Dividing your assets in a divorce settlement is tough, and there's no way to split a co-owned house in two. While selling and splitting the proceeds may be the fairest option, if you or your kids have an emotional attachment to the family home, you may be searching for alternatives – at least in the immediate aftermath of the divorce.
"Selling your place is probably the most public display of your divorce," says Boris Sharapan Fabrikant, a licensed associate real estate broker with Compass Real Estate in New York. The For Sale sign in front of your house will publicly air a part of the divorce negotiations you would rather not discuss with neighbors and friends who may not know about the proceedings.
Some divorcing couples avoid the issue entirely by having one spouse remain in the property, either due to emotional attachment or to ease the transition for the kids.
When One Spouse Keeps the House
What's the best way to ensure a smooth parting without having to deal with future real estate ownership or mortgage issues? When you're trying to keep one spouse in the home, there are typically two main factors that will drive your decision-making.
The affordability issue. A house that made financial sense to you as a couple will often have trouble translating to a single income after a divorce. "Often a simple analysis like (monthly cost) gets overlooked," explains Lili Vasileff, a fee-only certified financial planner in Greenwich, Connecticut, and author of "Money & Divorce: The Essential Roadmap to Mastering Financial Decisions."
Vasileff recalls working with a woman in the midst of divorce negotiations who was adamant about keeping the house. However, when Vasileff broke down the monthly expenses for the house compared to the maximum possible support payments the client would receive, it was clear there was no way she could afford the property.
For six months, the woman had worked with her attorney to win the house in negotiations, only to opt to sell it and split the proceeds. While it was a move the client came to terms with, Vasileff says the client wished she had realized the impossibility of it earlier on.
The deed issue. To simplify the divorce process, you may choose to refinance your mortgage to remove your spouse from the financial burden while leaving both your names on the deed to cut down on paperwork. But when you decide you want to sell, you may have an uncooperative co-owner on your hands.
Unless a divorce agreement explicitly outlines shared ownership and responsibility of property – not to mention the profit from a sale – it's best to go through the steps to remove the spouse who moves from the deed. It's also in the parting spouse's best interest to cut ties to avoid potential financial or legal liability should his or her ex have problems with payments on the house and face foreclosure.
Other Common Real Estate Options During Divorce
To avoid major real estate regrets or unnecessary financial hardship after your divorce is finalized, Vasileff notes that you need a thorough divorce agreement with strong language. Consider these five options – you may find one is the best path forward for your situation.
While it's possible to reach this decision amicably, Sharapan Fabrikant notes he's typically contacted later in the divorce process, following the decision of a judge or mediator. "It's not the husband and wife deciding mutually that they're going to sell it – it's a court order," he says.
Fiery tempers in the midst of the divorce can make listing the house tough, especially when both parties want their preferred real estate agent to list the property, "which I tend not to recommend," says Sharapan Fabrikant, who is also a member of the National Association of Divorce Professionals, a network of professionals that often take part in divorce proceedings.
Buy out the other person. Offloading your house isn't always the easiest decision. "Primarily when there's kids, one will keep the home just for the sake of the transition for the children," Sharapan Fabrikant says.
A way many divorcing couples keep one spouse in the home is having them buy out the other. This typically requires an appraisal of the property to determine its current market value and is typically paid in cash. With this payment, the deed will be transferred to sole ownership of the paying spouse.
If buying out your spouse is your preferred option, be sure you have enough money to do so, on top of other legal fees and costs associated with the split. The average reported cost of a divorce is $15,500, the majority of which is attorney's fees and doesn't include real estate, according to a 2014 survey of visitors to the legal advice site Nolo.com.
Sign over your half of the house. If divorce proceedings lead to the agreement that one spouse can keep the house without having to pay his or her ex, be sure all ownership documents get signed at the same time because there's no guarantee a split will remain amicable.
Try nesting. Also referred to as birdnesting, nesting is an option for divorcing couples with children to minimize the impact on the kids' lives. The couple continues to co-own the house, where the kids will reside full time, while also having a secondary place to live. Instead of the kids moving between parents' new homes, the parents will switch off who stays in the house with the kids each week.
Vasileff says she sees nesting as a part of the divorce agreement most often when a family therapist is already involved and making recommendations for the children's well-being. But now both parents will find themselves financially burdened by the costs of the family home and their individual living situation.
Plus, that amicability might not last long. Rules about who's in the house when, babysitters, new significant others and even food in the fridge can turn the idea sour. "I've had people argue over who ate the leftovers from the week before," Vasileff says. "Nesting usually doesn't last very long," she explains, with both parties opting for a different solution after a year or so either once the kids are more comfortable with the divorce or the parents can't feasibly accommodate the arrangement anymore.
[Read: How to Stage Your Home to Sell.]
Set up a time to sell in the future. You still have the opportunity to ease the transition of divorce without creating a long-term financial burden. Whether you choose to wait until your youngest child finishes elementary school or you're hoping the local housing market heats up, your divorce settlement can determine a time in the future when the house will be sold and the profit split between both parties.
