Divorce is the hardest part of life and it usually ends on major disputes. Most divorcing couples have real estate as their biggest shared asset. During the divorce one cannot help asking what happens to the marital or investment property?
To answer the question regarding the real estate property after the divorce, it is important to evaluate when the property was purchased. If the property was purchased exclusively by one of the party before the marriage, then this property is considered pre-marital asset and its rights normally belong to that spouse only. However, in case the property was a source of marital income or served as a home to the couple while they were married, then this property can be considered a marital asset and is therefore subject to equitable distribution between the two parties.
Any property that have been purchased after the marriage or served for marital purposes where the couple lived is generally considered the shared asset. Both of the partners have equal interest in the property and therefore it must be split in a fair manner.
1) How the Home Can be Divided after Divorce
Divorce is usually the process where you declare your dissolution of your civil partnership. Couples usually share their property and lives in their family home and therefore one needs to understand what are the options to divide this shared asset after the divorce takes place:
- Sell the home and both the parties move out. The money raised from this transaction can help each of the partners towards buying another home.
- One of the parties agrees to buy the house and pay the other.
- The parting couple agrees to keep the home and does not change the ownership. This usually happens when the children are involved and one partner continues to live in until their children turn 18.
- As a part of the financial statement the value of the property can be transferred from one partner to another. Usually the one who gives up their share of ownership rights continue to keep their stake in the home. Thus, when the house is sold, the party will be liable to receive the percentage of its value.
Let’s discuss if both parties mutually agree to sell their house. This could be because neither of them wants to live in the same family home, or they can’t afford to buy the other out. In such cases it is best to put the property on the market and get the best possible price which can later be divided. However, the parting couple needs to understand that before they get their share into the house, they will have to firstly pay off the mortgage, any equity line as well as broker’s fees. They will also be required to pay tax on capital gains if this law applies to their sale.
If the market conditions are not good at the time of selling, then these expenses will come as a heavy blow. Also, selling the property may mean that the couple has to uproot their kids, while they are trying to cope up with the fact of their parents’ getting divorced. But the major advantage of the selling the house is that, both the spouses get their shared money and can walk away to start their new life. This money can help them to make a clean break and start afresh with the purchase of a new place.
Once the parting couple mutually consents to sell their house and take the traditional route, then they have to face a lengthy and detailed process which involves a number of steps. Since the divorce itself is a great emotional upheaval, each stage takes a great courage and hard work on the part of the couple. Following are the stages of selling the house through an agent:
2.Choose an Agent
Try not argue over choosing the agent. Choose an agent if possible that can cause you the least amount of stress. Perhaps it is in your best interest to work with the same agent who helped you earlier to buy the house. Since divorce is a difficult phase, which often leads to many areas of disagreement, try not to argue over the agent since the process if just beginning. Otherwise perhaps mutually entrust the task of picking an agent to a friend or relative on whom both lay their trust.
3.Come to Agreement over the Price
The next step is to mutually agree on the asking price for the property. In the case of divorce, it is understandable that this can raise the potential of a conflict. Allow the agent to give his or her opinion about the asking price and hopefully help both come to an agreement. If the couple, however, mutually feels the price is too low, they might choose a different agent.
4.Stage the House
This is the most difficult stage of the sale process. In order to show the house to the potential buyer, the couple needs to understand that they have to invest some money on minor repairs and painting and make the house presentable. Both parties must decide where the money for repairs and renovation will come from. In case both of the parties have moved out by the time the house is put on the market, then perhaps the agent can take up the task to stage the property. However, if one of the spouses is still living there, then he/she has to shoulder the responsibility to declutter the house and get things cleaned up before someone shows at their place.
The couple has to work together at this stage to review the offers from potential buyers. This is specifically necessary if the market is volatile and the couple needs to make quick decisions. The couple can look for an agent’s advice, but the final decision will always be theirs.
This is the final stage where the couple will have to divide the cash amongst them. In most cases, this stage is the most simplified as the escrow company can agree to divide the cash among both parties after paying off all the obligations to the house. In case one of the spouses has been paying the mortgage payments after the separation which means that he/she has been reducing the principle amount due to the house and increasing the equity, then that person is liable to be paid a greater share. The distribution should be adjusted according to the spouse’s contribution after the closing cost and other obligations are paid.
If you are going through the difficult stage of divorce, then it is unlikely that you will feel any motivation to prepare your house for the potential buyers. You will also find it difficult to deal with appraisers and inspectors when you are trying to get on with your life and will likely be very irritated with the presence of the strangers in your house. A short sale may be the best option for the couple who are going through separation.
It is a mistaken belief that working with a Realtor® will bring the added advantage of ensuring the house sale at market valie and thus promises greater financial security. In reality, most of the couples end up in a worse financial situation where their house remains unsold for years and they are forced to make the mortgage payments for the house they no longer live in. Later they are left with no option then to sell the house far below the market value and further pay the commission of real estate agent, escrow fees and the closing costs.
However, you can consult real estate experts like Home Solutions FLA who are working to give their clients peace of mind. We are investors who buy houses on fair all-cash offer and will give our honest opinion regarding the sale of your house after the divorce. We work in the best interest of our client and therefore we give free advice regarding the options the couple have and what benefits and drawbacks they might face.
Home Solutions FLA will make an all cash offer for those couples who decide to sell their house quickly and move on with their life. You will have the advantage to have cash in your hand in as little as seven days and will easily be able to walk out of the marital home with a clean slate.
We understand that the divorce is the most difficult phase of your life and the last thing that you want is to worry about your marital home. Even though you want to have your share of cash in the shared asset, you also do not wish to go through the painful process of selling the house through an agent. Home Solution FLA will help you to make a quick sale and will guide you how to best protect your rights and interest as a homeowner. Contact us now and get fair all-cash offer today!!