Divorce and real estate: what you really need to know

As a couple undergoes a divorce, they may quickly come to realize the emotional and financial consequences it will have on their lives. Focusing on personal finance and real estate in particular, a separation can come with major complications. If they own real estate together, most divorcing couples want to sell their joint property as soon as possible. Although this is great news for buyers looking to take advantage of a quick sale, a seller is more likely to yield a better price if they use a more strategic approach. As difficult as divorce is, there are many reasons why you should wait to sell.

 

  • Sell during a busy season. The worst thing about selling a property due to divorce is that you don’t get to choose your timing. Ideally, you want to wait for a busy season, such as the spring or fall, where you’re more likely to make a sale at your asking price or above. Any time you pursue a quick sale, you risk losing some of your financial investment having to settle for something less than what you wanted.

 

  • Buyers can use your divorce against you. If you’re selling the property because of a divorce, you don’t want to publicize this as the reason. A buyer can easily seek out public information if there’s a court order showing your property needs to be sold. A buyer can then negotiate a lower price, knowing that you’re desperate for a quick sale.

 

  • Transaction costs. Any time real estate is bought and sold, there are transactional costs of tens of thousands of dollars to consider; plus, we’re not even talking about realtor commissions, land transfer taxes or additional legal fees yet. If you’ve recently signed a mortgage, having to pay these extra fees again can be a frustrating reality.

 

After considering all the facts, you must ask yourself: do we really have to sell right now? As painful as the thought may be, you may want to hold on to your real estate. Let’s assume you sell your home for $1.8 million; each person will be awarded approximately $900,000. Then, minus all those pesky selling fees. All in all, you’re not going to be left with near as much as what you invested.

 

Instead of selling outright, many divorcing couples choose to split their real estate by one buying out the other. If you really love the property or your partner just can’t let go of it, you may want to consider this option. It will relieve one person of financial stress while providing the other with the home they’ve fallen in love with. Although qualifying for another mortgage or refinancing can be a challenge, this may be easier than selling.

 

No matter how you decide to deal with your real estate after a divorce, it’s never a black and white situation. Sit down with your partner and decide what’s best for both of you and your finances.

 

 

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