If you and your spouse have made a mutual decision to part ways, you may be wondering about the best way to divide your assets -- particularly those that are held in both your names and aren't in liquid form, like your home. In many cases, selling is the best option; but for those in areas with a sluggish housing market, this can be a task easier said than done. What are your options, and how should you proceed? Read on to learn more about the factors you'll want to consider when selling your home before (or during) divorce proceedings.
Should you sell your home during a divorce?
For situations in which neither you nor your spouse wants to reside in the home after divorce, a sale (rather than buyout or transfer) is usually the most efficient option. This eliminates the risk that one party will default on the mortgage before the other party's name is removed from this legal document, potentially torpedoing both spouses' credit scores, while also ensuring that the division of sale proceeds is as equitable as possible.
If you instead choose to take possession of the house in lieu of other liquid assets or to buy your spouse out of his or her share of the home, you may find that the resale value of your home is lower than you anticipated, diminishing your share of the marital estate and giving you no recourse to recoup these funds from your ex-spouse.
How should you proceed when selling your home during a divorce?
Divorce can be a costly prospect even in the best of situations, and you may have considered a For Sale By Owner (FSBO) sale instead of enlisting the help of a real estate agent. However, the sale of a home during a divorce can be a situation in which time is of the essence, both in readying and staging your home and finding buyers willing to pay list price with few contingencies. The last thing you want is for your home to languish on the market for months or even years while you and your spouse remain legally tied.
You'll also want to carefully account for the funds used to pay your mortgage over the years, along with the down payment for your home. If you contributed more (or less) to the home than your spouse, this may affect the division of sale proceeds.