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Can you sell a house during a divorce?

If you are going through a divorce right now, have you given any thought as to what you want to do with your marital home? This can be one of the most important decisions in your entire case. If you don’t have children then it may be the most important decision that you make in your entire case. The implications of whether or not to sell, or how to divide up the equity in the home upon its sale can impact your life dramatically for years to come. 

In the event that you want to remain in the family house after the divorce it would be necessary for you to pay your spouse a sum of money equivalent to their equity share. You could do this with a cash payment, a cash-out refinance of the mortgage or simply by agreeing to allow your spouse to be awarded an equivalent value out of the community estate. The same could occur if your spouse would like to remain in the home and you agree to leave. The third option to consider would be selling the house and then splitting the resulting equity between yourself and your spouse. 

Here is why you may choose to sell your home in the divorce

During the course of your divorce, you may find that there are certain advantages to doing so on a number of levels related to you and your case. First off, cash is likely hard to come by both for you and your spouse while the divorce is ongoing. As such, adding a little bit of money to your bank accounts could be a welcome relief in the midst of spending a fair amount of money on the divorce between legal fees, court costs and the like. Also, since your divorce will be coming to a close sooner rather than later you may choose to take the equity you gain from the sale and apply it towards a debt or towards the down payment on a new home. 

The sale of your home during the divorce would put a period on the end of that sentence of your life, so to speak. You could emotionally have some closure that the sale makes any discussion regarding the future of the home a moot point. All of the emotion and memories associated with the home would be put to the side as you handle issues like splitting up the equity in whatever manner you see fit. 

Suppose that you have a large amount of debt elsewhere in your life. Maybe you opened up a business and financed the opening through making purchases on a credit card. If you were to sell the house during the divorce you would pay those debts before the divorce is over with. Your cash award from the home would be limited but you also wouldn’t have any debts to concern yourself with. This can be a great prize to aim for as you close out your divorce.              

I think the most practical reason to want to sell your home during the divorce is that neither you nor your spouse can afford to make the mortgage payments on your own once the divorce has been finalized. It is probable that both of your incomes were used when applying for a home loan. The loan was offered to you with the assumption that your spouse’s income would combine with yours to result in a loaned amount that was affordable for your family. 

Without the assurance that your spouse’s income would be available to assist in making the monthly mortgage payment it may be the best case for everyone to just sell the house. Even though you may feel compelled to try and make it work on your income for the sake of your kids, you are not doing them any favors by remaining in your home when you cannot afford the payments. Imagine what having to move out of your home under less than desirable circumstances could do as far as harming them from a consistency and stability standpoint. 

You need to work out a new budget using only your income before you make a commitment to remain in the house. This budget should have your income at the top, the money taken out of your checks on a monthly basis for health insurance and taxes as well as the current mortgage amount or the amount you anticipate paying towards a mortgage refinanced into your name only. 

How can you get ready to sell your home in a Texas divorce?

Selling your home is not something that you should enter into without a great deal of forward thinking and planning. It is not only a huge responsibility to sell a house properly, but a lot of money is also at stake. Not planning where you are going to eat dinner tonight is not a huge deal. You can only “mess up” the situation by a few dollars here or there. However, the failure to plan in regard to selling your home could result in tens of thousands of dollar’s worth of mistakes (or more). 

For instance, have you been putting off a key renovation of your home for some time? If so, now would be the time that you need to get that renovation done in order to maximize the value of the home. Contacting contractors, getting bids, obtaining a probable timeline of the work to be performed and then agreeing to all of this with your spouse is just the start of the planning process. Skipping over the details or allowing your spouse to take the lead on the planning could result at necessary steps being missed or incurring unnecessarily high costs when it comes to completing these repairs. 

Something that you should consider doing early in your case is discussing these issues with your attorney. He or she will have experience walking people just like you through the decision making process associated with determining whether or not it is in everyone’s best interests to sell the family home during the divorce. If the attorney can work out the details with your spouse’s attorney then it can save you from doing so and experiencing the stresses associated with having this discussion with your spouse directly. 

Deciding whether or not to hire a real estate agent to help you sell your home

This can be one of the most important decisions that you make in relation to selling your home during the divorce. Real estate agents do work on commission basis but their expertise in the area of home selling could cause your home to become an even more valuable asset for you and your spouse. 

Unlike when selecting an attorney to represent both of you in the divorce, you all are able to select the same realtor to work with when selling the home. You do not each need to hire a realtor. The reason being is that unlike in your divorce, you and your spouse have the same goal in relation the home- getting it sold. Having someone in your corner to rely on for advice and perspective can be incredibly helpful. 

The best thing you and your spouse can do before meeting with realtors is to do an informal analysis of the market and determine where you want to begin the asking price for the house and to determine what questions you have. In our area of Texas you may need to make special decisions regarding how to begin negotiations on a property that has flooded in the recent past or is adjacent to areas that have flooded. Do not assume that you have all of the issues figured out in regard to subjects like this. Defer to the experts and you are more likely to achieve a successful result. 

The devil is in the details

Once you decide to sell the house during the divorce and what realtor to use for assistance in doing so, you have answered two of the most important “big picture” questions possible. Next, you need to tackle some of the smaller issues head on. For instance, what sort of work needs to be done on the home before it is ready to put on the market. Sometimes your realtor may have a home inspector go through the place and see if there are any problems that absolutely need to be addressed prior to selling the home. It is best to deal with these issues now rather than taking less money from a seller and having him fix those issues after the sale of the home goes through. 

Once you decide on the repairs that need to be made, the next thing for you to make a decision in regard to is which one of you is going to pay for those repairs. The specific circumstances of your case will likely determine the answer to this question. Your incomes will likely play a significant role in answering this question. Splitting the costs as much as possible may be the best bet. 

Part of the temporary orders phase of your case will mean that you and your spouse will have to decide upon which of you will be staying in the house during the divorce. Many times it is the spouse who is primary conservator of the kids who is chosen to remain in the home. Will that spouse be the one to pay the mortgage and the cost of the repairs? Do not start repairs or go too far down this road without having all your ducks in a row as far as the details on who is paying for these repairs. 

The last thing I would work out with your spouse that relates to selling the house in a divorce would be which one of you is going to be available to the realtor for phone calls and general issues. The realtor should be able to handle all of the showings for the home as well as working with the buyer’s realtor. However, you may need to be available during the workday to answer questions and provide feedback. You and your spouse can determine on your home which one of you is better suited for this role. 

How to divide the equity in the home upon its sale

The amount of money yet to pay on your mortgage will be subtracted from its sale price (along with costs for repair and costs for the realtor) in order to determine the equity position that you have in the house. That equity will need to be divided up between you and your spouse. Since Texas is a community property state, both of you would be entitled to a portion of this money. A court would divide it in a just and equitable fashion, though you and your spouse are free to divide it in any fashion that you choose. 

You need to be aware that the manner in which you split this equity can impact other areas of your divorce. For example, if you are wanting to keep as much of your retirement benefits as possible then it may be in your best interests to allow your spouse to retain a higher percentage share of the equity in your home. You should speak to your attorney about what your options are and you can move confidently into this stage of the home selling process. 

Questions about today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material that we shared with you today please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultations six days a week here in our office. These consultations are a great opportunity for us to answer your questions and to directly address the issues involved in your divorce. Thank you for your time and we hope to see you again tomorrow here on our blog

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