If you are getting a divorce and own a house that is not worth what you owe on it, it could be difficult to come to an agreement. Even in an amicable separation, compromising will take patience and clear communication. We have some tips regarding how to sell a house during divorce.
Before considering the options below, both parties should create budgets and know what is feasible and also what their short term and long term goals are. Having this information will (hopefully) help you both to come to a decision regarding your options. Here are a few possible solutions regarding houses worth less than is owed on them in a divorce.
One Spouse Keeps the House
One option is that one spouse will keep the house, subject to the negative equity, with the understanding that there shall be some offset and consideration given in trading this negative asset for other property. The housing market is subject to change. If one person can afford to remain in the house, it is possible to rebuild equity.
Walk Away From House
A second option is when the encumbrance is too large and the payments are overly burdensome, some couples will just agree to walk away from the home. In some cases, one party will stay in the house, without making any payments on the mortgage, until the home is actually foreclosed upon and then there is a sheriff’s sale, which can take many, many months.
Short Sale or Sell to Investor
A third option is to try to sell the home, and work out a short sale with the bank or sell the house to an investor. This can happen in some situations, but bear in mind that if it is not handled properly, it can negatively impact your credit.
Even in situations where there is equity in the home, do not become overly enamored with your property. Sometimes it makes sense to try to sell the house. Every divorce should be handled on a case-by-case basis, bearing in mind that your situation is not the same as your friend or neighbor’s. Even if you can afford the house, if it is going to take too much of your income to keep the house, it may be better to sell it.
If you have questions about selling to an investor, or about purchasing an unwanted property, contact us for more information.
If you need help getting information ready in order to decide what to do with your house in a divorce, call us for more information.
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