It was your dream home or a fixer-upper. A starter house or the place you bought when that big promotion came through. You just moved in or you’ve lived here for years, raised a family. You chose the paint colors, debated: wall-to-wall or area carpet? You finally renovated the guest bath…
A house is never just 4 walls. It’s most likely the biggest financial asset you share, and it’s furnished with history, memory, and emotion.
But what happens when the marriage has cooled—and real estate is hotter than ever?
Is a seller’s market enough to tip you toward separation?
Is it wise to plant a For Sale sign out on the lawn during a divorce?
There are two main scenarios when married homeowners divorce:
- Sell the house and split the proceeds
- One person stays in the home and buys the other partner out
There are pros and cons to both, and many factors to consider.
A hot real estate market can have contradictory impacts, depending on your circumstances and stage of life.
Some couples, especially older adults who have been married for decades and in their house for nearly as long, take a hard look at their home equity versus their happiness in the marriage and decide that it’s best to move out and move on. Their house is paid off and has appreciated to a point where each partner will have a tidy sum to begin a new life with.
A younger couple or family with a hefty newer mortgage and little equity may find that selling makes little financial sense.
Even with a good price for their home, after figuring in transaction costs (from commissions to taxes to legal fees to moving expenses) some couples discover that once they divide what’s left it’s impossible to maintain anything close to the standard of living they currently enjoy. It’s important to be realistic about how this one asset will support two separate households. Compare carefully the cost of buying a new place you’ll be happy in against what your actual takeaway from the sale of the house will be.
Another major consideration for younger families is the children. The biggest con to selling may be having to move kids who are already experiencing upheaval from the divorce. Are your children of an age when changing schools, neighborhoods, activities, and friends will be an enormous burden? Some divorced couples even opt to “live together, apart” for the sake of finances and family.
It may be easiest to make a clean break and fresh start by selling your shared home.
But sometimes work, nearby extended family, school or childcare considerations, continuity for the kids, or just a strong desire to stay are enough to keep one of you in the house.
Staying could be a smart financial decision if your house is likely to appreciate healthily and offer greater gain in a future sale. On the other hand, it’s important to consider the costs of staying in the house too—can the partner who stays truly afford the buyout and sustain the purchase long-term?
If you’ve decided to divorce and sell the house, here are few tips to make it go more smoothly:
Begin financial and logistical planning right away, including how you will divide the proceeds, whether some of the money be used to pay off joint debts, if it will be distributed equally or adjusted because one partner has been paying more, etc.
Don’t go it alone
Although it’s usually fine to sell your house on your own, don’t add that stress to the difficulty of divorce. Agree on a reputable agent to work with and trust their judgment and experience on pricing and so forth.
It’s all in the timing
It’s better to be in the position of selling on your own terms than trying to unload a home quickly under stress. Consider whether waiting a few months might make a difference in the market.
Keep it on the down-low
Don’t broadcast your divorce or make it obvious. Savvy buyers may pick up on subtle cues—like an empty his or her side of the closet—that you are separated and in a hurry to sell.
The experienced family law attorneys at Schoenberg Family Law Group can help clients establish priorities, choose their battles, and secure their fair share of the estate, so they will emerge from the divorce in the most beneficial financial position.
By Debra Schoenberg