Selling A House After Divorce (Quick Guide)
Going through a divorce is one of the most challenging life events someone can experience.
And deciding what to do with the family home is one of the biggest headaches in any divorce.
Should you sell it? Buy out your ex? Or just keep co-owning for a while?
In this post, I'll go over everything you need to know about selling a house after divorce.
Should I Sell My House After Divorce?
I cannot give you a clear-cut answer here - because it really depends on your particular situation and what's most important to you.
That said, let me go over the pros and cons of selling a house after divorce:
Also Read: Best Time To Sell A Distressed House
Pros
The biggest pro is that it allows you to completely disentangle your finances from your ex.
You're cutting that final tie.
For some people, that separation and clean break is helpful for moving forward.
Plus, selling the house frees up equity you can use for a down payment on a new home or invest in your future.
A fresh start in a new place can be emotionally beneficial for both parties.
Cons
Selling isn't the best choice for everyone. You're also saying goodbye to a place that holds a lot of non-financial value and memories, good and bad.
That can be really tough, especially if you have kids, and they grew up in that home.
Having to uproot them can be disruptive if the kids are used to the neighborhood, schools, etc.
Timing can be an issue too - if the housing market is currently depressed, you may get less than the home's true worth.
And don't forget, any profits you walk away with could get taxed as capital gains.
How To Sell Your House After Divorce
There are 2 ways to sell your house after divorce. Let me go over them:
The Traditional Way
First up is selling your house in the open market with a real estate agent.
The process is pretty simple:
- Prep your home by cleaning, decluttering, and making minor repairs.
- Your agent will determine a competitive price based on market analysis.
- The agent will handle marketing, including listing the property online, hosting open houses, and arranging showings.
- When offers come in, your agent will negotiate with the buyer’s agent.
- After accepting an offer, you'll undergo inspections, appraisals, and paperwork until the closing.
The downside of selling this way is that it comes with realtor fees (usually 5-6% of the sale price) and can take months due to showings, negotiations, financing, and closing.
Plus, you and your ex will need to agree on everything from price to showings, which can be stressful during an emotional time.
Selling To A Cash Buyer
The second way is to sell to a cash home buying company.
These are firms that purchase properties as-is for cash, without you having to list publicly or facilitate a traditional buyer's mortgage process.
The biggest advantages of these are a very fast closing timeline (as quick as 3 - 10 days), no showings or repairs needed, and the ability to sell homes in any condition.
Plus, the cash buyer handles all closing documents and logistics.
However, their offers are generally below full market value in exchange for this speed and convenience.
Other Options If You Don't Want To Sell
If you don’t want to sell your home, there are two options:
Also Read: Understanding Your Home Value
Buying Your Ex Out Of The House
If you'd prefer to stay in the house, especially if there are children involved, you can buy out your ex-spouse's ownership share.
However, this requires a cash-out refinance for a new mortgage big enough to cover:
- Existing mortgage balance
- Ex-spouse's equity share (usually 50%)
- Closing costs
This lets you take full ownership by getting their ex's name off both the mortgage and the title.
But you'll need a lot of money - enough to cash out the ex's equity stake which could be $150K or more depending on home value and remaining mortgage.
CO Owning The House
The other option is to simply co-own the home together.
Depending on your financial situation, it may make sense to keep co-owning the house with your ex for a period of time, at least until children are out of school or the market conditions improve.
The downside to this is that both parties remain tied to the property and each other financially.
Plus, there are also tax and legal implications of co-ownership as unmarried individuals.
Legal Considerations
In many divorces, the marital home is one of the largest jointly-owned assets that needs to be divided or disbursed.
How you handle this asset should be clearly outlined in your divorce settlement or decree.
Depending on your state's laws, the equity or proceeds from selling may need to be split 50/50 or divided up through a more complex formula based on factors like who paid what toward the mortgage and home upkeep.
You can read more about the laws here.
FAQs
Is It Better To Sell Your House Before Or After Divorce?
If you and your ex-spouse are on good terms and can agree on the sale beforehand, selling before the divorce finalizes is fine. This can save on legal fees and expedite the process.
If that isn’t the case, it's recommended to sell the house after the divorce agreement is finalized.
How Long Do You Have To Sell A House After Divorce
The timeline depends on state laws and any agreements made during the divorce. Sometimes the divorce trial judge will decide the timeline too.