Best ways to dispose a single family home

10 years ago

A pair of close friends who are going through divorce asked me if they should buy each other out, or put their house on the open market.

The house is beautiful, and it is in a very desirable neighborhood with upside potential - Housing market is recovering in Phoenix. Financially they each could afford the house but size wise, it is too big for either one of them living in the house alone.

The more I think, the more I know that I am not capable of providing advice. I thought it would be better to post this question, and let experienced and smart folks on this forum share their knowledge, experience and insights.

It will be very appreicated if you would provide Pros and Cons and best approaches for either choice.

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Comments (7)

chibimimi
10 years ago
Since the house is not ideal for either of them, the clean break might be the best solution. There's also no resentment later if the house either appreciates or depreciates.
jewelisfabulous
10 years ago
I agree, make it a clean break and sell the house. They may feel like they're walking away from future rise in equity but no one knows what the housing market will actually do. Some economists are actually predicting another imminent bubble bust in housing prices

Also, If the home is awarded to one party by the court or if the couple decide to let one buy the other out, the other party needs to know that they're still responsible for the jointly held mortgage no matter what the new owner says or what the divorce decree states. The existing contract between the couple and the bank takes precedent over the court's ruling or any private agreement between the couple.

So, if the person living in the house defaults on the joint mortgage, it will ruin the credit of the other person AND the bank will come after them for the back payments to boot. A much better court ruling/private agreement would be that ownership will be awarded to the sole party once they can prove they've re-fi'd the mortgage into his or her name only. At that time only, the other party will sign the quit claim deed for his/her share of ownership.
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mjlb
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If there's more than $250,000 appreciation in the house, it would be better to realize the gain while still married, and get double the gain exclusion (or $500,000).
nancylouise5me
10 years ago
I would tell them to put the house up for sale also. No ties to the house or memories for either one once the divorce is final. Not sure if it is an amicable divorce. The only thought I have is will either one of them be a problem during the sale of the house. NancyLouise
ncrealestateguy
10 years ago
What does the divorce attorney advise?
azmom
Original Author
10 years ago
Folks, thank you so much for the advice and suggestions especially the concerns regarding appreciation, mortgage and title. I have already forwarded your inputs to my friends.

They both like the house and each is able to keep it financially. Based on the conversation I had with them, I don't think they have received any advice from their lawyers yet. I surely hope their divorce would be amicable.

ncrealestateguy, from your experience, may I ask your suggestion from an agent's point of view? Thank you again.
traceee
10 years ago
When married folks are facing a huge change in their lives such as divorce, it is not uncommon to steer towards the comfort found in staying in their current living situation. However, the true financial fallout or burden of living on your own is yet to be realized this early on. Understanding the financial consequences of divorce takes time and can conflict with the individual's emotional desire to remain in the same living arrangements or "the house."

You say they can both afford to stay in the home, but can they afford to stay in the home, and pay the bills, maintenance, and repairs, and still save for retirement, travel, shop, pursue new hobbies and adventures, entirely on their own? Maybe forever? This will take time to completely understand.

Best ways to dispose a single family home

Comments (7)

chibimimi

jewelisfabulous

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mjlb

nancylouise5me

ncrealestateguy

azmom
Original Author

traceee

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Best ways to dispose a single family home

Comments (7)

chibimimi

jewelisfabulous

Related Discussions

mjlb

nancylouise5me

ncrealestateguy

azmomOriginal Author

traceee

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

azmom
Original Author