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Divorce and Selling a Home

Divorce and Selling a Home

Divorce and selling a Massachusetts homeDivorce and selling a home they say are on the list of most stressful events a person can go through in their lives.

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. Divorce and selling a home in Massachusetts is as common as the day is long. It is one of the things that keeps real estate agents busy.

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.

Selling a home while divorcing 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. If you are selling a home and getting a divorce in Massachusetts it goes without saying that you will want a competent representative in your corner. A good Massachusetts divorce attorney is something both sides should have unless you think things can be worked out through mediation.

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

Taxes selling a Massachusetts home

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

Selling Massachusetts home in a 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 Real Estate Agent 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.

Customer service selling Massachusetts home

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.

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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 27+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northboro, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

{ 9 comments… add one }
  • Wendy McSteen August 10, 2010, 2:57 pm

    Hi Bill: Follow you on Activerain and you always have great articles. This is a very informative post on the subject of divorce. One of the most important points, as you mentioned, is that you cannot take sides. I will tell both the husband and wife “Divorce pending or not….it is my job to sell the house…period….everything else you should discuss with your divorce lawyer.

  • Gail Travers August 10, 2010, 7:48 pm

    Bill I read your article on getting a divorce and selling Real Estate with interest. As someone who has been through a divorce myself I can say that there are certainly quite a few financial considerations I should have given more thought to. You have done a nice job summarizing some of the things a person should think about when selling their largest marital asset.

  • Lottie Kendall August 12, 2010, 12:16 pm

    Hi Bill, another Active Rain colleague stopping in to say ‘hi.’ Good article, and something we see often in our business. Being impartial, not getting involved in the divorce proceedings, concentrating on getting the house sold is huge. Important to double up with the communications, too — talk with both spouses, always.

  • Bill Gassett August 12, 2010, 9:10 pm

    Lottie, Gail and Wendy – thanks for your compliments on my article about divorce and selling a home. These kind of transactions more often than not can be filled with emotion. A Realtor with experience in handling a divorce is never a bad idea!

  • Gary Smith March 27, 2011, 5:21 pm

    Bravo! Important topic – – Let me say just a word or two about the selling side of the transaction. It would make sense to consider having the home inspected “BEFORE” you try to market the home. It can help with two issues: 1) An inspection can prepare both parties for dealing with potential repairs that either should or could be made. Too often the repairs have the potential to affect value (or the perception of value in a buyer’s eyes). 2) This might be the best time for both parties to negotiate the cost of the repairs (if needed) while you both have counsel. Let’s face it, now days, everyone has an attorney protecting their interests (or should) and the associated repairs that could effect value should be addressed without having to “rush through the process”. I’ve been a home inspector for years now and the smart sellers are realizing they have the power to diffuse distrust, with respect to property disclosure, by providing a seller’s inspection report.

  • Donna Paul March 26, 2012, 12:06 pm

    Bill your post really says it all. During a divorce each party has to find a Realtor that can communicate well with them. It’s great that you have given the client different options before deciding to sell their home.

  • Peg June 20, 2012, 5:04 pm

    I mistakenly hired a realtor to sell our home due to divorce. She was made fully aware of the situation, my concerns and needs before I hired her. The minute she got my ex husbands phone number I was cut out of the loop. Even though my name is not on the deed, I provided her with the divorce order that documented my rights -she ignored the provision I asked for from the start of an addendum to the purchase and sale allowing a rent back for two weeks after closing for proceeds to be distributed as I have no way to move out of the home with my children , which I have sole use and occupancy of, with out the funds. Not only did she omit this crucial detail, she secretly met with my ex and the buyer to sign the P&S , which I first received notice of 4 days after it was signed via an email. I hired this woman, I showed the house for 90% of the showings..unbelievable. Now I have to find a way to attach the deed so they cant have the closing without following the Divorce order as to distribution of proceeds, because they have ignored the court order thus far. Pretty sad when $8800. is worth more to a realtor than common courtesy and respect. I am floored by this. It is extremely important to hire a realtor that has a track record for handling these types of divorce sales. I thought I had found her, she said all the right things..then did the opposite. I hope that my documentation of events will mean something to the licensing board.

  • Bill Gassett June 21, 2012, 12:06 pm

    Peg – sorry to hear about your situation. Given the limited information here I am not sure if the Realtor has violated any legal obligations. Since you are not an owner the contract to sell is between your husband and the Realtor. The Realtor would have to follow lawful instructions of the seller. It would not be up to the Realtor to decide about your rent back request. Based upon what you have said I think your husband may have violated his divorce decree which is an entirely different story. This of course is just my opinion on what you have stated and I am certainly not a lawyer.

  • Anita Breen May 29, 2013, 6:26 am

    I definitely agree that a great Realtor will help to open up a deal that best suit both parties’ interests.

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