HOW TO SELL A HOME WHILE GOING THROUGH A DIVORCE
Having to go through a divorce is not something that anyone gets excited about. Getting a divorce often leads to arguments, tension, confusion, and frustration. There are very few life experiences that are less enjoyable and difficult than getting a divorce.
We realize going through a divorce isn’t something exciting. It often leads to pointing fingers, frustration, arguments, and just plain confusion. There are very few instances in life that are more confrontational and difficult than going through a divorce.
That being said, if it’s something you must confront then having the right team around you to try and settle your affairs with your property is an ABSOLUTE MUST. A very common FAQ we get from home sellers in this situation is the process and steps taken to sell their current marital home. There are several examples and scenarios that could come into play, however everyone’s story and situation is different and it’s imperative to understand the options and exit strategy that exist to make the best decision possible to move forward.
Below are some of OUR BEST TIPS when selling a home during a divorce. PLEASE read through them carefully to determine what options are best for you and your situation.
TIPS FOR DECIDING ON WHAT TO DO WITH YOUR HOME WHEN GOING THROUGH A DIVORCE
OPTION # 1 – “THE BUY OUT” – ONE SPOUSE BUYS OUT THE OTHER
One of the most common options is this one. Many times, one of the spouses does not wish to remain at the martial property or continue to be financially obligated to it. In this case, one of the spouses takes over responsibility from the other. To do this, oftentimes one spouse will payout a lump sum to the other which will typically include any equity that has been built in the property over time or during the years of marriage.
In order for this to take place, one spouse would need to take full legal responsibility and apply to refinance thereby putting the property wholly into his/her name. Just like purchasing a new home, the spouse who chooses to purchase would need to go through a pre-approval process with a lender to confirm that he or she has the ability to afford the home and continue making payments on their own.
If one spouse can afford to put the home in their name and the divorce is finalized, then the remaining spouse would need to put the property in the other’s name via a “quit claim deed.” Our company has attorney resources available to assist with this when you are ready. It is a relatively small cost. It is our recommendation that when a legal transferring of property is involved from one spouse to another, that some form of legal presence be actively involved! This ensures either party is not taken advantage of.
OPTION # 2 – SELL THE HOME IMMEDIATELY
YOU DO NOT WANT TO DELAY ON THIS DECISION IF YOUR SPOUSE HAS ALREADY AGREED TO DO SO. EMOTIONS AND TIME CAN QUICKLY CHANGE PREVIOUS COMMITMENTS.
The second option for divorcing homeowners is to sell the property outright. Out of the three options, this is usually the most common and the most cost effective.
Usually when a divorcing couple agrees to sell a property the proceeds from the sale are usually split. If in the event there is not enough equity to split any proceeds (i.e. you owe more than the house is worth), then a Short Sale option could be the best case scenario. If so, please refer to our SHORT SALE GUIDE for more information on how that process works. This is common when a divorcing couple doesn’t want to put any more money into the home.
OPTION #3 – THE COUPLE CONTINUES TO CO-OWN THE HOME
The third option available to divorcing couples is to continue to co-own the home. Usually, when there are kids involved this tends to be a popular option in an effort to avoid removing kids from their built community.
If this option is where you find yourself, please understand that although you and your spouse are divorced the payments must still be made on time and any missing mortgage payments would result in a reduction of your credit score or worse.
It is highly advised that if a divorcing couple decide to continue to co-own a property that the agreement be made in writing and if the occasion or point in time arises that one spouse decides to buy out the other, that the decision to do so be made in writing as well.
Is Your State An Equitable Distribution State?
If you’re selling a home while going through a divorce, it is important to understand whether your state is an equitable distribution state or not. Equitable distribution can be defined as the distribution of property and debt obligations when dividing marital property during divorce proceedings. Equitable distribution does not mean a 50/50 split but does mean a “fair” distribution.
Tennessee is an “equitable distribution” state. This means that once property is classified as marital or separate, the trial court must divide marital property equitably according to the factors listed in T.C.A. § 36-4-121(c). … A trial court will classify all property as either marital or separate.
ALWAYS Hire A Realtor® Who Has Experience With Dealing With Divorce
If you and your spouse decide selling your home immediately is the best choice, then always hire a Realtor®. Divorce is hard enough, and agency laws exists to help govern emotional decisions (that when not managed or discerned correctly) can cost you BIG time.
So What Do You Ask When Hiring an Agent to Represent You?
Have you ever sold a property where a couple was going through divorce?
This is important for two reasons: One, a higher selling price and two, a faster sale of the property. Additionally, an experienced agent will know how to handle the stress that usually comes with a divorce environment and resolutions occurring with inspections related to or within the property.
How to determine the listing price of the home when going through a divorce?
List price is SO important when listing your home. It can be the difference on getting heavy buyer activity with multiple bids quickly or your home sitting for months on the market. Everybody wants to get top dollar for their property, and while there are several things you can do to help your selling price, the biggest element you have to keep in mind is the home MUST appraise i.e. you cant sell too much higher than the home is actually worth.
To determine a proper selling price, we look carefully at sales statistics within a certain radius of your property, considering relative range of square foot, bedrooms, bathrooms, age of property, etc. This exercise is called a Comparative Market Analysis or CMA.
A CMA will help you understand the current state of the real estate market in you area. It’s important to know whether the local market is currently a sellers market, balanced market, or a buyers market.
Tips To Prepare A Home For Sale During A Divorce
One of the biggest mistakes homeowners make while going through a divorce is not preparing a house properly for sale. It can be hard to take emotions and memories out of the process, but you MUST remember you are doing this to help your home compete and appeal to a potential buyer. Think “model home”, it starts with taking your property back to a neutral state as much as possible. By lessening your fingerprint on the property, you increase the physiology of a buyer to come in and imagine the property as their future home.
Some best practices include:
• Removing family photos and replacing with generic photography or modern art.
• Removing any clutter in the home
• Fresh paint neutral color (where needed)
• Consider making small updates such as updated lighting fixtures
• Get rid of pet or foul odors by cleaning your carpets
• Remove any clutter around the exterior of the house, remember you want to increase curb appeal
If you want more information on best selling tips for your property, please refer to our SELLER GUIDE.
Remember that you sometimes only get one first impression with a potential buyer. MAKE IT COUNT! You want to give your home the best shot possible to sell!
Keep in mind, that once your house is sold things will get easier. Oftentimes, the home is a couple‘s largest investment together and why it is the most stressful element of a divorce. For this reason, we hope some of our Tips For Selling A Home During A Divorce help you navigate this difficult season of your life.
If you need representation or have more questions please CONTACT US. We are happy to help.
– Amerikey Realty | The Adams Group