One of the realities of being a Massachusetts Realtor is that I often encounter folks that are going to need to sell their home due to a divorce.
The divorce rate today is higher that it has ever been. It is just a fact that people do not stay together for better or worse like they used to.
The divorce rate of course opens up the opportunity for Realtors to be helping those that need to sell what usually amounts to their largest marital asset.
Purchasing a Massachusetts home together can represent a significant outlay of funds for one or both members of the divorcing party. When it comes to a divorce both members are going to have have an active interest in ensuring that their part of the investment is protected whether there was a cash outlay or not.
Divorce can often times be a highly charged emotional event. Even in an amicable divorce there could be times when discussing the sale of the home could lead to rash decisions. Keep a close lid on your feelings and make sure that you are not led by emotion into a bad decision. You will need to keep in perspective that this should be a smart business decision.
There are typically three scenarios when selling a home in a divorce:
- One spouse keeps the home and buys out the other parties interest.
- One spouse keeps exclusive use for a specified period of time, typically when the youngest child turns eighteen, after which the home can be sold.
- The home is sold immediately and the profits are shared amongst each spouse.
Both parties should really be thinking about what it is that they would like to do. Does one party want to sell and the other would like to keep the home? Is it financially feasible for one party to keep the home? In the event one party does keep the home how will the other party be compensated?
For purposes of this article I will focus on some of the considerations when selling a home during a divorce.
Possible Tax Benefits Selling a Home During Divorce
There are many that do not realize there are tremendous tax benefits when selling a home due to the Real Estate capital gains tax law that went into effect in 1997 known as the Tax Payer Relief Act of 1997.
The current capital gains tax law when selling your personal residence allows for an exclusion of up to $250,000 in profit if you are single and $500,000 if married!
In order to be eligible you must have lived in your home for two of the last five years. The home must be your personal residence and can not be an investment property.
In a nut shell what this means is that the parties could get a tremendous tax break if the home is sold while you are still married. Selling the marital home will allow up to $500,000 in profit to be excluded from federal capital gain taxes. A couple may apply for this tax break if they file a joint tax return. If you choose to file separately, each partner can still claim up to $250,000 on their tax return, provided that they still meet the two-out-of-five years in the home qualification.
If the parties have owned the home for a significant amount and there has been a large equity growth this can amount to a significant tax savings. If one party chooses to remain in the home but plans on selling in the near future there could be quite a difference in tax savings.
Can I afford the home after the divorce
One of the unfortunate things I see a lot in a divorce is one parties desire to “win” at all costs.
There have been occasions where one spouse insists on keeping the home even though it is not a prudent financial decision because they see it as winning a large battle.
If they end up keeping the marital home there are times when they later realize that maybe taking on such a large debt and all the expenses that come along with home ownership was not such a good idea.
When going through with a divorce and keeping the marital home you need to make sure you can afford the mortgage payments. So many couples getting a divorce underestimate what it’s going to cost them to live once the divorce is finalized. One of the things that should be done when contemplating keeping the home is to develop a comprehensive budget before you lock yourself into a divorce settlement.
The emotional side of things should also be considered as well. Does the home have treasured memories shared together or is it a place you would rather forget about. Going back to the part about “winning” is what clouds many peoples judgments when it comes to both financial and emotional decisions.
Selecting a Realtor in Divorce
When couples go through a nasty divorce selecting a Realtor is something that most are not going to do as it will more than likely be court appointed.
When the relationship is amicable however, selecting the Realtor to work with is an essential part of the process. Just like any other Real Estate transaction you should be looking for a Realtor who has a strong track record of success.
Given that over 90% of all buyers today find their homes online you want to work with an agent that is going to provide dominant internet exposure. The agent should have their own website that comes up on local internet searches, as well as placing your home in the most traveled consumer sites for looking at properties.
I should emphasize though that it is not enough to just place your home in the popular sites. This is what the average agent does.
You should work with a Realtor that is going to spend the time adding great photography, expanded descriptions of your home, as well as some kind of video tour.
These are the type of things that make a difference and help your home stand out from the competition.
Above all else in a divorce you are going to want to work with a Realtor that has great communication skills.
Given there are two parties involved who might not be sharing the same roof anymore, you are going to want to work with someone who understands the nature of divorce and all the feelings that come along with it. The agent is going to have to have a certain level of patience as all communications will more than likely be repeated multiple times.
Selecting a Realtor is a process that should be done together. What I have witnessed 1st hand over my twenty four years in the business is that if one party selects who they want to interview, the other party may feel slighted in the process. The natural instinct is to feel that the Realtor is going to play favorites.
When I am hired to represent a couple in a divorce I want them both to be present for any interviews that take place. I want them to know that I represent both of them equally. The goal is always to get the best terms and conditions in the shortest amount of time with the least amount of headaches.
Creating an atmosphere of trust where either party can call me at anytime is very important. Getting a divorce is stressful enough as it is. Adding a home sale on top of it can make you feel like your life is totally upside down. Making the home sale process go as smooth as possible is always one of my missions.
Related Real Estate articles:
- Realtor communication skills
- Top Producing Metrowest MA Realtor
- Handling offers selling a Massachusetts home
- Preparing a Massachusetts home to sell
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About the author: The above Real Estate information on divorce and selling a home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Medway, Franklin, Framingham, Grafton, Hopedale, Mendon, Upton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, Worcester and Douglas.
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