Divorcing & Own A House? Here’s What You Need To Know

Christian: [0:13] Welcome to another episode of the Awesome in Seattle podcast. This is your host, Christian Awesome, of the Awesome, Awesome Group at Wilson Realty Exchange, Inc. Now, the Awesome, Awesome Group, we are a group of Seattle area real estate agents. Now, we both live and work all over the Seattle metro area. We have people on the east side. We work up north, up s- down south. We're kinda all over, so we're not just Seattle-based. Just like to get that out there upfront. Today's episode, we're gonna talk about what happens to a home when people are going through a divorce. Often, when people are contemplating divorce, one of the first questions that they ask is, "What happens to the house?" We will answer that, as well as share with you some of our tips and tricks for helping you through this to make it as stress-free as possible. Now, we've helped numerous clients navigate this process over the years, and we've used all of this experience to make this as smooth and as fair as possible for everyone involved. Now, sitting next to me is my co-host, and one of the agents here on the Awesome, Awesome Group- Hello … Melanie Gadami.

Melanie: [1:13] Hi.

Christian: [1:14] Welcome, Mel. Welcome. Uh, so first, I kinda wanna explain Why I feel a little bit, uh, more personal about helping people through a divorce. Now, I got into real estate when I was 20 because I came back from, I don't know if you know this story, Mel. Came back from college my sophomore year, uh, for the summer, and my parents dropped the bombshell that, "Hey, we're getting divorced. Also, we're losing the house to foreclosure." Oh. So I took the money that I had saved, uh, through… Really, it was just student loan money that I'd never spent- Mm-hmm … and a work study job that I had saved up. I took my money, paid off their back mortgage payments- Oh, wow … fixed up the house, added some curb appeal, and I actually put it on the market for sale by owner. Now, again, I'm 20, maybe 21 at this point. I'm not a real estate agent, but I was a weird kid in that I would, as like an 11, 12-year-old, I would use my paper route, lawn mowing money, all the money that I had earned- Mm-hmm to buy those late night infomercial how to buy a house with no money but down like courses. Mm. So I had always been learning- Good kid … about real estate forever really. Um, and so I used those skills and that knowledge to help them through that process. Thankfully, looking back, a real estate agent helped the buyer side- Mm-hmm and really, that agent took over the show 'cause I didn't know what I was doing at that point. I thought I did, but I really didn't. And they were able to sell the house. We had enough proceeds left from the sale to pay me back, to pay off all of their joint bills and expenses, and to each walk away with $2,500 to start fresh. So it was the best case scenario for a really crappy situation, but that's how I got involved in being an agent. Now, after that, I was like, "You know what? I wanna help others that are going through this situation," 'cause I see that there's people that say they will help, but sometimes they aren't the most trustworthy. So I was like, "I wanna help people in this situation." Unfortunately, I was a 20-year-old, 21-year-old baby-faced non-real estate agent, and people just didn't trust me. So that's when I got my real estate license and started down that path. So that's why I kind of have a soft spot for helping people that are going through this process. I understand it. I've lived through it. It's not always the easiest, but thankfully, with our knowledge, 'cause we've both helped numerous clients over the years that are going through this, we have created this system that works really well. So all people have to do is just follow it. We stay very neutral. We are, uh, over-communicative with all parties so everyone knows what's going on and that's, that's kinda how we roll.

Melanie: [4:00] Thanks for sharing that story, Christian.

Christian: [4:02] Yeah.

Melanie: [4:51] Uh, let's first talk about what happens when one person is able to keep the property, also known as buying out the other spouse. This means that one party pays their ex according to the current value of the home, and the amount that the ex is set to receive. Yep. So generally, this is done by refinancing the home to pay off the other person, and then a quit claim deed is issued, which then removes the party who is not keeping the home from being on the mortgage. So they are no longer responsible for any of the mortgage payments. There are obviously many other ways that this can play out. However, we're just gonna be super general. Every situation is different, and you should consult with, obviously, an attorney in this situation about all your options and your specific situation. And we are happy to send you a referral if you guys need one. Another scenario that people bring up is keeping the house and renting it out to someone else. Um, we're all about investing in real estate, but generally this doesn't work out well because people don't wanna essentially run a business together if they're divorced, which makes sense, 'cause it can be challenging.

Christian: [5:18] Yeah. Now let's talk about selling the house. Now, if the real estate owned by the couple is going to be sold, then that's where we, as your agent, like to come in. Like I said in the intro, we work all over the Seattle metro area, so east side, up north, down south. We work all those areas. Thankfully, we work as a team, so we have agents that do specialize all over the place. On that note, when you do file for divorce, generally it takes about 12 months to get your case seen by the judge. This can actually be a positive for you because you can then use that time to time the market of when your house comes on the market for sale. Uh, typically, you should avoid selling your house anywhere from the winter months, so October to December. The reason why is generally there's the fewest number of buyers available, the weather is not great. It's not really conducive for getting the most money for your home when you're selling. So generally, try not to sell between October and December. You should try, if you are able to time it, try to sell between March and July. Those are generally the months that you're gonna get the most money for the home. Now, Seattle's current market, Seattle area metro, is so hungry for inventory that you'll probably do all right if you didn't time it perfectly because we just don't have that, that inventory. There's so many buyers and so few homes for sale that it will probably be okay as long as you price it correctly from the get-go. That said, still try not to sell in November and December. Yes. Like October, maybe you can get away with it. Really don't try in November and December.

