How to Sell Your Family Home Amidst a Messy Divorce
Divorce sucks. Plain and simple. Included in all the issues that need to be sorted out in the dissolution of a marriage is the family home. Even if the love between you and your estranged spouse has disappeared, your mortgage remains.
Selling the house and dividing the proceedings is the typical, favored option. Obviously, a quick sale is ideal. But what if your home doesn’t sell?
If you’re faced with this dilemma, you’ve got a few options – some more favorable than others.
Rent the House
If you can collect a little cash while you’re trying to find a buyer for your home, consider renting it out in the meantime. There’s no sense in keeping the home vacant, draining your funds in carrying costs, when you could be covering these costs in the form of monthly rent.
Keeping the tenancy agreement on a month-to-month basis will keep the commitment to a minimum should you find a buyer that wants to take possession shortly after signing an agreement to purchase the house. No buyer is going to want to have to deal with evicting a tenant. On the other hand, you might consider leasing the place out for a longer term and takes the house off the market completely until your housing situation looks a little more encouraging.
Buy the Other Spouse Out
If one spouse is still interested in keeping and living in the home, you might want to entertain the idea of a buyout. In this case, the arrangement can involve just the two of you, or with lawyers involved. Regardless of which way you choose to handle the agreement, it’s important to arrange how much one spouse will be paying the other for his or her share of the property.
In the case of a buyout, the spouse who is keeping the house will have to refinance the mortgage in only his or her name, and take the other spouse’s name off the title. Then, the equity of the home in which the buying spouse is entitled to is paid out.
Co-Own
You and your soon-to-be-ex might choose to co-own the home during or following your divorce, at least until you can find a buyer. This will give you a chance to wait out the real estate market while both of you still assume responsibility of the mortgage.
While this might not be a suitable option for many divorcing couples (for obvious reasons), it’s still a way to hang on to your equity and avoid losing out on the money you should make from the sale of the home.
Short Sale
If no one is interested in keeping the family home, you could potentially wheel and deal with your lender to work out a short sale on it. This process basically involves the sale of the property for less than the amount that’s currently owed on it.
In this case, you and your lender need to decide if selling the house and absorbing a bit of a loss is acceptable, compared to defaulting on your loan. A short sale is usually one of your last resorts, since you basically lose all equity you had in the home, and will have to deal with the negative effects on your credit report.
Deed-in-Lieu of Foreclosure
If you absolutely cannot sell your family home no matter how hard you try, you and your ex can essentially walk away from the home. In the case of a deed-in-lieu of foreclosure, you would basically hand the keys over to your lender, and be completely released of all obligations under the mortgage.
Your credit report and score will be significantly affected if you opt for a deed-in-lieu, much like with a short sale. You might even be stuck with tax complications against the forgiven debt. On the other hand, you can avoid time-consuming and expensive foreclosure proceedings.
Nowhere is it stated that you can’t finalize your divorce until your family home is sold. Unfortunately, certain markets can make it really tough to sell the home for the amount you deserve. Luckily, there are some creative ways that you can consider to get the home off your hands and move on. And, as always, this can all be done much more easily with the help of a seasoned real estate agent.
