Selling your home during a divorce can add a lot of stress to an already stressful situation. Emotions are often running high. It helps to have the assistance of an experienced and objective real estate agent at your side to help you make rational business decisions in connection with the transaction. Without help, it’s easy for divorcing couples to make real estate mistakes that cause the house to linger on the market, unnecessarily complicate the sales transaction and adversely affect how well the home looks to potential buyers. The result is the home sells for less than it should.
Here are a few do’s and don’ts to help you avoid those real estate mistakes:
DO: Work With an Experienced Real Estate Agent
When you contract with an agent to sell your home, make sure the agent has experience with divorcing homeowners. Some agents receive special training on transactions in properties during a divorce. An agent with that kind of experience will know where issues typically arise and how to avoid or minimize the associated stress. Such an agent will know how to coordinate meetings and showings with both divorcing spouses. They know how important it is to communicate with both parties to keep everyone informed of important developments, and to prevent real estate mistakes.
Working with an experienced agent to get the best price possible for the property also means disclosing any court ordered details regarding the property or the sale before listing it. To be effective and efficient at selling the property, the agent needs to know about all stipulations regarding the sale and the responsibilities of both parties. The agent needs to know, for example, which spouse has the court approved authority to act on behalf of the couple. It will usually be the spouse living in the home. The agent also needs to know the listing price if it is spelled out in the court’s order, and who is authorized to reduce the price if necessary. Some court orders may cover which spouse is responsible for home repairs and how to get approval for those costs.
DON’T: Let Home Maintenance Slip
When one spouse moves out and the other is busy trying to juggle a job, child care and taking care of the house, home maintenance and repairs can pile up. Keeping up with all of that while struggling through a divorce can be overwhelming. That is especially the case if a court order has imposed constraints on the amount of expenses it will require and requires both spouses to consent. However, falling behind on simple repairs and basic upkeep is important to getting a good selling price.
DO: Stage the Home, Especially if it is Unoccupied
Ideally, one of the spouses will stay in the house until it sells. The spouse should try to make it appear as though both spouses are still living there. If buyers sense a divorce sale, they are likely to suspect the home can be bought at a fire sale price point. That will only encourage lowball offers.
If no one is living in the home, it is best to leave some furnishings so that it will not appear empty. Homes generally sell better if they are at least lightly staged. Empty homes, or homes with a few items left behind a helter skelter can impair the home’s marketability.
If you can afford a professional stager, it may be worth the expense. A professionally staged home helps the house sell quickly and for a good price.
Whether lightly staged or staged professionally, a furnished home can help buyers picture themselves living in it, and a well-staged home can even help make the rooms seem bigger.
DON’T: Overlook Your Capital Gains Tax Break
Before you list the home for sale and finalize your divorce, make sure you review the tax consequences with a CPA or your attorney. If possible, you want to plan a sale by timing it to minimize your capital gains tax liability and preserve the exemption in the divorce.
As you may have heard, the capital gains tax is a tax that you pay on the profit you receive from selling a capital investment. Your home is such a capital investment.
If you sell your house while you’re still married, each spouse can exclude the first $250,000 of profit (or gain) from your taxable income (for a total of $500,000). If you sell the house while you’re in the midst of a divorce, you can exclude from tax the same amount of $500,000 of gain, provided both spouses lived in it for two of the five years before the sale.
This tax exemption can be affected by factors such as the timing of your divorce filing, the date your home is sold, whether both spouses co-owned the house even though only one lives there or whether one spouse buys out the other half of the house. Make sure you don’t inadvertently overlook these details.
Contact the Real Estate Team at Katie Zarpas Group for More Information
The real estate agent at the Katie Zarpas Group is experienced with helping divorcing couples sell their home and prevent real estate mistakes. They know how to ensure a smooth process with minimal stress on both parties while extracting the best possible price for the home. Contact them for more information.