Selling a House During Divorce in California
One of the most stressful parts of getting through a divorce is dividing assets, including the marital home in California. Negotiating whether to sell the house or not can take days or even months. However, the best decision may be to sell the home and divide the profit so both parties can move on with their lives.
The process of selling a marital house during divorce is very similar to how you would sell a typical home in California. The home could be sold with a real estate agent who will manage the listing and stage the home. Or, the home could be sold as is to a cash buyer who simplifies and speeds up the entire home sale. Either way, once an offer is accepted and the deal is closed, the profit is divided between the two parties based on the states divorce laws.
Selling a home during divorce can be complicated depending on which route you take. The more decisions that have to be made, the more disagreements that often arise during the sale.
Divorce laws vary state to state— we recommend seeking out an attorney in family law specific to California regarding capital gains tax and dividing assets.
If you are going through a divorce or are just plain curious, we’ll help you understand better how to sell real estate during this tough time. Make sure to bookmark this page and share it with others who might need it!
What Happens to the House in a Divorce?
One of the inevitable consequences when going through a divorce is a property dispute. One spouse might want to keep the California home, while the other wants to sell it. There are also cases when both parties want to keep the house.
So, what happens to the home? Who gets the home in the end?
The answer to this is complicated because every divorce is different. It would depend on both parties involved who will get the home or if it will be sold so the profit can be divided. But in most cases, the assets of the couple, including real estate, should be split or sold.
A couple divorcing has four options in terms of dealing with their marital home:
1. Split Large Assets
If both parties have large marital assets such as a family house and a vacation home in California, this should be split so each would own assets that have roughly the same amount.
In cases where there is only one house, the other party can settle for other assets such as cars, art collections, stocks, etc.
This option is highly suggested since the couple would not need to go through the stress of selling a property while dealing with a divorce. There would be no marketing or agreeing on an offer.
Of course, splitting large assets requires negotiating who gets what so both parties can land on an equitable agreement.
2. Co-Own the House
If the couple divorcing is still amicable toward each other, co-owning the California house is also an option. This means that the two would write a co-ownership plan that states how the mortgage would be split, who would pay for the repairs, etc.
The couple may also designate who will divide the proceeds of the sale in case the home gets sold at some point.
This option is ideal if both parties want their children to live in the same house. However, this doesn’t come without any cons.
For starters, co-owning real estate means being tethered to the other party financially. The credit scores of both spouses would also be affected in case of late payments.
3. Buy Out the Other Spouse
Most divorcing couples also settle for a buyout. This means that the spouse who wants to keep the California home would buy it from the other person.
The amount may be half of the market value of the house or less depending on the income of both parties, the earning potential of the house, and their contribution to the property.
This option is perfect for spouses with children who go to school in the area or if selling during that period in time is not favorable.
Before deciding on a buyout, the interested party should make sure that the cash they’ll be paying is not included in the divorce proceedings. Also, they have to ensure that they have enough resources to pay the mortgage on their own.
4. Sell the House
As mentioned in the introduction, selling the house on the California real estate market is a common option since it can give closure to both parties. However, this only makes sense when there is equity to extract from the home.
This will also provide the divorcing couple with enough cash to settle payments for their debts, real estate agent, and divorce attorneys while buying new places.
Note, however, that if neither of the parties stayed on the property for two years, they would have to pay capital gains tax.
Do I Have to Sell My House in a Divorce?
If the divorcing couple is going back and forth about whether they should sell the house or not, there are a couple of reasons why selling is often the better choice…
Legal Battles
Most commonly, both parties contributed to buying the marital home in California, even if it is not a 50/50 share. Thus, they may both want to keep the home.
If one spouse wants to sell, while the other wants to keep the house, both parties must agree on terms.
Legal battles can complicate the divorce further. If they failed to settle with an agreement, the court will decide and it may not work out as either of the spouses wanted.
If the divorcing couple settles to sell the home in California, they can avoid a lot of stress by avoiding a larger legal battle. Yes, selling takes time and energy, but in the end, the couple can split the sales and move on.
