Divorce happens, not every marriage is successful and as a Simi Valley real estate agent I have been called to help divorcing couples sell what usually amounts to their largest asset in the marriage, their home. This is typically one of the more stressful events in a divorce as not only is the home a large monetary asset for both the husband and wife, but it is also very personal, as it was home to a family with many memories.
Simi Valley like most of the nation is trudging economic challenges, significant drop in housing values and employment challenges which has added additional stress on families and has contributed to increased divorce rates. The stress and emotions involved in divorce can create many challenges as couples move through the process. The division of real estate assets and the protection of that significant investment for both the husband and wife requires a seasoned real estate agent who can work to protect that investment and be flexible to work through the emotions and stress of a divorce environment. The bottom line is that many times in divorce, emotions are out of control, which undermines common sense and when common sense gets undermined, the monetary cost to the divorcing couple is significant and wasteful.
It would be nice to wave a wand so both parties in the divorce could work on the division of their real estate assets in a amicable manner, but since that does not always materialize, if you are in a divorce please remember that with less emotional reactions and the more you approach the sale of the real estate assets with common sense and a business like attitude, can protect and save money.
What are some of the plans of the divorcing couples with the real estate asset(s)? Well that depends on if the divorce is amicable or turbulent.
- Does one spouse want to retain the home?
- Try to retain the property while the children are in school and then selling the asset later?
- Not happy with the market conditions and want to try to hold on to the house and sell it later for a larger profit?
- Sell the real estate assets now?
One of the challenges of one spouse trying to retain the home is reaching an agreement on value. Sometimes an attitude of retribution will possess either the husband or wife in that they think by holding on to the house they can buy out the the other party at a discount and get a leg up in the divorce. This is a bad plan as the house will be appraised and possibly a few broker price opinions ordered to determine the value of the home.
Sometimes when children are involved and/or the real estate market is declining there is motivation to try and keep the house and sell it after the children are grown. If this will be 5 or more years, who is going to pay for the deferred maintenance that will occur. The house may need costly items, such as a roof, paint, etc. If the spouse retaining the home in this transitional period does not have the money to make these repairs, the plan to sell the home later for more money may backfire as the deferred maintenance items will negatively impact the value at sale time. When the property does sell later money used to maintain the house will probably need to be reimbursed which could cause more points of disagreement.
Financial Implications and Taxes
Unfortunately, divorce will cause both the husband and wife to make decisions that will not be easy. Selling the house should not turn into a contest to see who wins the trophy. The winner could put themselves in a tough financial position trying to keep the home.
Consider that there could be tax advantages to selling the property now. This is not tax advise, but rather questions think about and hopefully a prompt to push you to consult a qualified tax professional. Currently a married couple selling their primary residence may have up to a $500,000 exemption in capital gains value while an individual has only $250,000. Here’s the rub, and why you need to see a tax professional. If one spouse retains the property, then can the other can spouse claim the house as their primary residence while they are not living there? Does the spouse who moves out now turn their interest in the property to an investment interests which could hold larger tax implications?
Unpopular as it is, sale of the house as terms of the divorce will provide a solution that will bring closure to the situation. Replacement property can be found for either spouse to relocate to, while the standard of living, i.e. house size and neighborhood may not be the same, Simi Valley provides many great neighborhoods and getting re-established in Simi Valley will provide opportunity that may not be available in other communities.
If facing divorce and the value of the property is has dropped significantly, in that it there is not going to be enough money to pay off the debt against the house, take a step back form the scorched earth policy of trying to get back at the other spouse by letting the house go to foreclosure. Today the alternative of Short Sale will help both spouses get back on their feet quicker. I cannot emphasize enough, don’t let the stress and emotions get the better of your common sense. You are making a break, make it with the smallest amount of collateral damage, selling now can be achieved if you have equity and even if you do not (with a Short Sale to avoid foreclosure).
How to choose a Realtor
This is where things can get tough. Ladies, you probably have friends that are in the business, getting your husband to agree to using one of your friends is going to be as likely as you allowing your husband to use one of his buddies. Selling your house in divorce is not about having a person to complaint to about your spouse. You need a professional that is going to work to get you home sold for the highest price possible and be able to facilitate and protect the interests of both husband an wife through the process. Document execution and disclosure needs to coordinated and monitored in a timely manner as to not affect a buyer’s ability to conduct investigations or complete their loan process. Many times the husband and wife will not agree on negotiating terms with the buyer which takes extra skill to work out the differences for a successful sale. You will need an experienced, skilled practitioner, especially in this market with Short Sales common in divorce situations.
Marketing your home is a topic in itself, but the ability for the Realtor to remain calm in the middle of divorce negotiations is not a skill possessed all.
- What is a Short Sale can I sell my Home?
- Understanding Home Valuations – Broker’s Price Opinion
- What’s my Short Sale Tax Liability
- 5 Keys to finding a good Real Estate Agent
- Whats my Home Worth?
