Divorce and selling a home, they say, are on the list of the 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 who will 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 than 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 divorce, both members will have had an active interest in ensuring that their part of the investment is protected, whether there was a cash outlay or not.
Selling a house in the middle of a divorce can often be a highly charged emotional event. Even in an amicable divorce, discussing the home’s sale could lead to rash decisions.
Keep a close lid on your feelings and ensure you are not led by emotion into a wrong decision. You will need to consider that this should be an intelligent business decision.
When selling a home and getting a divorce in Massachusetts, 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 House in a divorce:
- One spouse keeps the home and buys out the other party’s interest.
- One spouse keeps exclusive use for a specified period, typically when the youngest child turns eighteen, after which the home can be sold.
- The home is sold immediately, and each spouse shares the profits.
Both parties should be thinking about what they would like to do. Does one party want to sell, and the other wants the home?
Is it financially feasible for one party to keep the home? How will the other party be compensated if one party keeps the house?
For this article, I will focus on some considerations when selling a home during a divorce.
Possible Tax Benefits Selling a Home During Divorce
Many 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 residence allows for an exclusion of up to $250,000 in profit if you are single and $500,000 if married!
You must have lived in your home for two of the last five years to be eligible. The home must be your personal residence and can not be an investment property.
In a nutshell, this means that the parties could get a huge 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 they still meet the two-out-of-five years living in the home qualification.
If the parties have owned the home for a significant amount and there has been considerable equity growth, this can amount to substantial tax savings.
When one party chooses to remain in the home but plans on selling shortly, there could be quite a difference in tax savings.
Can I Afford The Home After The Divorce
One of the unfortunate things I see in a divorce is one party’s 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 significant 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 must ensure you can afford the mortgage payments.
So many couples getting divorced underestimate what it will 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, or is it a place you would rather forget about?
Going back to the part about “winning” is what clouds many people’s 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. Like any other Real Estate transaction, you should be looking for a realtor with a strong track record of success.
Given that over 90% of buyers find their homes online today, you want to work with an agent that will provide dominant internet exposure.
The agent should have their own website that comes up on local internet searches and place your home in the most traveled consumer sites for looking at properties.
I should emphasize, though, that it is not enough to place your home on popular sites. This is what the average agent does.
It would help if you worked with a Realtor who would spend the time adding great photography and vivid descriptions of your home and offers a video tour.
These are the type of things that make a difference and help your home stand out from the competition.
Excellent Communication is Key When Selling a House During Divorce
Above all else, you will want to work with a realtor with great communication skills in a divorce.
Given that two parties might not be sharing the same roof anymore, you will want to work with someone who understands the nature of divorce and all the feelings that come with it.
The agent will have to have a certain level of patience as all communications will likely be repeated multiple times.
Selecting a Realtor is a process that should be done together. I have witnessed 1st hand over my thirty-six years in the business that if one party decides who they want to interview, the other party may feel slighted in the process.
The instinct is to feel that the Realtor will 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 any time 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 really upside down. Making the home sale process go as smoothly as possible is always one of my missions.
Related Real Estate Articles:
- Realtor communication skills
- Top Producing Metrowest MA Realtor
- Handling offers to sell a Massachusetts home
- Preparing a Massachusetts home to sell
About the Author: The above Real Estate information on divorce and selling a Massachusetts home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 36+ Years.
Are you thinking of selling your home? I am passionate about real estate and love sharing 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, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.
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.
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.
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.
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!
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.
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.
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.
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.
I definitely agree that a great Realtor will help to open up a deal that best suit both parties’ interests.