Split Up, Sell Off: Everything You Need to Know About a Divorce Sale
In the United States, about 40 to 50 percent of all marriages end in divorce.
In this article, our focus on property division. Keep reading for more information on preparing for a divorce sale of your home.
Marital Property Division Laws in Your State
Property division laws vary from state to state, but they generally fall under either of these categories:
- Equitable distribution
- Community property.
In an equitable distribution state, property acquired during the course of a marriage is split fairly and equitably – not equally. Although there is no specific formula for calculating equity, the court will consider your monetary and non-monetary contribution towards the purchase of the property among other factors.
In a community property state, you and your spouse have joint and equal ownership of all assets acquired during the marriage. In a divorce, the property is split equally.
As such, the first step to selling a house during divorce is to understand how property division laws in your state will affect your share of the proceeds. This knowledge can help you to better prepare a stronger case.
For instance, if you live in an equitable distributions property state, you’ll start gathering all the information you need to convince the court that you deserve the amount you’re seeking.
The Consequences of Selling the Home
Obviously, the fact that you’re looking to sell your matrimonial home means neither of you wants to keep it. Or even if you’d love to keep it, you’re not able to buy out your partner.
Before selling the home, it’s important to know the associated consequences/costs and establish how they will affect your interests.
For example, if you and your partner purchased the property through a mortgage, the proceeds from the sale will first go into paying off the mortgage. The same goes for any other debt secured against the property.
You might also spend money on home inspection, appraisal, and staging. And depending on the nature of the sale, you could have a capital gains tax bill to clear.
Cumulatively, these costs can really take a substantial bite from your gains or drive you into a loss.
It’s advisable to take some time to evaluate whether selling the home makes economic sense for both of you. Sure, it’s understandable that you might want to split up quickly and move on. However, money is equally important, and it’s vital to sell the home at the best possible price.
Try to reach out to your partner and see if you can agree on how to get the best value for the property. Perhaps you might want to do some repairs and repaint the walls to make the home more attractive to buyers.
Finding a Real Estate Agent
When you’re going through a divorce, the last thing you want is to deal with strangers.
This is why you and your spouse might need to hire a real estate agent to take care of the sale, even though such a move will add to your selling costs.
The challenge most divorcing couples face when using this option is agreeing on a real estate agent. This mostly happens when both parties have different interests. Maybe you want the sale to happen quickly at whatever cost, while your spouse has no rush.
Either way, sooner or later you’ll need to settle on an agent.
To make things easier, you could each elect a close friend or relative and task them with finding a real estate agent for you. Or if you have divorce lawyers, they can help you find a mutually agreeable agent.
Another option is to work with the same agent who helped you buy the house – if they’re still in business. Since you already have an existing professional relationship, it shouldn’t be too difficult to trust them with your differing interests. They can even help you iron out your differences as far as selling the home is concerned.
Selling to a Cash Home Buyer
If you cannot agree on a real estate agent or need to sell in a hurry, find a cash home buyer.
A cash buyer will snap up your home as is. You won’t have to worry about making any repairs or a potential deal falling through because the buyer cannot secure financing. This post by Ashley Buys Houses gives a lowdown on how selling your house for cash works during a divorce.
Bear in mind selling to a cash buyer has its downsides. For instance, you will certainly get lowballed.
Dividing Your Cash
Once the home is sold, it’s time to divide the cash. But how the division works will depend on your specific circumstances.
If you’ve already agreed on how to share the proceeds, the division is pretty straightforward. You pay off the debts and share the net gains according to your agreement.
However, if the sale is court-supervised, the money will grow to an escrow company, which will settle your debts and other costs on your behalf and then divide what remains as per the court’s directions.
Divorce Sale: Put the Past Behind You
Although couples get married hoping to enjoy a lifetime together, sometimes – almost often, in fact – things just don’t work out.
If your worst fears have comes to pass and you’re now going through a divorce, selling your home is a way to put the past behind and also get money to help you move on.
With these divorce sale tips, you’re in a good position to prepare your home for the market and sell it without any troubles.