The Top 5 Tips for Divorcing Homeowners
As perhaps your most valuable asset, the house you and your soon-to-be ex-spouse share can become a major sticking point in your settlement. Before you contact your attorney to begin negotiating, consider these 5 important tips:
1. Don’t count on Zillow to determine your home’s value.The “Zestimates” on Zillow are produced using only the most basic information. That means the system might be comparing your house to others that are completely dissimilar. In fact, Zillow’s estimates have often been shown to be 30% or more off the true market value –either higher or lower. To learn the true market value of your home in the current market, either hire a fee appraiser or enlist the services of an experienced REALTOR® to prepare a Comparative Market Analysis. These professionals will view the house, then compare it to similar houses that have sold recently in your neighborhood or similar neighborhoods.
2. Keep the lines of communication open…Keep your conversations respectful, professional, and logical. Letting your emotions rule while discussing the disposition of your house can sway your judgement and derail the entire process.
3. Don’t use a friend as your REALTOR® when you sell during a divorce.You may think that your friend will protect your interests, and perhaps that’s true. Therein lies part of the problem. The REALTOR® you use should be completely impartial – protecting both of you as you negotiate with a buyer for your house. Additionally, since selling a house during divorce is fraught with emotion, pulling a friend into the middle of your troubles would be doing a disservice to that friend. Instead find a REALTOR® that also has experience and training in selling homes in a divorce case.
4. If you want to keep the house, carefully assess the situation. The first thing you need to know is whether it is possible or financially practical for you to keep the house. If you and your soon-to-be ex have been making payments and taking care of maintenance issues on two paychecks, will it be possible to do it on one? Consider the deferred maintenance, cost of utilities, pool or gardener, and put pencil to paper to create a budget for yourself.
If it looks possible, sit down with a lender and talk it over. Learn where you stand relative to your credit scores, your income, your other debts, etc. You might be able to manage the current payment, but could you refinance for enough to cash out your ex-spouse? These are questions that should be answered before you begin paying attorneys to negotiate the price and terms. Lastly – do you really want to stay there? Sometimes the memories can be overwhelming and it’s best to make a clean break and a new start somewhere else.
5. If you want to remain in the house without refinancing, consider the risks. Perhaps you can negotiate a property division that allows you to remain in the house and simply take responsibility for paying off the current mortgage. This is a simple solution, but not without risk. If both of you signed the mortgage loan documents, both of you will remain liable for the payments until the loan is paid in full. It doesn’t matter if the judge granted you house to one spouse and your ex signed a quit claim deed. The bank is only interested in who signed the paperwork on the loan.That means that if you simply stop making payments the lender will report the missed payments and the eventual foreclosure on both of your credit reports. Does your ex-spouse trust you enough to take that risk?