Divorce or separation is always stressful. Selling a property after a divorce or separation can just add to the stress. However, it's better to take a cooperative approach to selling your home and other properties. A good real estate agent can help, but you need to take a step-by-step approach if you want a successful outcome.
The first steps to take
Divorce proceedings take time and there are legal issues to deal with if you're in a de facto relationship. To ensure the best outcome, it is important to take some initial steps before you contact an attorney or take other steps towards finalising your relationship:
- Get your finances in order
- Estimate the value of each of your assets and liabilities
- Make copies of all relevant certificates, contracts and agreements
If you've been in a long-term relationship, you've probably been sharing your finances. When the relationship ends, each party will want to be in control of their own finances. It can be confusing and stressful, but both parties need to get their own finances in order. Who is going to pay the mortgage after one party moves out? Are there children to consider? What about credit card payments?
At this stage, it can be difficult to agree on anything, but the Family Court of Australia will take everything into account when dividing your assets and liabilities. Keep records of your expenditures and if you have been treated unfairly, you may be able to recoup your losses later.
Homes, apartments and other assets have fluctuating values. You may not be able to get an exact value for all of your assets and liabilities, but get as accurate an estimate as you can. A real estate agent can give you an estimate of the value of your property.
You will need valid copies of all relevant certificates, contracts and agreements you have previously shared. In some cases, you may need stamped and approved copies. In other cases, a simple photocopy will do. Just be sure you have copies of everything. You will need them later.
Get legal advice
Once you have your finances in order; have estimates of your assets and liabilities; and have copies of important documents, it's time to get legal advice. Take all the relevant information with you to your initial consultation. You will need it to discuss your case and your options.
Divorces and separations can be messy. If you cannot agree with your former partner, you may need to take your case to court. This will cost both of you money. Divorce attorneys often work together to achieve a mutually satisfactory solution before resorting to the courts.
Settling in court
If a mutual agreement is impossible, you may have to schedule a court hearing or you can continue trying to come to a solution through your legal representatives. It is important to remember that the courts don't work from a formula. They look at each case separately. The Family Court will consider:
- The values of your assets and liabilities (including superannuation)
- The financial contributions of each party (wages, salaries, etc.)
- Indirect financial contributions such as inheritances
- Non-financial contributions (child care, home making, etc.)
- Future requirements such as age, child care and the ability to earn
Settling out of court
If you want to settle out of court, you will have to consider these issues, too. If one party feels they are being treated unfairly, they will insist on taking the case to the Family Court.
It's important to get legal advice early because:
- Property adjustments must be made within one year of divorcing
- If you have been in a de facto relationship, property adjustments must be made within two years of the date of separation
The earlier you can come to a satisfactory agreement, the earlier you can put the past behind you and begin rebuilding your life.
Think about your options: will you sell or keep the house?
Selling is not your only option when you divorce or end a de facto relationship. Dividing property will be necessary, but you may be able to keep your home. You will have to buy out your partner, which may involve refinancing your home and perhaps paying a higher mortgage. If you have other assets, such as a rental property, you may be able to work out an asset swap.
Your other option is to sell your home. It is a shared asset and if you can't come to a mutual arrangement, the Family Court will decide whether it's a 50/50 split or one partner gets a larger share than the other.
You may also agree to keep the home for a period of time. For example, if a child is in high school, neither of you will want to unduly disrupt their life. One party may be able to stay in the home until the child finishes high school. They may have to take responsibility for the mortgage payments for the duration if the other party moves out and has to pay rent until the home is sold.
Refinancing your home and buying out your partner
If your home is in both partners' names, you cannot simply remove one partner from the loan agreement. You will have to come to an agreement first and then you can go through the refinancing procedure. The bank or lending institution will want to know:
- You have the necessary funds to buy out your ex-partner if you do not have enough equity in your property
- Your record of repayments. They are more likely to refinance if you have an excellent record of home loan repayments
- They may or may not take your savings into account
The bank will do a valuation of your property. If their valuation is too low, they may not lend you the money. Consider employing a mortgage broker, who can get valuations from a number of lending institutions. However, be aware that doing this could damage your credit score and make refinancing more difficult.
If you are receiving child support payments, they may be considered part of your income. If you have older children, lenders may not consider child support payments as income because of the short duration of the payments. They will also need at least six months of statements from Centrelink to prove you are receiving your payments regularly.
Finding the right agent to sell during a divorce
Many real estate agents know how to sensitively handle selling a home during a divorce. Others have little experience with divorce sales and may not handle your sale with enough sensitivity. It is crucial to find an agent who knows how to deal with both parties sensitively and compassionately.
This is where OpenAgent can help you find a real estate agent with extensive experience dealing with divorce or separation sales.
Maggie Owen is one example of a divorcee who found the perfect solution from Open Agent. From her first contact, she found Open Agent to be "compassionate," "friendly" and willing to help. And that was only the beginning. As she says: "Open Agent catered to my needs and found three real estate agents who would help me in my situation. They did all the legwork for me. Throughout the process, they kept in touch."
Preparing your house for open homes
When you put your home on the market, it is in your mutual interest to get the highest possible price for your home, but that may mean having to spend some money. Some of the hidden costs of selling your home include:
- Renovations and repairs
- Gardening and garden maintenance
- Home staging
Depending on the condition of your property, these costs can be low or significant. Who is going to pay for them? If one party is struggling on a small salary, they may not be willing to pay for renovations.
A real estate agent can be a big help in sorting out problems like these. They will do their utmost to find a mutually agreeable solution. For example, one party might pay for the necessary renovations and deduct half the cost after the sale of the home.
Reviewing all relevant offers
Another point of disagreement can come when offers are made on the home. One party may want to sell while the other wants to wait and get a higher offer. This can lead to serious arguments. A sensitive real estate agent can help reduce the stress by turning the conversation back to the facts of the sale:
- If the offered price was fair, they will show both parties examples of other properties that sold for around the same price
- If the offer was too low, the real estate agent may suggest asking for a higher offer or waiting until a more realistic offer is made
- If neither party can agree, the agent may be able to help them come to a mutually agreeable (and realistic) price
Dividing the sums
It is not your real estate agent's job to divide the sum of the sale. That is for you to decide through legal advice or the Family Court of Australia. Their job is to get the highest possible price for your property and help you both cooperate during the sale process.
There is no guarantee of a 50/50 split. As mentioned above, it depends on a number of factors. Once an agreement is made and signed by both parties, it is binding.
After your property is sold, it's time to put the past behind you and get on with your life. In the best case scenario, both parties will feel they got a fair deal and will be able to move on. Good divorce attorneys can help, and a good real estate agent can help both parties get the best outcome when they sell the house.