Expertise and Experience. Ask them specific questions about the most challenging issues they have faced in a divorce and what they do to help couples avoid them in the future.
Home sales are always stressful, but adding a divorcing couple to the process brings a set of challenges and stress that’s nearly unprecedented otherwise.
Regardless of the circumstances surrounding the divorce, it is incredibly important for a real estate agent to be able to properly mediate on listing terms, repairs, sales price and closing conditions throughout the process.
Agents experienced with divorcing couples act as a facilitator or mediator, while not taking one party side or the other, but acting in both parties best financial interests. This usually means first making sure the home sells for the most money possible in the least amount of time. This may not always be the specific agenda of one spouse of the other.
It can be very costly for a spouse presently living in the home who wishes to stay longer than a spouse which the court has ordered the vacate it. The spouse not living in the home may be much more enthusiastic about selling the home than the spouse living in it.
If the nonresident spouse is too eager, the home can sell for less than it’s worth under this pressure. If the resident spouse is more interested in staying in the home, for as long as possible, this too can result in the home becoming stigmatized in the marketplace (for excessive market time) and thus selling for a lower price in the end.
In most cases, spouses should price the home to sell within the first 30 to 60 days of the initial listing with the real estate agent and cooperate to make this happen. This timeframe is proven to produce the highest sales price on most home sales and will likely net in the fewest disruptions and disagreements.
After selecting a real estate agent, what’s next?
The real estate home sale process can produce as much chaos as a contested divorce. Adding the latter into the process makes it even more challenging for all the parties involved.
I cannot overstate the importance of the real estate agent communicating equally with both spouses after the listing is taken regarding feedback, showings, strategy, offer negotiation and contract facilitation of the closing.
How can we work together in light of the fact that our marriage is ending? As difficult as this life event is, you have to treat the home sale process as if though it’s a day at the office while you’re going through divorce. This is easier said than done because emotions are usually very high between the divorcing couple.
One or both parties shouldn’t use the home as a negotiating tool over custody battles, other financial distribution or arguments. In almost all cases, this costs both spouses more money than it ever gains or saves.
I’ve experienced the home being used (on multiple occasions) as negotiation leverage over a custody battle. This almost never ends with a positive outcome for the spouse(s) doing so. It costs money, disrupts (or delays) the best outcome for the children and costs excessive legal fees (with divorce attorneys) that could be used for each spouses new beginning (or their children’s support and education).
Moreover, the larger and more lengthy the arguments, the more attorneys bills each into the equity both parties seek to recover.
Working with your spouse instead of against them in selecting an agent can be instrumental in earning you more equity and saving you thousands of dollars in costs and fees associated with common disagreements of the divorce.
Just remember, this is about your new beginning and regardless of the circumstances leading to the divorce, the home sale is the one aspect of divorce that ultimately has no competing agendas if both parties are committed solely to obtaining the most money for the home in the least amount of time.
I’m deeply sorry about your marital situation, but I’m hopeful this article added some direction and peace to your future.
God Bless You.