If you’re getting divorced, you’re likely wondering what’s going to happen with your home. Unsurprisingly, many couples aren’t excited about having to deal with selling a piece of real property while they’re going through the divorce process. Although the divorce process can be a very stressful time, selling your home doesn’t have to be the most overwhelming part of divorce.
Accept that You May Need to Sell
Many couples cannot afford for one spouse to keep the house in a divorce. In order for one party to keep the house, typically the party that keeps the house will need to buy the other party out of their half of any equity in the property. Equity is how much the property is worth after deducting any debt on the property. Buying the other party out usually means paying them half the equity or giving them assets equal to half of the equity. Most people do not have the cash or assets to buy the other party out. There are really two challenges here, not only does the party receiving the property have to pay half of the equity to their ex, but (in most cases) they have to be able to refinance a mortgage out of their ex’s name. Therefore, the house is often sold. If you need to sell the house, it may be worth it to see which repairs need to be done before you list the home. A real estate agent can help you decide which repairs need to be or should be done to make the house marketable.
Who is Selling the Property?
When it comes to selling the house it has to be determined who is going to go through the sale process. One of the parties may take responsibility for listing the property, showing it, and receiving offers. If the parties cannot agree on who should sell it, they should find a mutually agreed upon realtor to list the property. It’s best for the parties to agree to follow the recommendations of the realtor to minimize conflict. They should usually follow the recommendations unless they mutually agree to deviate from them. Homie, and other assisted sale services, that list the home as for sale by owner, may be a good idea depending on your circumstances. The primary downside to having a realtor sell the property are the costs associated with their services. When selling a piece of real property there is generally a buyer’s agent and a seller’s agent. Both of which receive a 3% commission, for a total of 6% of the purchase price the seller pays. This can become a pretty significant amount.
Both parties are typically involved in the actual sale transaction needing to sign documents for the listing, acceptance of an offer, and closing. It must also be determined who will reside in the property during the sale process, if either one does. Along with that, who is going to be responsible for paying the mortgage and utility costs during the time the property is being sold. The person remaining in the home during the sale is also responsible to ensure the property remains in good condition for sale.
Agree on Who’s Paying for What
If your home doesn’t appraise for the amount of the loan, you may have to work something out with the buyer. Typically, when a home’s appraisal comes in below the offer price, there may be additional negotiation between the buyer and seller. If you have to concede some of the purchase price you will have to figure out how you and your spouse will split this loss. Figuring out how to pay for any improvements or repairs can also be difficult as they need to be paid upfront. Couples may choose to liquidate marital assets to pay these costs, obtain a loan to be paid off with the proceeds, or figure out another way to pay them. If one party is paying these costs, it should be determined whether or not these costs should be reimbursed with the proceeds of the sale of the property. The bottom line is that all parties generally want to see the deal go through. Everyone wants the house to sell. Make sure you’re doing your part to make that happen, even if that means making a few reasonable sacrifices.
There’s Room for Negotiations
If you need a new HVAC system installed in order to sell your house, you can pay for the installation and ask that the cost be offset in the divorce. For example, if installing the HVAC is $10,000, and you and your spouse have a car that’s worth $20,000, you may be able to negotiate that you pay for the HVAC if you keep the car and all of its equity. When it comes to divorce and real estate, negotiation is almost always a sure thing. Make sure you’re ready to negotiate when it comes to reasonable and fair requests.
Consider Investors If You Need to Sell Fast
If for some reason you need to sell a house quickly, selling it on a site like Opendoor may be an option. However, most of these sites offer sellers around 70% of what their home is worth. This is because they’ll turn around and sell the home at market value. The upside is that most of these companies will buy your house as is. This way, you don’t have to mess around with repairs or appraisals. You can also avoid having to negotiate the cost of these repairs with your spouse.
This is an option that both parties would have to agree to.
In some cases there may be negative equity in a piece of real property. In this case, the parties have an obligation on a debt that is greater than the value of the property. In this situation the parties have to determine what to do with the negative equity. They may choose for one person to keep the property, split the negative equity, sell the property and split the loss, or for one person to keep the property and all of the negative equity. There may be other options for parties finding themselves in this situation. It’s important to investigate all of your options to minimize potential losses.
Try Not to Get Desperate
When it comes to selling the house during the divorce process, try not to freak out—especially if your realtor isn’t freaking out. Your realtor should have a good idea of how much your home will sell for and how long it will take to sell it. Your realtor should also take measures to protect you from unreasonable requests from the buyers. A good realtor will tell you which repairs and requests are fair and reasonable and which repairs and requests aren’t. As previously mentioned, everyone wants the deal to go through and the house to get sold. Unless it’s an emergency, you probably don’t have to sell the house immediately by taking low ball offers and making every concession the buyers ask for.
Division of Proceeds
When the house is sold, there are costs associated with the sale that need to be paid prior to either of the parties receiving any funds. Typically the sellers will have to pay the realtor’s commissions, closing costs, taxes and fees, any debt associated with the property (mortgages, home equity lines of credit, etc.), costs for repairs, reimbursement of separate funds invested in the property, etc. Only after these are paid do the parties get to split the remaining proceeds in the manner that they agreed. This is typically 50/50 unless there is some reason for a different division. Oftentimes one or both of the parties will put separate funds down on the property when it’s purchased. Whether it’s money they had prior to the marriage, or a gift/inheritance from family. These funds are generally reimbursed before the remaining proceeds are split.
When You Need Advice
If you’re ready to file for divorce CoilLaw is here for you. Our attorneys are experts in fighting for our clients rights and helping them navigate one of the most difficult challenges they’ll face. If you’re concerned about how your home will impact your divorce, contact CoilLaw today to set up an initial