Selling your homes through separation or divorce?
I’ve been working with a lot of couples selling their homes through separation or divorce. Given my history, I definitely feel their pain and understand the stress of managing a huge financial transaction and splitting up possessions during an incredibly emotional time.
Selling a home during a split is both like and unlike other situations. As always, it’s important for me as the agent to take the time to hear both parties’ opinions and priorities, but in splits, those are more likely not to match and for there to be less interest and motivation to try to come to an agreement. More often than not, I will need to sit down with each party separately and act as a neutral negotiator to find a solution that is acceptable to both. It’s almost like having two sellers instead of one.
I don’t want to pry into my clients’ personal lives, but as an agent, I need to know the general
details of the split; things like who is living there, who to communicate with, court-ordered
timelines and who’s making decisions. I need to know who to connect with about showings or who is allowed (or not) in the home. I realize that because of a split, a seller’s financial situation might be in flux or change from what they’re used to, and sellers are sometimes embarrassed to admit it, but just like I tell all my sellers, I’ll be able to do my best for you if you are open and honest with me.
There are a few decisions that couples will need to make together. These include choosing an agent (make that easy, choose me!) and a property lawyer, the list price, who is responsible for cleaning, decluttering and making any necessary repairs, and the closing date. I can help with finding cleaners and contractors if that is the simpler option.
Like with any other sale, list price can be a bone of contention but it can be worsened if one
party opposes the split and sale. Here, an agent’s appraisal of the property value can help come to an agreement, and if necessary, another third party appraiser might need to be called in.
There are times when the best solution might be for one party to buy the other out, but this is definitely not the case for everyone or even most situations. TImes when buy-out might be
preferable would include to keep kids in the same school or school district; for sentimental
reasons like a property that has been in someone’s family for a long time; or when it’s more
affordable. This last one has to do with the difference in how much you can borrow when buying a new/new-to-you property and transferring a property from dual ownership to single. When you refinance a mortgage to buy a new property, you can only borrow up to 80% of the property’s value. But when you buy out an owner, you can borrow up to 95%.
Let me be clear though: Couples considering a buy-out should think long and hard about the consequences of staying tied to someone you will no longer be partnered with. In my opinion, it is usually a better choice to sell the shared home and start with a clean slate. I can speak from bitter experience that the legal, financial and emotional complications can greatly outweigh the financial advantages, even if a split seems like it will be amicable. In my case, we had just remortgaged our home so I bought him out. Even years later, we’re still working through the financial and legal complications.
Some final words of advice for couples selling a home because of a split:
● Settle things quickly. Long closings or negotiations just drag out a painful situation and
prevent you from healing and moving on.
● Fill in signs of a recent move-out. For example, a closet with one side empty, obvious
furniture missing, etc. can signal divorce to buyers’ agents which they will see as a
vulnerability in your negotiating position. If possible, agree to leave things in place until
after it sells or ask your agent for help with staging.
● Don’t be afraid to rent before buying again. This option will let you find your new financial
normal before you commit to a new mortgage.
● In the end, the best resolution will come if both parties can cooperate to complete the
sale in a way that provides a fast, clear dissolution of the financial and legal ownership of
the home. If there is any unresolvable dispute, the funds from the sale could be held up
in trust and no one will get paid until it is settled. And more arguing and back and forth
will increase legal fees on both sides. In other words, getting along for a shared objective will let you both get on with your lives.