Selling a House During Divorce in California
One of the most stressful parts of divorce is dividing property, including the house. Deciding whether to sell the house can take a long time. However, it’s usually best to sell the house and split the money so both people can move on.
Selling a house during divorce is similar to selling any other house. You can sell it with a real estate agent who will handle the listing and presentation. Alternatively, you can sell it as-is to a cash buyer who makes the process faster. After the sale, the money is divided based on the divorce laws in your state.
Selling a house during divorce can be complicated. The more decisions there are, the more disagreements can happen.
Divorce laws vary by state. We suggest finding a family law attorney in your state to help with tax and property division.
If you’re going through a divorce or are curious, we can help you understand how to sell property during this tough time. Save this page and share it with others who might need it!
What Happens to the House in a Divorce?
In a divorce, a common issue arises regarding property. One partner may desire to retain ownership of the property, while the other may opt to sell it. Occasionally, both parties express interest in retaining ownership.
What becomes of the property? How is ownership determined?
The resolution is complex as each divorce is unique. It would depend on both parties involved who will get the home or if it will be sold so the profit can be divided. But in most cases, the assets of the couple, including real estate, should be split or sold.
A couple divorcing has four options in terms of dealing with their marital home:
1. Split Large Assets
If both parties own significant properties like a primary residence and a second home, it’s best to divide them fairly, ensuring each party receives assets of comparable value.
In situations where there’s only one property involved, the other party may opt for alternative assets like vehicles, art pieces, shares, etc.
This option is highly suggested since the couple would not need to go through the stress of selling a property while dealing with a divorce. There would be no marketing or agreeing on an offer.
Naturally, dividing substantial assets entails negotiations to determine the distribution, ensuring both parties reach a fair settlement.
2. Co-Own the House
If the divorcing couple still gets along, they can share owning the house. They would make a plan together about how to pay the mortgage and who fixes things.
They can also decide who gets what money if they sell the house later.
This is good if they want their kids to stay in the same house. But it has downsides.
First, they’re tied to each other’s money. And if one of them doesn’t pay on time, both their credit scores suffer.
3. Buy Out the Other Spouse
Many divorcing couples opt for a buyout arrangement. This involves one spouse purchasing the home from the other.
The buyout price typically reflects a portion of the property’s current market value, often determined by the incomes of both parties, the potential income generated by the property, and their respective contributions to its ownership.
This option is particularly appealing for couples with children attending local schools or when selling the property isn’t advantageous at that time.
Before committing to a buyout, the interested party must confirm that the funds they’re using aren’t considered part of the divorce settlement. Additionally, they should ensure they have sufficient financial means to manage the mortgage independently.
4. Sell the House
As mentioned earlier, putting the house up for sale in the local real estate market is a popular choice because it can bring resolution for all involved. However, this is only viable when there’s equity to be gained from the property.
It will also furnish the separating couple with sufficient funds to cover debts, real estate agent fees, and legal expenses related to the divorce, all while facilitating the purchase of new properties.
Note, however, that if neither of the parties stayed on the property for two years, they would have to pay capital gains tax.
Do I Have to Sell My House in a Divorce?
If the divorcing couple is going back and forth about whether they should sell the house or not, there are a couple of reasons why selling is often the better choice…
Legal Battles
Usually, both parties pitch in to buy the shared property, even if the ownership isn’t exactly equal. Consequently, they might both have the desire to retain ownership of the property.
If one partner desires to sell while the other prefers to retain ownership, they need to come to a mutual agreement.
Legal disputes can further complicate the divorce proceedings. In the absence of a settlement, the court will intervene, potentially resulting in an outcome dissatisfactory to either party.
Opting to sell the property can alleviate a significant amount of stress and circumvent a protracted legal battle. While selling requires time and effort, it enables the couple to divide the proceeds and move forward.
Liability Risks
When a spouse decides to buy out the other party, that would mean sole ownership and higher liability risks.
The partner intending to retain the property must engage with the mortgage provider to secure financing based solely on their income. If the lender assesses that the buyer’s financial capacity may be insufficient due to the heightened payment burden, they will not endorse the individual’s solo ownership proposal.
