Selling While Separating: Part 1 of 3 – The First Steps To Take When Selling Your Home During a Divorce
As a real estate agent, I get an up front and personal look into people’s lives throughout all different phases.
From newly married couples buying their first home together, those who are upsizing to make room for their first (or second… or third…) baby, those who are downsizing as empty nesters, and even some of life’s more emotional moments, like those going through a divorce.
I always say that home ownership is so much more than just buying a home as a place to live – it’s a deeply personal and sometimes emotional decision, which means that my job as a real estate agent is so much more than just a transaction!
While I’ll of course always answer your typical real estate questions and be there to guide you throughout the sometimes confusing process, my hope as an agent is to be SO much more than that!
I believe that a real estate relationship should go far beyond the closing table so that you feel confident in your decision to buy or sell even after it’s already done.
I recently had the pleasure of working with a client who was going through one of the more emotional scenarios I described above and throughout the entire process, she kept asking me reallyyyy good, valid questions and it made me think…
More people are probably wondering these same things.
Even though selling while separating doesn’t feel like something fun to talk about, the reality is that it’s something that a LOT of people go through and need to know about.
And as someone who has actually gone through the process myself and is now years on the other side of it, I decided it was time to create a resource for people like me and my client.
The last thing you want to do during this already stressful time is scour Google for answers to your questions and make guesses along the way. Instead, you should be able to find exactly what you’re looking for and know how to navigate your situation confidently!
INSERT: The Selling While Separating Series here on the blog.
Throughout this 3 part blog series, we’ll be diving into:
The First Steps To Take When Selling Your Home During a Divorce (you’re here!)
How To Prepare To Sell Your Home While Separating (coming soon!)
Finalizing the Sale During a Divorce and How to Move Forward with Confidence (coming soon!)
My hope throughout this series is that you can ease some of the stress you might be experiencing and be able to make a decision that you feel good about and move throughout the process with ease – so let’s dive in!
How To Know If Selling Your Home Is The Best Option During A Divorce
First things first, let’s start with how to know if selling your home while separating is even the right decision!
For some couples it might be the best and most strategic move, but for others it may not be. Overall, this decision can be influenced by various factors, both emotional and financial.
When deciding which makes the most sense for your specific scenario, there are some key considerations that can help you make the right decision:
Financial Feasibility
First up – finances. One of the first things you want to do when trying to decide if you should sell the family home during a separation is to assess the financial implications of keeping versus selling the home.
Can one spouse afford the mortgage, maintenance, and other expenses on their own?
Does one spouse prefer to keep the house over the other?
Are you both in agreement that selling is the best option?
If the home is too costly to maintain on a single income, selling will likely be the most viable option.
Equity Distribution
During a separation, the division of assets always has to be considered and choosing to sell the home can often simplify this part of the process. Typically, the proceeds from the sale can be split equitably between both parties, potentially easing financial negotiations and settlements.
Emotional Well-being
Once the financial side of things have been considered, it’s time to think emotionally.
For some, remaining in the marital home can be a constant reminder of the failed relationship, making it difficult to move on. On the other hand, familiar surroundings can provide stability during a turbulent time, especially if children are involved.
Some couples decide that it’s best to keep the home for these purposes, while others want a fresh start. Ultimately, this decision can only be made by you and no two scenarios will be the same!
Practical Considerations
In addition to the emotional side of things, there are also some practicalities to consider.
For many, they’ve chosen a home based on its proximity to work, schools, family, friends, etc.
If the home’s location no longer aligns with your new circumstances, selling could be the better option. However, if the location of the home remains important and is something that one of the spouses isn’t willing to part with, selling may not be the best fit.
Additionally, many choose to keep their home during a separation so that their kids can continue to live life as normally as possible, including staying within their current school zone.
If this isn’t a factor for you, no problem! If it is, however, you’ll want to carefully take this into consideration and make the decision that makes the most sense for you.
Market Conditions
Lastly, once you’ve considered finances, emotional aspects, and the practicalities of selling, it's time to take into account the current real estate market conditions.
Is it a seller’s market where you can get a good price for your home? Or would it be better to wait until the market improves?
Working with a trusted, local real estate agent in your area can help you better determine this aspect of things so that you can make a decision that you feel confident in!
Deciding whether to sell your home is a deeply personal decision. Consulting with a financial advisor and a real estate agent experienced in divorce sales can provide valuable insights and help you make an informed choice.
Legal and Financial Preparations For Selling While Separating
Once you’ve decided that selling your home IS the right decision during a divorce, it’s time to handle the not-so-fun part of the process – legal and financial preparations.
Even though this part of the process can feel intimidating, it's important that it's not overlooked because having the right legal and financial aspects in place will ensure that you’re able to navigate the selling process as smoothly as possible and prevent potential disputes down the line.
Here’s a comprehensive guide to help you navigate these preparations:
Consult with a Lawyer
First things first, GET 👏🏼 A 👏🏼 LAWYER 👏🏼
I can promise you that you don’t even want to attempt the selling process without one.