Liability Risks
When a spouse decides to buy out the other party, that would mean sole ownership and higher liability risks.
The spouse who wants to keep the home would need to talk to the lender so he can finance it through a single income. If the lender thinks that the person who’s buying the home cannot afford it because the payment will increase, the lender won’t approve the sole ownership.
Further, if the other spouse stops paying for the mortgage, the other spouse is liable putting the property at risk of foreclosure if unable to make the full payment.
Selling the home in California can help avoid these complications.
Financial Reasons
If both parties don’t plan on living in the home anymore, selling the family home on the California market before the divorce financially makes sense. Both parties can divide the proceeds as the court deems fair.
To understand the financial pros and cons completely, it is best to seek legal advice from an attorney in California who’s an expert in taxes, tax law, capital gains tax and other financial matters related to divorce.
Selling Property in California Before Divorce Settlement
When the house is put on sale after a divorce is filed, potential buyers would know how eager the couple is to sell the home. They may even give lower offers for the property. To avoid this, the family house in California should be sold prior to the divorce.
Here are a few notes when selling a home in California before divorce:
- If both parties want to sell the home for market value, they should still live in the same home so potential buyers wouldn’t sense that separation is in the works.
- If staying is not possible, don’t clear out all the things of the other spouse.
- When someone comes forward with an offer, the two should get the deal done together, not just one spouse.
Again, the couple’s goal should be to prevent the buyer from sensing how desperate they are to get rid of the home to avoid receiving a low offer.
Pros of Selling a Home Before the Divorce
- Home value is protected.
- The negotiating power of the seller is still intact.
- Disputes as to who gets the house after divorce would be avoided.
Con of Selling the House Before a Divorce
- Staying together or pretending to still be together after a marriage falls out can be difficult.
How to Sell a House During a Divorce in California
While it is not suggested to sell the home when the divorce is being processed, some couples may opt to do this.
There are a lot of things to consider when a couple takes this path, especially when they aren’t living on the property anymore…
- Home maintenance
- Approval of showing requests
- Mortgage payments, property taxes, home insurance
- Repairs after the home inspection
If you’re curious about how to sell a house in California during a divorce with a real estate agent, it is similar to any other home sale; however, the varying interests of the two parties complicate the sale, especially when setting an asking price.
Here is the detailed process of selling a house during a divorce in California:
- Step 1. Make home improvements. The couple must decide whether to make home improvements or sell the property as-is. If they opt for the former, they would have to talk about how they’ll finance it or which spouse will be in charge.
- Step 2. Hire a real estate agent specializing in selling properties of couples in divorce. The parties should get a real estate agent that they both like. One should not decide for the other person. Also, the real estate agent should be knowledgeable in selling houses during divorce in California to avoid lowball offers.
- Step 3. Divide the cost of staging the house and marketing between the two parties. The cost of staging and marketing a home is not cheap, especially if the property is not maintained well. That said, both parties should decide on how they’ll divide the costs among them and who would take charge of issuing payments, etc.
- Step 4. Set a price that both parties agree with. The asking price should also be agreed upon by the couple, and it should be based on the fair market value of the property. This can affect their other divorce negotiations, so they should set the price carefully. A real estate agent and a divorce attorney can be involved in this.
- Step 5. Accept an offer that both parties agree on. When an offer has been placed, the decision of accepting or making a counteroffer should involve both parties. The home sale should not be closed unless the offer is accepted by both, not just one spouse.
- Step 6. Split the sale of the house. When the house is sold and the two parties are amicable, there won’t be any issues in splitting the sale. Of course, this is after they have settled payments for the mortgage, taxes, real estate agent, closing costs, etc. In case the division of profit isn’t settled, a more complicated process would ensue. We have explained this in detail in the latter part of this article.
Pros of Selling the House During a Divorce
- This allows the couple more time to plan who will be responsible for what actions.
- The California divorce attorney can offer counsel to sell the home fast.
Cons of Selling the House During a Divorce
- Prospective buyers can use the divorce as leverage.
- The stress of the divorcing couple due to the ongoing divorce can negatively affect aspects of the home sale.