Moreover, if the non-buying partner ceases mortgage payments, the buying partner becomes legally responsible, potentially jeopardizing the property’s status and leading to foreclosure in case of payment default.
Opting to sell the property presents a viable solution to circumvent these complexities.
Financial Reasons
If both parties don’t plan on living in the home anymore, selling the family home on the market before the divorce financially makes sense. Both parties can divide the proceeds as the court deems fair.
To understand the financial pros and cons completely, it is best to seek legal advice from an attorney who’s an expert in taxes, tax law, capital gains tax, and other financial matters related to divorce.
Selling Property Before Divorce Settlement
When a couple divorces and decides to sell their home, potential buyers can sense their urgency to sell, leading to lower offers. To prevent this, it’s advisable to sell the family home before finalizing the divorce.
Here are a few notes when selling a home before divorce:
- If both parties want to sell the home for market value, they should still live in the same home so potential buyers wouldn’t sense that separation is in the works.
- If staying is not possible, don’t clear out all the things of the other spouse.
- When someone comes forward with an offer, the two should get the deal done together, not just one spouse.
Again, the couple’s goal should be to prevent the buyer from sensing how desperate they are to get rid of the home to avoid receiving a low offer.
Pros of Selling a Home Before the Divorce
- Home value is protected.
- The negotiating power of the seller is still intact.
- Disputes as to who gets the house after divorce would be avoided.
Con of Selling the House Before a Divorce
- Staying together or pretending to still be together after a marriage falls out can be difficult.
How to Sell a House During a Divorce
Although it’s generally not recommended to sell the property during divorce proceedings, some couples still choose to do so.
There are numerous factors to take into account when a couple pursues this option, particularly if they’re no longer residing at the property…
- Home maintenance
- Approval of showing requests
- Mortgage payments, property taxes, home insurance
- Repairs after the home inspection
If you’re curious about how to sell a house during a divorce with a real estate agent, it is similar to any other home sale; however, the varying interests of the two parties complicate the sale, especially when setting an asking price.
Here is the detailed process of selling a house during a divorce:
- Step 1. Make home improvements. The couple must decide whether to make home improvements or sell the property as-is. If they opt for the former, they would have to talk about how they’ll finance it or which spouse will be in charge.
- Step 2. Hire a real estate agent specializing in selling properties of couples in divorce. The parties should get a real estate agent that they both like. One should not decide for the other person. Also, the real estate agent should be knowledgeable in selling houses during divorce to avoid lowball offers.
- Step 3. Divide the cost of staging the house and marketing between the two parties. The cost of staging and marketing a home is not cheap, especially if the property is not maintained well. That said, both parties should decide on how they’ll divide the costs among them and who would take charge of issuing payments, etc.
- Step 4. Set a price that both parties agree with. The asking price should also be agreed upon by the couple, and it should be based on the fair market value of the property. This can affect their other divorce negotiations, so they should set the price carefully. A real estate agent and a divorce attorney can be involved in this.
- Step 5. Accept an offer that both parties agree on. When an offer has been placed, the decision to accept or make a counteroffer should involve both parties. The home sale should not be closed unless the offer is accepted by both, not just one spouse.
- Step 6. Split the sale of the house. When the house is sold and the two parties are amicable, there won’t be any issues in splitting the sale. Of course, this is after they have settled payments for the mortgage, taxes, real estate agent, closing costs, etc. In case the division of profit isn’t settled, a more complicated process would ensue. We have explained this in detail in the latter part of this article.
Pros of Selling the House During a Divorce
- This allows the couple more time to plan who will be responsible for what actions.
- The divorce attorney can offer counsel to sell the home fast.
Con of Selling the House Before a Divorce
- Prospective buyers can use the divorce as leverage.
- The stress of the divorcing couple due to the ongoing divorce can negatively affect aspects of the home sale.
Selling a Home After the Divorce Settlement
After the divorce settlement and asset split, sole ownership of the property shifts to one party. This ensures smoother decision-making regarding the property’s sale.
