In the first of a two-part series, learn how you can stave off disputes in this potentially fraught type of transaction with clear, consistent communication.
When a couple decides to divorce and there is real property involved, its sale cannot be treated as a normal transaction. While some divorces are amicable, the majority are not. In these cases, it’s all the more important for the listing agent selling the couple’s home to rise to the challenge with professionalism, market knowledge and effective communication. (Part two of this series discusses common scenarios when working with divorcing couples who are selling a home.)
The sale of a marital residence often carries significant emotional weight. Further, when both parties stand to receive the net proceeds of the home—typically the largest marital asset—the agent may find themselves caught in the middle. Understanding the details of the divorce as they relate to the sale of the home is essential to ensuring a smooth and profitable process for clients who are going through a tremendously stressful time in their lives.
Understanding the Terms of Sale
It’s extremely important to understand the terms of the sale from the outset, and no one is better equipped to clarify how decisions will be made than the attorneys involved in the divorce. First, how is the title to the property held? While in some states the title may not be dispositive, it helps to establish a baseline of who is on the title and the details of the home’s purchase.
It’s also essential to know whether the sale of the house was court-ordered or mutually agreed upon. Divorcing parties often agree to sell the home with specific parameters, which may include guidelines for selecting the real estate professional, determining a sale price, how reductions to the sale price may be initiated, and who will give the agents access to the home and offer acceptance criteria. The attorneys involved in the matter will be knowledgeable about these details and can guide the agent accordingly. If anything is unclear, always ask the attorneys. Speaking to both parties’ attorneys, even if they have the same information you do, is also advised to remain unbiased and professional.
Court-Ordered Sales
If both parties cannot agree on whether to sell the home, a court may order the property to be sold and the net proceeds to be divided between the sellers. While the court sets the basic parameters for the sale, the lawyers are responsible for working out many of the details with their clients. An agent can be extremely helpful in guiding the attorneys and clients on issues such as preparing the home for sale, determining a sale price and managing any reductions in the sale price.
While working with clients going through a divorce (and their respective attorneys) can be a difficult task, maintaining an open dialogue throughout the process will help move the sale along quickly and efficiently. Ensure that all communication is consistent and clear, with both sides receiving identical information. If one party brings up a good question, it’s important to offer the answer to both parties, preferably in writing. This helps to keep the agent out of the middle and corrects any miscommunications swiftly.
State-Specific Property Division
There are several different ways in which real property can be divided in a divorce, depending on where a transaction occurs. In community property states such as California, most property owned by married couples is divided equally, with each party owning a one-half share. In equitable distribution states like New York, property division is not always equal and considers various factors. Understanding each party’s motivation for the sale and their stake in it can be helpful, though the ultimate distribution is less relevant to the agent.
Representing sellers going through a divorce can be challenging but also rewarding. There are often heightened emotions at play. It’s important to remain professional and leverage your knowledge of the market to make informed decisions aimed at achieving the best result for both parties. Remain neutral and communicate effectively with both clients and attorneys. A solid understanding of the agreements and court orders, along with an open dialogue, will help ensure a smoother process that can lead to future referrals from attorneys who appreciate your assistance.
Source: nar.realtor
