The Arizona Divorce Real Estate Guide: developed to answer complex real estate questions about what to do with the home when going through a divorce.
The Financial Aspects Of Divorce Real Estate
Most couples get a mortgage to buy a house. Keeping it in a divorce means one partner will need to bear all the expenses. Such as mortgage payments, utilities and home repairs.
Consider if one income will be enough to afford the home!
Buying Out Your Partner
Buying out your partner will require you to have money available. Has the value of your home increased? Be expected to pay your spouses share of the equity to complete the buyout. This can cause a substantial increase in monthly mortgage payments if you choose to refinance the home.
Don’t assume your spouse will give up their right to the equity. If you are unable to pay your spouses share of the equity, a judge might force you to sell the home. What if you plan to pay your spouse but can’t do it immediately? Try reaching an agreement through negotiation.
Only consider buying out your spouse if you can afford to pay the expenses of owning the home. The last thing you will want to do is create financial troubles by owning a home you can’t afford.
Refinancing In One Name
Divorce real estate agreements need the consent and signatures of both spouses. The courts usually have no issues with one spouse refinancing the home. As long at the spouse refinancing the home has the financial ability to do so. The spouse who is refinancing the home is required to pay any equity owed to the other spouse.
Capital Gains Tax
Capital gains refer to any profit you make from the sale over what you originally paid to buy the house. When a couple files their taxes together, up to $500,000 of that profit is exempt from taxation. This only applies if they have been living together in that house for at least two years out of the last five years. If one spouse sells the house after the divorce is over, they will only be eligible for tax exemption of up to $250,000.
The Emotional Aspects Of Divorce Real Estate
Keeping the house may seem like an attractive idea. Many divorced people quickly realize that it was a bad idea to continue living in the same home. Once a marriage goes bad, the house ceases to be a place of contentment because of tainted memories. Moving on with your life can become more difficult if you still live in the house you once shared with a spouse.
Mental And Emotional Health
The more time you have spent in the home as a married couple, the harder it will be to start new in the same home.
For this reason, selling the house can help divorced couples easily go their separate ways. Holding on to the home for its sentimental value can be damaging for your mental and emotional health. Are you going through a difficult divorce? Then sell the house so you can begin to let go of things that strongly remind you of your life together.
Having a home requires both financial and emotional investments from both spouses. The decision to keep the house in a divorce should be made with a clear head. Don’t let your emotions cloud your judgement. Perform a cost benefit analysis on your home. Compare selling the home versus keeping the home. This will help determine which choice will bring financial security to you.
What To Do In A Separation
When selling your house, take all financial details into account. Things like, outstanding property taxes, mortgage payments and home repairs. The home may require renovation before it can be sold. Couples often disagree on which spouse should pay for all these expenses. If your state follows community property laws, such as Arizona, the cost will be split equally.
A fair division of the finances, which is not necessarily equal, will be applicable in states where the law requires equitable distribution.
Selling the house while going through a divorce might be better for both spouses. Each spouse can use the proceeds from the sale of the home to find their way in their new life. Since the house is usually a shared investment, it is better to move forward without the legally binding assets. It can become difficult to afford all the expenses that come with owning a home once divorced.
The Money Argument
A primary thing most couples argue over is money. Since divorce involves selling a major asset, there might be a high risk of conflicts arising over the sale of the home. Arguments about money matters are mostly fueled by memories associated with the home.
The Divorce Real Estate Sales Process
A dissolution of marriage can get ugly. Both spouses will need to put aside feelings and deal with the home selling process. The divorce real estate process has many things to consider to have a smooth transaction.
Establishing Ownership Of The Home
Before selling the home, each spouse should be absolutely clear about ownership. If you live in a common law state, the partner who bought the house is the sole owner. Majority of states allow exceptions to this rule. One such example: if a couple has been living in the home for a while and the spouse who does not have ownership has made financial contributions that resulted in an increase in the value of the property.
