Helen (not her real name) loves her family home. Helen and her ex bought their Clarendon Drive home over a decade ago. The home was bought to accommodate two growing teenage daughters. Two years ago, the couple decided to go their separate ways. Helen wanted to keep the house but her ex was happy to sell the home and move on.
That was how I met Helen.
“This house has so much of my soul in it,” Helen explained that afternoon. A bubbly woman in her 50s, Helen was wearing a green summer dress with a pair of bright yellow gumboots. “Ah, the boots,” she said when I looked at them politely. “I’ve been fixing the garage. The roof’s got a leak in it,” she said matter-of-factly.
The home was – impressive. Over 50 squares of living space in a spectacular 605m2 block of land. Inside, a spacious living/dining area with a soaring gabled ceiling, a stylish modern kitchen and white shutter French doors leading to a rose garden and a pool. Spectacular but intimate at the same time was my first impression of the home. Helen contacted me to appraise the home as part of the financial settlement for the divorce.
Selling the home in a divorce
Selling up during a divorce is not easy. What happens to the family home is one of the trickiest parts of a divorce. There’s a range of options owners can choose from selling to transferring ownership to one party. Helen was choosing the second option.
Not every divorce sale is like Helen’s. I’ve met many couples who have not decided what to do. In these circumstances, real estate can become part of the decision making process.
There are many variables to take into account in a divorce sale. Factors like whether there are children involved, the respective incomes of both parties, and the ability to pay a mortgage while one party pays to live elsewhere are important. I have to be mindful of the wishes and priorities of both parties when advising clients about a divorce sale. At the end of the day, the aim is to get the best financial outcomes for both parties in a difficult and stressful situation.
Do we have to get divorced before we sell?
Whether the property is held in one party’s or both parties’ names is a consideration in determining how to sell a property in a divorce.
Some people think they have to get a divorce order before they can sell. The reality is you cannot get divorced until you have legally separated for 12 months or more. But the family home can be sold or transferred at any point.
Also, divorce does not necessarily trigger a sale. Most people will sell when they have a financial settlement in place.
Can I buy my partner out?
Helen and her ex-partner did not have a mortgage on the home. However, I have seen many cases where the house has money owing to a bank. The party who wants ownership of the house must be able to pay the mortgage on the house. They must also have enough funds to pay their ex-partner for his/her portion of the equity in the property.
There are ways a person can fund a buy-out in a divorce but I believe this advice should be left to an accountant. The total assets and division of these assets is a discussion with a lawyer. As a real estate agent, my role is to appraise and sell a property for the best price so both parties can benefit. I am mindful of the human cost in a divorce and I try to be as sensitive as possible in an extremely delicate situation.
In Helen’s case, both parties agreed to sell. But in some cases, both parties may want to hold out for the best price, particularly if the divorce has not descended into acrimony and neither party needs the funds urgently. The financial settlement usually has a deadline for the sale. The date is an agreed date by both parties.
Sell first or settle first?
It takes time to negotiate a financial settlement in a divorce so I sometimes advise the client to go ahead and proceed with the sale if they have agreed to sell the property. The funds can then be placed in trust until a settlement is finalised.
One important issue I would like to raise in this article is a scenario when a house with a mortgage sells for less than the value of the mortgage. This can happen because in some cases, both parties want to be released of their obligations as quickly as possible.
If that happens the mortgage may have to be discharged using other funds from the matrimony pool. It is a delicate balancing act that lawyers and accountants for both parties can assist.
Separation and divorce are emotional. The best way about it is to stay calm, seek professional advice, and consider all options.
The appraisal of Helen’s house was satisfactory to both parties.
The other day, I gave her a call to see how things were going. Like the rest of Australia, she was working from home. ‘Still wearing gumboots around the home?’ I joked. ‘I’ve got them on right now – with my jammies,’ she laughed.
It’s moments like this that make me think I’m in the best job in the world. Making others smile or laugh because their property’s sale has brought so many good changes in their lives.
Do you need a specialist that is understanding of your situation? Contact me here for a free consultation.
About ‘The Life of Phi’
Hi, my name is Phi Dang. My clients call me ‘Phi’. I have been selling homes in Melbourne for over three years. I love my job as much as I love basketball. I’m a local boy. I went to school in Keysborough and university in Clayton. I didn’t just stumble into real estate. I actively sought it out as a career after graduating. There’s something about homes and how they can impact people’s lives that appeals to me. I’ve been wanting to start a blog for some time now. The coronavirus shutdown was a brilliant excuse to start. The ‘Life of Phi’ is a collection of stories about my life as a real estate agent. Selling a house is very much like telling a story, too. Every home has a unique story to tell. I help owners tell their stories.
Disclaimer: This story is inspired by true facts. The story, names, location and incidents portrayed in this article are fictitious. Any resemblance to the real persons deceased or alive is purely incidental.