Guide to Selling your House During a Divorce

  • February 13, 2020
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During a divorce, there are tons of items that you may be dealing with. From trying to decide who gets what vehicle, to custody arrangements if children are involved. Owning a house together opens up a new can of issues that you may have to face when selling your house during a divorce. Who gets the profits from selling the home? Should the home be put onto the market? This is where community property comes into play.

For those who are in this position, we first recommend that you come to decisions together on the financial goals of each person and how a house will fit into these, before you make any other major decisions. If you can do this peacefully, you will find that this process will be much easier on you!

What is community property?

Community property is anything that was acquired together during the marriage. Those who are married are sharing the property equally, even if one spouse’s name is on the mortgage note or not. In addition to a home, other examples of community property are 401k’s, stocks, furniture, rental properties and other investments.

During a divorce, the best route is to discuss with the spouse who will get what. While both parties may have a right to the property and belongings, many times, these items are not divided fairly. Why is this? The courts may consider who is at fault for the divorce, as well as who is the main ‘breadwinner’ in the family. And of course, the court is going to determine who is the primary caregiver when children are involved. These factors all play together to determine just how the property will be divided.

Separate property: What is this?

The items that you acquired before marriage are considered separate property. This can include items like inherited property, gifted property, claims like personal injury claims, and anything that you may be deeded to as the sole owner.

  • Inherited property is given to one spouse in only their name, and it is considered separate property.
  • Gifted items are given to a single person. Since it is given to that one person, it is considered separate property.
  • Personal injury claims: The person who was injured that filed this claim is the sole owner of whatever comes from these claims.

Even with separate property, it is important that both parties come together to agree that this is an item that is solely theirs.

Selling a House During a Divorce

How can I sell my house during divorce?

This information will help explain the options you have if you plan on selling your house during a divorce due to the house being considered community property.

Option 1: A buyout by one of the spouses

A buyout during is one option when you are trying to decide on what you should do with your house during a divorce. However, most people are not aware of all the details that go into a buyout. First and foremost, both parties must consider the value of the house and how much each person should get when one or the other buys the house. This can be challenging when the divorce is causing hard feelings between the couple.

What is a buyout?

A buyout is when one person in the couple buys the other person out of their half of the home, mainly because they want to keep this house. The person buying the house can do this with a lump sum payment or with payments over a period of time, depending upon the deal that is brokered between the couple. Keep in mind that this buyout does not have to happen with cash since other assets are being divvied up during the divorce settlement. For example, one person can opt to not take the others retirement plan in turn they want the house free and clear. Buyouts are a popular option when kids are involved so that the divorce doesn’t cause additional disruption to their lives by making them move, change schools, make new friends, etc.

Risks with a house buyout during a divorce

A buyout seems rather straightforward, and in most cases it is. However, there are still risks and complexities associated with any type of property investment. For example:

  • The house could go down in value after it has been judged what this is worth, meaning that one person paid too much.
  • The home may increase in value, meaning that the seller actually lost money in this transaction
  • One spouse could lose their tax benefits by taking this deal

How is house value determined during a buyout?

How does a couple decide on the value of the house? If you have not recently had this appraised, this means that you must do some work. You may find it helpful to work with a real estate agent who has sold in the area and who can give you a comparable price for your home. You can also decide to hire someone to appraise the house which can cost $300 to $500. Hiring someone to appraise the house may be the best option since this is going to remove any doubts that the couple has about the value. This appraisal will be a non-biased market assessment that won’t be impacted by the fact that you are selling your house during divorce And it can make negotiating a buyout much easier with this official appraisal.

Other considerations when buying the house from your spouse

Other items that should be discussed in the buyout of the home aside from the purchase price/value is:

  • Can you or your spouse afford the house and qualify for a mortgage alone?
  • Is there maintenance or updates that the house needs?
  • If one spouse still owes money to the other, then the house value may be used as credit for the amount owed.
  • What if you owe more on the mortgage than the house is worth?

Option 2: List your house on the market

If a buyout is not an option, you are going to have to sell wether you like it or not. The most common reason for not being able to keep the house is because the payments of the home are too large for either spouse to make alone. This financial burden can sometimes cause the house go into foreclosure, leaving the owner with damaged credit and will make it hard to buy another house for years.

If you have the time and are in agreement with your spouse, you can list your house on the market with a real estate agent. While this sounds simple, a divorce is often a challenging time for both spouses to approach all decisions logically and without emotion. It can often be hard to come to an agreement on simple questions like which realtor to select, how much to list the property, and what offer price to accept. To complicate things even further, unless your house has been recently updated and is in great condition, you may have to invest additional money, at this difficult time, into the house in order to get it to sell. Since the process of selling a house on the market takes a while, this will draw out the settlement of the assets in the divorce, a process that you want done quickly.

Option 3: Selling your house to an investor quickly

For those who feel a buyout may not be their best option, and don’t want to list the house on the market, if you have equity in the home, you can sell the house ‘as is’ to a real estate investor. Investors that buy houses in New York, like Leave The Key Homebuyers, will make you a no obligation cash offer so you can evaluate if this is the best option for you.

In a situation where you are selling your house during a divorce, this is a popular option because you’ll be able to get the proceeds from the sale of your home very quickly and put the whole thing behind you. When selling to an investor you won’t have to deal with any needed repairs or get stuck with the house sitting on the market for months. While it can be tempting to sell your house during a divorce to a company that offers cash for the home, you and your spouse still need to be on the same page when it comes to accepting a cash offer.

When a divorce happens, if you are in the unfortunate situation where you owe more on your house than what it is worth, you are left with fewer choices. In this situation, you may want to start working with a short sale specialist to negotiate with the bank so you can avoid a possible foreclosure. Unfortunately, in this situation, you will not be able to stay in the house and remember that a short sale is going to affect your credit rating.

For those who are considering selling to an investor or if you think a short sale might be necessary, contact us, we can help! We have worked with people who are going through divorces and in other situations in which they need to sell their houses as soon as possible and make back whatever money they can. We’d love to see if we may be a good fit to help you in your current situation.


How To Sell Your House During A Divorce In New York