Selling a Home in California After the Divorce Settlement
Once the divorce is finalized and assets are divided, there is only one person in charge of the home sale. This means no conflicts when making decisions in relation to the home sale in California.
In addition, prospective buyers won’t be able to use a divorce to their advantage. There is no blatant desperation to sell the property, so the offers will be as competitive as selling a house normally.
Pros of Selling the House After a Divorce
- The spouse who got the house has no one to argue with in terms of decision-making.
- Moving out is easier because only one person is involved.
- The focus of the spouse in charge is undivided since there’s no more divorce to think about.
- Prospective buyers have no reason to offer a lower price because there is less desperation to get rid of the property.
Con of Selling the House After a Divorce
- The sale of the house depends solely on you. There is no other spouse to make decisions if things get difficult when selling a home.
How to Divide the Profit From a House Sale During Divorce
If the family home in California is sold while the divorce is ongoing, dividing the profit would have to go through the attorneys of the couple.
The attorneys can identify if the real estate falls under community property states or equitable distribution states. The difference between community property and equitable distribution is whether the assets are divided equally or equitably.
If the house is not declared as a community property state, the court and divorce attorneys will negotiate and decide what is equitable. This is right after tax and mortgage payments have been settled.
Splitting the sale after selling the home is complicated. One spouse can demand a larger portion of the sale if they have a larger contribution to the purchasing and upkeep of the house.
When the division of proceeds isn’t settled between divorce attorneys, the court will make the final ruling. Often, the decision of the court is not really in favor of anyone.
Thus, it is really suggested if the couple can reach a mutual agreement on their own.
3 Tips on Selling Your House During a Divorce in California
Here are 3 valuable pieces of advice that a couple can consider when selling a home during a divorce in California.
1. Sell the Marital House During Summer
If there are children involved, sell the house during summer in California so it won’t impact their schooling. Remember that changing residences is not easy, especially for a child.
If you must sell your home in the middle of a school year keep in mind the impact to your child’s routine and emotional stress, so they feel supported.
2. Sell the Marital House During Spring
If you can wait to sell your house, wait for spring. Buyers are more enthusiastic to purchase a house during spring because it is warmer and the school year is ending. It is also when people receive their tax refunds, so buyers have some tax money to spend.
3. Sell the Marital House to an Investor or Cash Home Buyer
Couples desperate to sell their family home fast should consider real estate investors and cash home buyers in California. These buyers have the financial resources to make fast cash offers. This lets both spouses extract their equity and move on ASAP.
Unlike selling on the market with a real estate agent, a fast sale with a cash buyer means less months paying taxes, insurance, mortgage payments, utilities, and maintenance. Selling your house to an investor in California is a popular option amongst couples getting divorced because of the conveniences.
Key Takeaways: Selling a House During Divorce in California
It’s no surprise that selling the marital house during a divorce in California is stressful. This is to be expected since the two parties involved in the decision-making are divorcing in the first place…
That said, selling your home should be done before the divorce is filed or after it is settled. Selling your home when the divorce is ongoing could worsen the anonymity between you and your spouse leading to lower value offers on the market.
However, cash buyers are a hassle free solution that many divorcing couples seek out. Divorcing spouses can get cash in an amount they agree upon and close in as little as 7 days. No one has to agree on repair costs or related expenses. It’s fast and easy.
If selling your home in California during a divorce is causing you headaches, let us help out. Here at Sell My House Fast, we will give you a free, no-obligation cash offer and let you choose the closing date of the sale! Fill out the form below or contact us at (844) 207-0788 if you are interested.
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Selling a House During Divorce California
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Author: Andy Kolodgie
Andy Kolodgie is an experienced real estate investor with a network that expands nationwide. As owner of Sell My House Fast, Andy’s goal is to provide home sellers with more options to their real estate problems than a traditional home sale. He’s been featured on multiple publications including Yahoo Finance, MSN, HomeLight, Credit.com, Apartment Therapy, Business.com, LegalZoom, Zolo, and Creditcards.com.
