Selling Your House During A Divorce
Buying and selling a house is stressful enough when you’re excited about the process. But what happens when you’re getting divorced? For most couples, their house is their largest asset, so the decision is going to take some thought.
Deciding who gets the kids factors into most divorces, but equally emotionally stressful is deciding who gets the house? Should you sell it and split the proceeds, if any; or buy your spouse out? There are other alternatives if it’s not a contentious split. Couples who part ways in an amicable split will often divide the house into two apartments and co-exist. Others will share the house, amicable or not, just to save money. What’s the best option for you? How do you decide?
List the Pros and Cons for Each Partner
Either sit down with your attorney, or with a trusted friend and have each partner decide separately what the advantages and disadvantages of keeping, selling, renting or sharing the house will entail. Once you’ve each done this separately, sit down together (with or without your attorneys) and go over your lists to see where you agree or disagree. Look for reasons you both share. Try to find common ground. This can get emotional as deciding what to do with the house can become symbolic of your relationship.
- Remember this is a financial and lifestyle decision, not a chance to continue the fight.
- Think about how this will impact you, your children (if any) and your jobs, friends and neighbor connections. If you have relationships with neighbors who babysit, dog-sit, or otherwise provide a friendship or service that might be hard to find elsewhere, take that into consideration.
Sometimes it makes more sense to keep the house, especially if it’s paid for. It may actually be cheaper to pay a mortgage rather than rent an apartment.
|Pros of Selling
||Cons of Selling
Sell the house
If neither spouse wants to stay in the house, or neither can afford to buy out the other, selling may be your only option. Put the property on the market and hope for the best price you can get. Don’t get too excited. Before you can split the proceeds of the sale you’ll need to pay off the mortgage, your attorney, the realtor, any equity line or second mortgages and broker’s fees. You may also have to pay capital gains tax.
Working With Realtors To Sell Your House
It’s usually okay to sell a house without an agent, but not when it’s part of your divorce. Not only does it add to the stress of the divorce, but it provides more opportunities to create drama and tension. This isn’t just about a house, memories, and a life you’ve created and must now leave; it’s about money — the most stressful aspect of any relationship. Get an agent you both trust to work with you.
- Don’t spend a lot of time arguing about an agent
- Try to use the same agent you bought the house from if they are available.
- Don’t take out your stress and anger on the agent. Your divorce is not their fault. They’re trying to help.
- If you use a new agent and can’t agree on one, both of you can pick and agent to represent you, then have a third sell the house—if the first two agents are willing to do it with no listing in the offing or for a reduced percentage of the sale.
- Take the agent’s advice about an asking price. They’re the pros.
You don’t have to sell. It’s only one option. You can also turn the house into two apartments (upstairs/downstairs) or literally build a wall to separate two wings. You can buy your partner out, or sell your share. You can co-own the house until the kids leave for college, so you don’t disrupt their lives any more than necessary. You can share the house. Although your options may seem obvious, there are things you’ll need to consider:
- Capital Gains Tax – not as bad as it used to be. Most owners selling a home in a divorce get a $500,000 exclusion from capital gains; $250,000 for an individual
- The impact on your credit report if the mortgage isn’t paid and your name is on the mortgage
- The impact on your credit report if you show multiple addresses (old home/new apartment or home)
- Getting a divorce lien
- How to split maintenance costs if you choose to share or co-own the house
It’s fairly easy to sell your house during a divorce, but you can and will get through it. Need some assistance searching for a new home? Check out our listings!