Selling a Home During a Divorce
When you got married and purchased a home, you probably did not anticipate trying to sell that home while navigating through a divorce. Selling a home can be stressful under ideal circumstances. Having to sell a house while going through a divorce compounds the stress and emotional toll of an already stressful situation. Discussed in this article are some of the ways a divorce can impact your home's sale and how a licensed real estate professional can help.
Expect it to Be an Emotional Process
Despite how long you lived in your home with your spouse, leaving that home can be difficult. If you have children, you will have memories of special occasions and family time spent together in the house. You and your spouse may find it hard to agree on simple things. So, it's understandable that you might disagree on certain aspects of selling the home. You must treat the home's sale the same as you would any other important business transaction. Also, selling the house could help you find closure. A professional real estate agent will understand the emotional aspect of selling a home, especially during a divorce.
Getting the House Ready to Sell Requires Preparation and Cooperation
Preparing a home to sell while going through a divorce requires both you and your spouse to make critical decisions ahead of time. Even if one spouse continues to live in the home while it is on the market, the other spouse still has a vested and legal interest in the house. Your home may need maintenance or updating before you can place it on the market. Changes made to the house could be costly, and some will take time. If the communication between you and your spouse is not good, it could stall the process. Your real estate agent could act as an unofficial mediator to help guide you through the decision-making process.
Determine the Market Value of the Home
Most divorcing couples want to sell their home as fast as possible. Whether you stand to gain a considerable profit from a sale or on the verge of losing the house, you will benefit from selling it. Whatever the situation, you will not get any more money from the house than what the market will allow. A real estate agent can conduct a current market analysis to let you know what your home is worth. You can use that information to decide on an asking price for your home.
Decide on What Range of Offers You Will Accept in Advance
Once you receive an offer on your home, you will have a limited time to decide whether to accept the offer. If communicating with the other spouse causes undue time delays, it could cause you to miss out on the best offer. It would help if you discussed in advance with your spouse what offers you will accept. That way, it will not require much discussion once you receive an offer within the accepted range. If you and your spouse cannot agree on an acceptable offer, it might be a good idea to seek advice from your attorney or your real estate agent.
Consider How You Will Divide the Profit from the Sale
In dividing the profit from the home's sale, you must consider the property division laws in the state where you live. When you live in a community property state, you must view everything you purchase as belonging to both spouses. There are some limited exceptions, such as a prenuptial agreement.
A spouse who contributes more than the other towards the mortgage and the home's maintenance might receive more money from the sale. There could also be an agreement that one spouse could keep more profits from the sale if the other spouse keeps some other asset.
Consider the Capital Gains Taxes and Other Benefits
Another consideration in a divorce sale is when to sell the house. It may benefit you more to sell the house before the divorce is final because of the capital gains tax exemptions. Under current law, a married couple selling a house can claim up to $500,000 in capital gain taxes. A single individual can exclude $250,000. To be eligible to claim the exemption, the home must be your personal residence. You also must have lived in your home for two of the last five years.
Make Sure the Title is Proper
The divorce decree and the title to the property must contain specific language for the title transfer to be proper. County records index properties by their legal description. A title containing the street address alone would not provide the appropriate notice of the title transfer. The divorce decree must include language expressly granting the house to one spouse. It must also divest the other spouse of any interest in the house. You can expose the divested spouse's interest to creditors with an incorrect title. A real estate agent experienced in selling properties belonging to divorcing couples will be familiar with the sale's unique requirements.
In many ways, selling a house while you are in the midst of a divorce is no different than selling it at any other time. In other ways, pending divorce adds more to the things you need to consider. A real estate agent will know what could impact the sale of your home. They can help guide you through what could be an incredibly challenging process.