Going through a divorce is often an emotional roller coaster with lots of uncertainty and problems to sort out. Even the most amicable of divorces still involve legal and administrative matters that need to be taken care of. One of the most difficult things to do during a divorce is to sell your family home. Selling a house is not so straightforward as it involves several considerations. Whether settling a mortgage, refinancing, transferring to one partner, or putting it up for sale, financial, legal, and emotional factors could impact the sale of the family home – including how quickly it sells. Here are the steps you need to take to sell your house fast during divorce.
Disentangle the Legal Entanglements First
Before you can even think of putting your house on the market, both of you should sit down and review the financial aspects. If there is an outstanding joint mortgage, you are both liable to pay it off – and the smartest solution is to sell your house fast and divide the proceeds.
However, the new “Tax Cuts and Jobs Act” reduces the advantages of home ownership with the mortgage deductible trimmed down from $1 million to $750,000 applicable to all loans taken after December 14, 2017. If your home mortgage was taken before this date and there is significantly more than $750,000 left on the mortgage, it could make sense to keep the house to take advantage of the higher grandfathered deduction. Removing one spouse from that grandfathered mortgage could, however, become tricky; this could result in refinancing, which means it will be subject to the new tax law.
Another change in the new tax law is the state and property tax, which is capped at $10,000. Hence, those living in high property tax states might need to reconsider if one or the other spouse can afford to keep the home.
A lawyer or tax specialist might be able to help divorcing couples find the best way to dispose of the home without losing tax benefits under the previous laws.
If current conditions are not favorable, or if the current value of the house is less than the remaining mortgage, it is best to wait till the property market improves before selling the house. If one of you remains in the house until the market improves, then he/she should pay more than 50% of the mortgage to make up for the fact that the other spouse will likely have to pay rent until the house sells. Talk to a lawyer and write up a formal agreement as to who will pay what and how long you are willing to wait to sell the house.
You could also consider a divorce lien, where one party keeps the house, and the other gets a note and deed of trust (or mortgage) secured by the property. One gets real estate and the other gets paper. The spouse who keeps the house retains a fair share of the equity, and he/she must pay the departing spouse according to an agreed-upon schedule.
If neither party can afford to keep the house – even in the short-term – a short or pre-foreclosure sale is an alternative.
Determine Your Home’s Market Value
If you hope to sell your house fast during divorce, you must establish its market value. There are several ways you can do this: by using a real estate agency that can give estimates as to the market value of your house, or you can contract a property appraiser. The seller usually pays for the services of an appraiser, which can cost between $287 to $373 according to HomeAdviser.com. Whichever one you and your soon to be ex-spouse chooses, the market value is important as it gives an educated estimate of the eventual selling price of the house. Factors that may affect the market value include the condition of the house, the number of bedrooms/bathrooms, square footage, location, and improvements. The real estate agent or the appraiser will also consider recent sales of comparable homes in your neighborhood to establish its market value.
To Sell Your House Fast, Take Time to Prepare it Properly
There are things that you can do to get the best appraisal, prepare the house for viewing and selling, get the best offer possible, and hasten the sale process. Start by removing clutter and your personal things (including family pictures and collectibles) in the house so that it is easy for potential buyers to picture themselves living in it.
A few cans of neutral paint and some elbow grease can pay big dividends – especially if your house has a different color in every room. Fill all the holes, scrape off dated wallpaper, and paint everything the same neutral color – usually pale grey or almond are recommended. It will make the rooms look bigger and allow buyers to see your home’s great features without having to look past the bubblegum-pink bedroom or lime-green-and-orange living room. Emotional buyers will reject a house because of the color-scheme, so remove that stumbling block before the first viewing.
Your home should also be spotless and clean. Pressure wash your driveway, clean windows and keep your garden neat. Inside, the kitchen and bathrooms should be extra shiny. If you cannot handle the cleaning yourself, get a professional company to do it. It will save you time and the extra stress at this difficult time in your life.
If you have pets, make sure they’re out of the house and there’s no doggy or kitty litter smell in any room. If a friend or relative can keep you pets for a couple of weeks when your house goes on the market, that will take away the stress of having to remove them at a moment’s notice – plus you won’t have to clean up after them every time there’s going to be a showing.
Put the House up for Sale
Now that the fair market value of your family home has been established, it is time to put the house up for sale. You can get a real estate agent to do it if you want to avoid the additional burden of selling a house while divorcing. Don’t forget that you also need to pay the realtor their fees once a sale occurs, so this should be included in your estimates. NOTE: Do not disclose that you are going through a divorce to the realtor or others as you might get low offers for the house. If buyers sense you’re desperate to sell because of divorce, they will try to lowball you.
Selling a property is not always easy – especially during a divorce. But at the end of the day, getting it done as quickly as possible and for a fair price means that you both can move and get on with your lives.
Jess Walter is a freelance writer and mother. She loves the freedom that comes with freelance life and the additional time it means she gets to spend with her family and pets.
I disagree with Jess’ comment: Do not disclose that you are going through a divorce to the realtor. A real estate agent trained as a Real Estate Collaborabive Specialist (RCS-D™) can be an invaluable asset when going through divorce. This agent can help line up mortgage, insurance, and title consultations, as well a find a reputable appraiser and a home inspector. All of these services help gather documentation to reveal the true value of the home and give the client the necessary tools to make an informed decision whether to keep or sell the home. The job of an RCS-D™ is not to tell the client whether to sell or keep the home. His job is only to help ensure the client has all the information they need. And… although an appraisal and home inspection will cost the clinet, an RCS-D™ does not charge for their time.