Where you live is a big part of your life, and if you’re considering a divorce, your home plays a significant role in the details of your divorce agreement. That’s because it’s not as simple as deciding whether or not you’ll stay or go.
Whether you love your home or find yourself daydreaming of Zillow listings, there are many factors that you need to weigh before you make a decision. Here are some guidelines for where to start.
Deciding to Sell—Or Stay
The biggest question you and your former partner may have is whether the property is being sold or one of you will be buying the other’s share out. This decision can be difficult to make. From a poor seller’s market to wanting to keep children in their childhood home, there are many reasons to want to hold onto a family home.
On the other hand, there may be factors weighing in favor of a sale, including the financial freedom that comes from selling a home. Both sides can hold weight during a divorce. It’s important to take a critical approach to this discussion—but that can be difficult when dealing with the other stresses of a divorce. An experienced divorce attorney can help you identify your goals and needs, giving you a clearer path forward.
How to Sell a House During a Divorce When You Both Agree
Depending on state laws, the process for selling your house during a divorce may vary.
No matter what state you live in, it’s advisable to work on closing with your divorce attorney and document the sale of the house as part of the legal proceedings for the divorce settlement. Selling your home and allocating who receives what percentage of the sale has numerous implications for the rest of your divorce settlement.
The simplest way to put your house on the market during or following a divorce is by agreeing upon (and drafting where necessary) a detailed plan for the sale with your spouse and legal counsel on both sides. The more details you include, the less room you leave for ambiguity or disagreements.
Selecting your real estate agent
Selling a house is stressful under the best of circumstances. During a divorce, this process can pile onto an already overwhelming plate. With that in mind, selling your home without a real estate agent during a divorce is generally not advisable. You may want to interview several agents and get referrals from friends or family. A trustworthy agent, and one comfortable representing two parties who may have competing interests in the process, can eliminate much of the work—and stress—you would otherwise face.
Determine the agent’s primary liaison
To keep the process moving forward and avoid hurt feelings or conflicts, establish a clear plan for the agent to communicate with both parties. By agreeing on how information will be shared and problems will be resolved, you can streamline minor decision-making and provide the agent with a clear path so that they can work efficiently.
Agree on an asking price
In addition to preparing a market analysis or working with an appraiser to estimate the home’s value, your agent can offer valuable insight into a strategic asking price. Your agent can leverage their knowledge of the local market to suggest a price that will help you sell your home within your desired timeframe. Spouses should also discuss factors related to the asking price, such as the specific terms of the sale (closing date, due diligence period, repairs, closing costs, etc.) and potential price reductions.
Both spouses must agree on an asking price unless the court has determined otherwise.
Decide who will prepare and stage the home
Preparing a home to go on the market can be an ordeal unto itself. Repairs (both minor and major), updates, painting, and various requirements can rack up costs and extend your selling timeline.
Both parties should agree on who will facilitate any updates to the house and clean and stage it (i.e., set it up to show potential buyers). Your real estate agent is a good resource for finding skilled contractors and deciding how to stage your home to its best advantage. Make sure you and your spouse clearly outline financial responsibilities for updates and staging costs. Discuss with your agent and your divorce attorneys whether it makes sense to have your own home inspection before the sale so you know what the “problem areas” are and whether you and your spouse can agree ahead of time with your agent what financial credits you might offer when you go into a contract for sale.
Agree on who will review offers
When reviewing and accepting offers from potential buyers, both parties will likely have to work together unless stipulated otherwise ahead of time.
Your real estate agent and legal counsel can provide advice and help you think through your options, weighing the terms of different offers, but ultimately this decision must be made by you and your former spouse. If one of you wants to keep the home, and you’re using the market to set the “sale price,” it is necessary to agree ahead of time on how and when one spouse can use the “right of first refusal” by matching a viable offer, and figuring out how to measure which offer is the best one.
Plan what will be done with any proceeds from the sale
Finally, you and your spouse should agree on how to divide profits from the sale of your home before it ever goes on the market, and if there is no decision before the sale date, how the proceeds will be held until there is agreement or your divorce is final. It’s important to remember that before any sales proceeds can be divided, parties will have to pay off the mortgage, broker fees, and closing costs.
While this process can seem overwhelming, an experienced divorce attorney can help mitigate future risks and break down the process into manageable components. Once both parties review and agree to the plan, things can move forward.
However, the decision to sell a family home can be difficult for any number of reasons, whether they be emotional or financial. Not everyone will agree to the drafted conditions, or even to the idea of selling the house at all.
When One Party Does Not Want to Sell
If one party does not wish to sell the house, for any number of reasons, there are courses you can take with the court to reach a resolution with your spouse.
Mediation or alternative dispute resolution (ADR) are typically the preferred methods for parties to arrive at a divorce settlement, including any decisions related to selling a home. ADR is typically less stressful and less costly in the long run. That said, in a high-conflict divorce, it may not be an option.
If both parties cannot agree to the proposed terms for selling a house or for a spousal buyout, you can work with legal counsel to ask the court for an order to sell the house during the process, but in New Jersey, this is a very specific, fact-dependent request.
From a legal standpoint, whether you currently live in the house or not won’t affect your claim to keep or sell your home but may affect how the home is paid for during the divorce and how the sale proceeds or buyout proceeds are allocated
A spouse with a vested interest in the home, such as contributing to the mortgage during the marriage, still has a claim to the home. However, if you are not currently living in the domicile, it can bring up further complications, such as who will continue to pay the mortgage, taxes, and home insurance. These are all issues you can settle with your spouse through mediation.
If only one party is set on keeping the home during a divorce, a widely-used option is to buy out the other party’s equitable interest. A buyout is when one spouse sells the house to the other spouse. In this case, you and your legal counsel can work with an appraiser to determine fair market value for the home and establish a buyout amount.
The buyout method will depend on your particular circumstances, and both spouses will need to agree on how the buyout will occur. During a contested divorce, these decisions may be left to the courts for a final ruling.
The Experienced Divorce Attorneys at Jacobs Berger are Here to Help
It is critical to ensure that any home sale accounts for your family’s needs and individual circumstances.
At Jacobs Berger, LLC, our experienced attorneys have extensive experience in navigating home sales in divorce cases throughout New Jersey.
Take the steps you need to build a solid future for yourself and your family. Schedule a strategic planning session with an experienced attorney today.