Home ownership: defined by the state when a couple has spent a minimum of two years in their house together.
Most community property laws say married spouses will have equal ownership of any property they purchased while married. The home can be put in either spouses name, but both will be equal owners. Even if one spouse bought the home. Exceptions to this rule can be made through prenuptial or postnuptial agreements.
Preparing Your Home For Sale
Selling the house is the right decision in most divorces. Before taking this step you need to put in the work required to make the sale a success. You will need to do any maintenance and repair work needed on the home. This requires cooperating with each spouse. If discussing things is difficult with your spouse, be sure to involve your lawyer in the process and consult with them about the home repairs needed to get the home sold. In addition to your attorney, having a divorce real estate agent will help you take the right steps needed to sell your home.
Things To Agree On
Do not leave any aspect to chance. It’s best to have unwanted conversations before listing the home for sale. Here are some factors you and your spouse should agree on before the divorce real estate sale:
- How are the expenses for the repairs and maintenance divided?
- Is one spouse capable of covering running expenses and mortgage payments if they keep the home?
- Will the real estate agent manage all aspects of the sale or will one spouse take responsibility for staging the home and showing it to prospective buyers?
- How to price the home and deciding on a minimum offer that will be acceptable for both spouses.
- What will be the acceptable days and times for showing the home.
It is important to talk through timelines, payment schedules and other minor issues.
The Home Asking Price
You must decide on how much to sell the home for. Each spouse needs to be in agreement. Trust your divorce real estate agents advise on pricing the home. The goal of your real estate agent is to help get you the best price in the least amount of time.
Staying Until Sold
Spending more time in the home can be tough. Sometimes it’s not the best idea for both spouses to move out right away. When potential home buyers come to look at your home, they prefer houses that feel homely and properly furnished. One spouse should continue living in the home until it’s sold.
If neither spouse wants to stay in the home, then invest in staging your house with rented furniture. Staging a home is expensive. Living in the home will save you from worrying about the extra expense and provide security for the home.
Distribution Of Funds
How are the funds of the home sale distributed in a divorce? It depends on what property division laws are in your state. If both spouses have equal ownership due to community property laws, both of them will equally share all payments and profits resulting from the sale of their home. If divorce real estate community property laws don’t exist in your state, there might be different ways to split the funds and expenses. Consult your divorce attorney regarding the laws you must follow in your state.
Finding A Divorce Real Estate Agent
Couples going through a divorce have a divorce lawyer. The lawyer will assist in matters such as the fair distribution of expenses and proceeds from the sale of the house. However, an experienced divorce real estate agent is still needed to manage the sale of your property. Divorce lawyers can recommend local real estate agents who have experience with divorce real estate. You can also search for divorce real estate agents on your own.
Hiring Your Divorce Real Estate Agent
Selling your home can be tough in the best of times. It’s even tougher when you are in the middle of a divorce. This makes finding a good divorce real estate agent more important.
Your agent must be able to act as the voice of reason when things get heated!
Look for an agent who has dealt with separating couples or who has also been through the divorce process themself. The agent you hire should be someone who can remain neutral and make negotiations easy for both spouses.
There is a good chance that you will underestimate your own emotions before listing the home for sale. This is why it’s important to rely on a divorce real estate professional who routinely deals with such home sales.
What Could Go Wrong
There are plenty of things that could go wrong without a divorce REALTOR ® guiding you along. Conflicts can result with a delay in both the divorce and the sale of the home.
Pick a REALTOR ® who is easy to talk with and who can remain calm in tough situations.
It will become evident the help of a divorce real estate specialist is the most efficient way to sell your home. A REALTOR ® can produce the best possible price, mediate between both parties, and take care of the more complex aspects of the transaction.
Most importantly, the real estate agent should have experience dealing with divorce real estate. When you have to sell your home in a divorce, it is crucial that you are in good hands.