By establishing a set time the property will go on the market a year or more in advance, you allow for "a little bit of a breather" for emotions to cool and prepare for the sale without having to rush, Vasileff says.
Of course, it could also leave room for amicability to fall by the wayside. Like with a sale during divorce proceedings, Sharapan Fabrikant says he encounters situations where he's working with one spouse who wants to be involved in the sale and the other spouse's attorney because that party has less interest in the matter.
Draw buyers to your home, not away from your online listing.
Eighty-eight percent of homebuyers use the internet as part of their home search, according to a 2015 National Association of Realtors report. That’s clearly a portion of buyers you can’t afford to miss when selling your home. But what makes an enticing home description? Specifics and honesty are key, but with so many home listings out there, it’s also important to avoid phrases and terms that have become cliche or have taken on a new meaning. Read on for real estate buzzwords to leave out of your listing.'Quaint' or 'cozy'
'Quaint' or 'cozy'
Any description of a house pushing the “quaint” and “cozy” factor is likely trying to mask the fact that the house is uncomfortably small. And while the size of a home matters to most buyers, let them determine if it's the right size based on the square footage listed. “Consumers look through a lot of listings. They don’t have the patience to decode all the cliches and euphemisms,” says Steve Udelson, president of Owners.com, a website for self-directed homebuyers and sellers.'Luxury'
High-end homes attract a whole new set of potential buyers, but “luxury” has been so overused it’s hard to tell the difference anymore. “You’ll find various listings that are by no means ‘luxury’ or ‘luxurious,’” says Michelle Farber Ross, a broker and managing partner at MMD Realty, based in Fort Lauderdale, Florida. “Agents use those buzzwords, and you look and think, ‘Oh gosh, this would never be a luxury home.’” She notes the true luxury market begins at $1 million (and starts even higher in pricey cities such as New York and San Francisco).'Up-and-coming'
The description of being in an “up-and-coming” neighborhood has taken on a whole new meaning – and often not a positive one. This phrase is a veiled attempt at pointing out a high-crime neighborhood, which gets into dangerous territory, as the Fair Housing Act prohibits providing subjective information that may steer homebuyers toward or away from a neighborhood based primarily on race or any other form of discrimination. “You can’t red-flag a neighborhood,” says Tim Brinkman, owner and broker of The American Real Estate Co. in Keyser, West Virginia. He tells his agents that they should only share information about the neighborhood that's location-based, such as the home's proximity to a grocery store or park.'Priced to sell'
'Priced to sell'
This all-too-common phrase has zero impact on a home description. Plus, Udelson explains, “priced to sell” raises awkward questions for online house hunters: “What does that mean? That means all other listings are not priced to sell?” A home description should remain focused on the home's qualities and let the listed price speak for itself. This phrase and others – including “motivated seller” – diminish the property's selling points and may leave you with lowball offers from buyers looking to score a deal.'Updated'
Every homebuyer may want an updated kitchen and master bath these days, but the word is so vague that it can lead to major letdowns when it comes time to tour the house. “Take that down a notch and be more specific,” Udelson says. New quartz countertops and recently installed stainless steel appliances should be described as such to differentiate from a kitchen that only got a fresh coat of paint.'Needs TLC' or 'Handyman Special'
'Needs TLC' or 'Handyman Special'
Overly vague terms get obnoxious when it comes to fixer-upper properties. Phrases like “needs TLC” and “great potential” fail to note how much work the home needs, often leading buyers to assume the worst so they don't even bother to see the home in person. Brinkman’s least favorite home description is “handyman special.” “Just how handy do they have to be?” he asks, noting this could be minor maintenance or a complete remodel.'Walking distance'
Close proximity to stores, restaurants and public transportation can be a huge selling point for many homes, but clarity is essential because “walking distance” varies significantly by person. While anything less than a mile might be considered walkable by one buyer, any more than a block may be too much for another. “That’s not bad, but you can be more direct,” Udelson says. Note the physical distance to the nearby shopping center or explain that there are no major roads to cross, which makes walking much easier for those who are inclined to pay a higher price for convenience.'This home has it all.'
'This home has it all.'
Lacking an actual description of the property, this phrase does little to draw homebuyers to a home showing. Udelson notes this and other expressions like “the possibilities are endless,” for example, are “vague, overused abstractions” that do little to sell to a new owner. You don’t want to leave room for a potential buyer to doubt a description. Instead, ensure the home's features speak for themselves. A home with a pool, master suite and chef’s kitchen might be everything a buyer wants, but if it’s simply described as having “it all,” the buyer may never check it out.Remember: No need to repeat the basics.
Remember: No need to repeat the basics.
When a property goes into a multiple listing service, the information that breaks down key details of the home, such as the number of bedrooms, bathrooms and age of the house, is presented in list form. Farber Ross warns against repeating those details again in the description you write: “They can see all those statistics on their own – you don’t need to reiterate any of that.” Instead, use the description as an opportunity to describe the type of hardwood floors and countertops that may pique a buyer’s interest.Read More
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.
Teresa Mears | May 3, 2019
Conventional wisdom says 20%, but you can buy your first home with much less down.