Moreover, potential buyers can’t exploit the divorce situation. There’s no evident urgency to sell, leading to competitive offers akin to standard house sales.
Pros of Selling the House After a Divorce
- The spouse who got the house has no one to argue with in terms of decision-making.
- Moving out is easier because only one person is involved.
- The focus of the spouse in charge is undivided since there’s no more divorce to think about.
- Prospective buyers have no reason to offer a lower price because there is less desperation to get rid of the property.
Con of Selling the House After a Divorce
- The sale of the house depends solely on you. There is no other spouse to make decisions if things get difficult when selling a home.
How to Divide the Profit From a House Sale During Divorce
If the family home is sold while the divorce is ongoing, dividing the profit would have to go through the attorneys of the couple.
The lawyers can determine if the property is in a community property or equitable distribution state. The main difference is how assets are split – equally or fairly.
If the home isn’t in a community property state, lawyers and courts will decide what’s fair, usually after taxes and mortgages are paid.
Splitting the sale of the house is complex. If one spouse contributed more to buying and maintaining the home, they may get a larger share.
If divorce lawyers can’t agree on how to divide the proceeds, the court will decide. Sometimes, nobody really wins with the court’s decision.
Thus, it is really suggested that the couple can reach a mutual agreement on their own.
3 Tips on Selling Your House During a Divorce
Here are 3 valuable pieces of advice that a couple can consider when selling a home during a divorce.
1. Sell the Marital House During Summer
If there are kids, aim to list the property in the summer to avoid disrupting their education. Keep in mind that relocating can be tough, particularly for youngsters.
If you have to sell during the academic year, consider how it might affect your child’s schedule and well-being, ensuring they receive the necessary support.
2. Sell the Marital House During Spring
If you can wait to sell your house, wait for spring. Buyers are more enthusiastic to purchase a house during spring because it is warmer and the school year is ending. It is also when people receive their tax refunds, so buyers have some tax money to spend.
3. Sell the Marital House to an Investor or Cash Home Buyer
Couples desperate to sell their family home fast should consider real estate investors and cash home buyers. These investors can make quick cash offers, enabling both partners to access their equity and move on ASAP.
Compared to selling traditionally through an agent, a rapid sale to a cash buyer means fewer months spent on expenses like taxes, insurance, mortgage payments, utilities, and upkeep. Selling to an investor is often favored by couples undergoing divorce due to its convenience.
Key Takeaways: Selling a House During Divorce in California
It’s no surprise that selling the house during a divorce can be stressful. This is because the two parties involved in the decision-making are divorcing in the first place.
That said, selling your house should be done before the divorce is filed or after it is settled. Selling your house while the divorce is ongoing could worsen the communication between you and your spouse, leading to lower offers on the market.
However, cash buyers are a convenient solution that many divorcing couples seek out. Divorcing spouses can receive cash in an agreed-upon amount and close in as little as 7 days. No one has to agree on repair costs or related expenses. It’s quick and simple.
If selling your home during a divorce is causing you headaches, let us help. Here at JiT Home Buyers, we will provide you with a free, no-obligation cash offer and allow you to choose the closing date of the sale! Fill out the form below or contact us at (510) 473-5885 if you are interested.
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You can start the process to sell your house fast by calling us or filling in the online form. We will respond back to you the same day and present you with a fair cash offer for your house. If you accept our cash offer for your home, you can schedule a closing date and get cash for your house.
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The Easiest Way To Sell Your House Fast In California
You’re in the driver’s seat when you accept our cash offer for your house. We make the process simple, fast, and easy to follow when working with us. You have no obligation to accept our cash offer for your home when contacting us for a fair cash offer for your home. No matter the reason you want to sell your house, we want to buy your home as is. Remember that you get many benefits that include no real estate agent commissions, no cleaning, no improvements, and no stress. Our cash offer for your as-is house assures you of fast cash payment at closing with a reputable Title company. You can count on our company to give you a fair cash offer for your home! If you’re still thinking, “I need to sell my house fast”, calling us could be your best decision all day. 🙂
Author: Saini
My name is Saini, and I founded the JiT Home Buyers team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.