Melanie: [6:58] Yeah.

Christian: [6:59] One thing to note too is that you don't need to understand or have laid out yet how the proceeds of the sale will be dispersed. You don't need to figure that out before you decide to sell the home. That is often the biggest question that you do need to resolve during the sale of a home. But you could figure that out after the home sells. You could put the proceeds in an escrow account, a neutral third-party escrow account, and it can just sit there until you do determine how that is going to be split between the two of you. One tip we have, if possible, all parties should agree before the home comes on, on the market for sale who is going to do specific things, like who's gonna continue to pay the mortgage, who's gonna continue to pay the utilities, who's gonna maintain the yard, what are you gonna do if repairs pop up? And honestly, you should also have, if the home is on the market for a while, you should have a preset plan on how much and when exactly you are going to do price reductions if the house doesn't sell immediately Now your agent will be able to, especially if you work with us, your agent will be able to help you determine what those time frames and those amounts should be. But this is all something that you should determine before you even come on the market. Also, we like parties to agree to their goal. Do they want to sell for the most money, or do they want to sell as fast as possible? Now, this is kind of like one of those old scales, like time or money. Which one's more important? Sometimes it's both, but that's not really ever possible. So if you're trying to get the absolute top dollar from your home, you might need to spend some money on those updates and repair, and that always takes time. Now, if you just wanna get the quickest sale, you're probably not going to have the house in the best shape, which means you're not going to get top dollar. If you're working with us as your agent, we will actually come out, help you assess the home, help you determine what actually needs to be done before we come on the market and what doesn't need to be done before we come on the market. Um, we'll tell you, "Hey, I know you planned these seven items that you want to do before we come on. You only need to do two of those. The other five, buyers are not gonna care about." Now, this is the beautiful thing about working with us, the Awesome and Awesome Group. We work with a ton of buyers, so we understand what buyers are looking for and what's important to them and what's not important to them, and that's where we can come in, uh, into play and really help you understand, well, you don't need to do these things 'cause the buyer's not gonna care. They're, that's not gonna stop them from making an offer on the house.

Melanie: [9:33] All right, let's talk about CMA versus appraisal.

Christian: [9:35] Yeah.

Melanie: [9:36] Often, your attorney will need a way to decide the value of your home, and there are two ways to do this. Appraisal being one, which is a neutral third party who tours the home and looks at homes that have sold within the last six months and determines the home's value. They generally cost about $600.

Christian: [9:58] Yeah, sometimes up to 1,000, depending on the square feet and stuff, too, and how fast you need it, but yeah.

Melanie: [10:02] And CMA being another, which is free, and it's done by your real estate agent, um, in the area. They look at the home, and they compare it to other properties for sale. Only an appraisal is admissible, but oftentimes a CMA will work to get a sense of value.

Christian: [10:18] Yep.

Melanie: [10:19] Divorce takes a long time, so if you rely on appraisals, you will need to do them over and over, which obviously that's gonna cost you money, because they don't reflect current market conditions, and conditions can change pretty fast in Seattle.

Christian: [10:38] Yeah, I mean, and we- I heard of a case recently where they were on their third appraisal because it had taken so long. So they got one done, they had to update it a few months later, they had to update it again a few months later. When it takes a year, and you get one a year out- Right … the market can change drastically in one year.

Melanie: [10:56] Mm-hmm.