A lawyer who specializes in family law will help you understand your rights and obligations and can provide guidance on how the sale will affect your divorce settlement and ensure all legal requirements are met.
During this part of the process, it will be crucial to review your divorce agreement or separation order to understand any stipulations regarding the sale of the property and ensure that both parties are clear on their roles and responsibilities.
Lastly, before any selling can take place, ownership status of the property will need to be verified.
If the title is in both names, both parties must agree to the sale. If the title is in one name, understand the legal implications and how proceeds will be divided.
Necessary Divorce Documents
When choosing to sell your home while separating, there’s a few important documents that your lawyer will need including:
Property Deed – this will verify ownership and facilitate the sale
Mortgage Statements – these will provide accurate information about the loan balance
Divorce Agreement – your lawyer will help you draft this agreement and will need to be kept accessible throughout the entire process so you can reference any clauses related to the sale if needed
Understand Tax Implications
Next up it’s important to understand any potential tax implications that may come with the sale of your home, such as capital gains, property tax, or tax deductions.
Capital gains tax is a tax on the profit (gain) you make from selling an asset. When you sell an asset for more than you paid for it, the difference between the sale price and the original purchase price is your capital gain. This gain is subject to taxation and the tax implications can vary depending on how long you’ve owned the home and if it was your primary residence.
In addition to capital gains tax, it’s crucial to ensure that all property taxes are up to date, as unpaid taxes can complicate the sale process and may need to be settled before closing.
Lastly, a tax professional can help you understand any deductions or credits you may be eligible for related to the sale of your home during a separation.
Assess Financial Impact
Once you understand your potential tax implications, it’s time to assess the financial impact that can come from the sale of your home while separating.
The most important financial consideration to take into account is the mortgage payoff if you and your ex-spouse still owe on the home. Before selling, you’ll need to calculate the remaining balance on your mortgage and understand that the proceeds from the sale will first go towards paying off this balance.
THEN, it’s time to understand equity distribution! As mentioned above, during a separation, the division of assets always has to be considered and typically, the proceeds from the sale of your home can be split equitably between both parties, potentially easing financial negotiations and settlements.
For this part of the process to go smoothly, it should be clearly documented in your divorce agreement so that no misunderstandings or complications arise.
Additionally, it’s important to determine how the closing costs will be split between both parties. When selling a home, closing costs most often include agent commissions, legal fees, and transfer taxes, so having a plan to navigate these fees beforehand is crucial.
Overall, by addressing these legal and financial preparations, you can help ensure a smoother, more efficient home-selling process during your divorce.
Proper planning and professional advice can mitigate potential issues and pave the way for a successful transition to the next chapter of your life.
How To Emotionally Cope With Selling Your Home While Separating
Choosing to sell your home, regardless of the reason, is often an emotional decision, but choosing to sell your home while separated can heighten those emotions even more! 📈
Not only are you letting go of a place that you’ve likely spent many years creating memories in, you’re also letting go of certain people and even if it’s for the better, it can still be incredibly taxing.
Like I mentioned above, I know that a home can be SO MUCH MORE than just a place you live – trust me, I’ve had my fair share of emotions with building and buying homes. In fact, I share the story of the house that built me here!
So you won’t find me being the one questioning why you might be so attached to a space. Instead, you’ll find me being the person that acknowledges how you feel while also helping you make moves (literally) that can impact your life even more.
When choosing to sell your home while separating, emotions will almost always be high and it’s important to know that and recognize it when you’re going into it so that you’re fully prepared to cope if necessary.
The last thing I want you to do is ignore what you’re feeling. It’s normal to feel a range of emotions when selling while separating, like sadness, anxiety, or even relief.
My best advice is to allow yourself to process these feelings and understand that they are a natural part of transitioning to a new living situation AND a new chapter of life.
Once you’ve acknowledged what’s happening, I believe the best thing you can do is focus on the positives. And I know… that can be easier said than done. But by shifting your perspective to focus on the positive aspects of the situation, you can alleviate some of the emotional burden that might be lingering.
Need an agent to help you sell your home while separating?
Overall, choosing to sell your home while separating can be an emotional and stressful decision, but it’s also the RIGHT decision for many people.
The key is that you have someone on your side throughout the entire process to make the journey as simple, straightforward, and stress free as possible.
You want someone that can answer your questions, help you navigate selling your current home, AND help you find a new, better suited home that you love.
This is why you always want to partner with a trusted, local realtor to help you do it right. Your real estate agent is the person that works with you from start to finish to make this process feel way less overwhelming and get you to the ultimate outcome that you truly want!
So, if you’re currently going through a divorce (or are about to be) and you need a trusted agent on your side in Billings, MT, CLICK HERE to get started on the right foot.
I’ve personally navigated this journey before and I know how it can feel, which is why I’m dedicated to helping you go through it with ease!
P.S. Not local to Billings, MT? Good news for you – I know people!
Connect here and I’ll get you in touch with a trusted agent in your area that can help you navigate your scenario with ease.