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Ask Brian: How Do I Sell a House During Divorce?

By Brian Kline | March 12, 2019

Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].

Question from Bradford of Sacramento, CA: Hi Brian, My wife and I separated and have filed for divorce. I moved out of the family home but she is still living there. Our divorce is relatively amicable at this time. I’ve agreed to continue making half of the mortgage payment until the house sells. She is paying the other half plus the utilities. Both of us realize that neither can afford continuing to live in the house once the divorce is final. We would like to start the sales process now. What should we be considering?

Answer: Hello Bradford. I need to start by making it clear this in not legal advice because I’m not a lawyer. I’m only making suggestions that have worked for others. I doubt that congratulations are exactly in order because you seem to handling these finances well but that does help you get through this trying time. First, it’s assumed that you both have joint and equal equity in the house. That there aren’t extenuating circumstances such as one of you owning the house, made the down payment, and accumulated equity prior to the marriage. There can be a whole bunch of other extenuating circumstance such needing cash from a quick sale to pay attorney fees. In these cases, you’ll need to consult with an attorney about your specific situation.

Otherwise, selling the house during a divorce isn’t much different from any other sale except that you’ll need to agree on several issues even though the relationship is strained. The first is choosing an agent to list the sale with. The easiest solution can be listing with the agent that you originally bought through. There are a few considerations that go into this decision. Is the agent available? Were you pleased with his or her services the first time around? Is the agent experienced on the sale side of the equation? Alternatively, each of you can put together a short list of possible agents that both of you interview/review to see if you can come to a mutual agreement. Another alternative is both of you agree on a mutual friend to make the decision or each have a friend work with a friend of the other to make the decision.

The next task is deciding on the listing price and possibly a minimum sales price. Once you have chosen an agent, this shouldn’t be too difficult. The price should be pretty close to what the professional suggests. As long as you are dealing with the value of the house, this is a good time to decide on the minimum sales prices in case a full price offer doesn’t come through. This doesn’t mean one or both of you won’t have to do some negotiating with a buyer. However, this can be an opportunity for you or her to accept responsibility for being the solo negotiator as long as the price remains above the minimum. Not having to gain acceptance from both of you for every offer will get the deal done easier and faster. Still, other negotiating points might come up such as a contingency that you purchase a homebuyer’s warranty.

The next major task is making minor repairs and staging the house for sale. This could require some painting and carpet replacement. Logically, this responsibility falls to the spouse living in the house although financial help from the other is appropriate. You’ll need to agree on the extent of improvements, the colors, quality of materials, and who to hire if professional help is needed. A good listing agent will help you figure these out to maximize the sales price and expedite a fast sale. Your agent should also be able to put you in contact with reputable professionals.

The other major task is dividing the sale proceeds. This can be a win-win during a divorce since it gives each of you some cash for a fresh start. Unfortunately, there isn’t always as much left over after paying other divorce costs such as attorney fees. You can use the escrow company to distribute the funds but first you and your soon to be ex- have to agree on who gets paid how much. It would be unusual for both of the attorney fees to be equal. You could pay each attorney an equal chunk and each of you be responsible for the balance outside of the house sale. There are going to be other large ticket items such as if one spouse is walking away with a new car that still has payments owing. But most of these are outside of the scope of the house sale itself. What is likely to be part of the house sale is if each spouse has been making unequal mortgage payments. Bradford, in your case, both of you have been paying equally towards the mortgage but she has the benefit of living in the house. Probably, you should be compensated for the fair market value of the rent. Another consideration is when one has been paying the full mortgage - he or she should benefit from the value appreciation during the separation. This can be a good reason to sell sooner rather than later to make the calculation simpler.

Finally, it’s never good letting prospective buyers know there is a divorce involved. Your agent is probably going to know because only one of you is living in the house or because offers have to be submitted to each of you separately. But you should make sure your agent knows that you don’t want this shared with perspective buyers or the buyer’s agent. Otherwise, you’re likely to receive low-ball offers.  

Please comment with their thoughts and experiences about divorce sales. Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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