Christian: [10:56] Like it has in this last year. Mm-hmm. So sometimes it's best to rely on your agent to create a CMA for you, which is a comparable market analysis. Again, this can't be used in the case in court, but we can give you a better idea on what pricing might be, um, and it's free, so lean on us. So how does the process of selling actually work? So we see ourselves as a neutral third party. We do not represent one side or the other, we represent both of you. Our job is simply to get the house sold as quickly as possible for the most money possible. We never favor one side or the other, and communication during this process is critical and huge. We like to over-communicate during this process. We are gonna stay in constant communication with everyone. For example, if I have a phone call with one of the spouses, I will then send a recap email to both spouses, or a re- ecap- recap text message to both parties just to let everyone know what was talked about or decided upon, if it's not something that needs to be jointly decided upon. Um, that way everyone's on the same page as we navigate through this journey, trying to get to our goal of selling the house Repairs. Now, this is something that is really important and has been super helpful for people in the past that we have helped, and that is where you set kind of a benchmark between what's a minor repair and what's a major repair. Now, in our experience, it's best to set a dollar amount that dictates if there's any repairs that cost less than this amount, just get it done. We don't need both parties' approval to get it done. Often, in cases in the past, that amount has been around $5,000 generally. Now, this can… Obviously, it's up in the air, and depending on how much cash everyone has, this can change. Um, but generally, any repairs that do or updates that do require, uh, more than $5,000, that's when both parties need to decide and agree upon it. But anything under that, that's where it's like, "Yep, let's get that done." That toilet's leaking, just get it done. That sink has a clog in it, just get it done. The shower needs to be re-grouted, just get it done. Those types of things don't cost that much. They are important, and you don't need to spend time haggling over whether or not to get it done. So lean on your agent to use their best judgment on whether or not these repairs even need to be done. One other thing that we do that kind of sets us apart is we really will take over, kind of like in a concierge mode, helping you prep the home for sale so you guys don't have to do much. So we will take over coordinating the house cleaning, the yard work, junk removal if needed. So if there's items that no one wants and you just need to get rid of them, we'll coordinate getting rid of them. We'll take care of hiring the stager and getting them out there, out there and scheduling that. Same with professional photos or a 3D Matterport tour, or maybe there's a house video. All of those things are things that we will take over so you don't have to. There's a lot of other little things that pop up as well. If we can do it, we will. We'll just take it off your plate 'cause we know that you're already going through a ses- stressful situation. Ideally, to get the most money, we suggest that the house should be vacant when we're on the market. Now, one party might be living in the house still. If that's the case, we recommend getting out of town for the week that we're on the market. When we have such low inventory, like right now, we actually recommend that, you know, for, for that week that we're on the market, 'cause generally it is only a week if you price it right, you're gone. That allows the house to be sold so much faster for a higher amount of money, because the buyers can just get in and get out. They can get in any time they want. They don't have to get approval from you to get out of the house first. You don't have to worry about keeping it clean the whole entire time. It's just so much easier and less stressful if you're just not there. So that's, that's a huge, huge one.

Melanie: [15:02] If you're getting divorced, look back at your records. You wanna find out how much you contributed to the home, so how much you paid towards the down payment, and hopefully you kept a clear record of all of this, and it will potentially play a role in how much you're entitled to. If you were unmarried at the time that the home was purchased, try to locate any agreements you made about the home.

Christian: [15:27] Yep. So

Melanie: [15:28] that's just a little tip.

Christian: [15:29] It is a good tip. All right, moving on. So there are some very specific loan programs that some lenders actually assist people that are in the middle of divorce with, which is pretty unique. Not every lender has this, and they're not even available from the lenders that do have it all the time. So this is gonna be a very niche product and loan option for some people, if it's even available at the time of you buying. Now, what happens is, for one example, is if one person is keeping the home and the other one is trying to buy their own house What this one loan program that I'm thinking of will do is they will actually not take into account the current mortgage on the current house. This also goes for if you guys are selling the house and you wanna buy separately after the fact. They won't take into account the current home because they know that it's not gonna be on your record, your credit report long-term. So that, they will be shielded from seeing or even caring about the current home and its debt-to-income ratio and how much that's going to affect you. They'll remove that from your credit profile, allow you to qualify for that next home purchase without being dragged down by the current home that you're trying to get rid of, or that the other party is staying in. If you need a recommendation for a lender that can offer these times of things, or types of loans, just reach out. We're happy to share that with you. Now, after helping people sell a home when they are getting divorced, there's been numerous times where both parties separately, individually, have come back to have us help them buy their next house. So as a couple, they jointly sold the house that they co-owned. After that sale was complete, they then came back to us and individually bought their own houses. And what this showed us was, one, we were doing a good job of being neutral. Two, we did a good enough job where they trusted us, and were willing to work with us again because we did such a good job for them. So that was really great for us to see, that we were doing a good job of being that neutral third party throughout the process.

Melanie: [17:28] Exactly,

Christian: [17:30] which is important. Yeah. So that is all for this episode. I hope you learned a ton. If you are in the process of getting divorced, and you're thinking of selling your house, we would love to have a conversation with you. We kind of do specialize in this as one of the things that we specialize in. It's, it's not necessarily a fun process, and it's one that not everyone knows how to handle as an agent. We've helped numerous people over the years do it, and I mean, you just did it within the last month. I helped someone that had just gone through it with the purchase side of things, and it's… You need to find someone that is an expert in this. So- And trustworthy. And trustworthy, yes. That's why we have done this podcast now for almost four years at this point. We have a ton of credibility, we've helped lots of people through this, and we realized, hey, it's finally time that we talk about it. It's kind of a taboo, not a subject people really wanna talk about or listen to. Yeah. But it's really an important one that people do need to learn about. So if you are interested in chatting with us, just reach out to us directly. We would love to help you. There's not gonna be any pressure or no commitment in using us or anything like that. We just wanna help you out, help you through this process. Um, and if you wanna share this episode with your spouse, feel free, because it's good for everyone to be on the same page. That is it, uh, for this episode of the Awesome in Seattle podcast. We'll see you in two more weeks. See ya. Bye.