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How to Navigate a House Buyout in Divorce

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b2ap3 thumbnail Upset Couple 2Ownership of the family home can be one of the most difficult things to negotiate with your spouse during the divorce process. Your spouse may resist if you want to keep the house or vice versa. A common way of dealing with this dispute is for one party to “buy out” the other for half of the home’s value.

Buyouts are not without risk. Home value fluctuates over time. Whichever party sells out his or her portion of the home (usually the noncustodial parent, if the couple has kids) could risk missing potential appreciation of the home’s value as the market changes; likewise, the buying party could feel that the price was too high if the home’s value falls. Buyouts can happen over time but usually occur as part of a divorce settlement.

Determining a Home’s Value in a Divorce

The simplest method of getting an estimate for your home’s value is to speak with a real estate agent about recent home sales in your neighborhood for houses similar to yours. They call these “comps” ”“ comparable rates.

If you do not trust the comps, you and your spouse can jointly hire an appraiser. Appraisers generally charge between $300 and $500 dollars for a formal report on your home’s worth and can help you and your spouse come to an agreement on a buyout price, especially if you and your spouse have different opinions of how much the house is worth. If you and your spouse disagree on the appraiser’s assessment, you can each have your own appraiser give a report. This can lead to issues at trial when the appraisal prices are far apart, a fairly common scenario in divorce courts. You can also ask a judge to decide on the value of the home, but in all likelihood, the judge will refer to the appraisers’ reports.

Obtaining Funds for the Buyout

After appraisals are made, there is the question of where to obtain the funds to do the buyout. Usually, the party keeping the house will have to refinance to buy out the other spouse. Alternatively, they can assume the mortgage payments and offer other property as payment for the home’s equity.

Home buyouts become even more complicated when children are involved, but can also create more options, such as a long-term plan for a buyout. If the spouse staying in the home does not qualify for a refinance and does not have the money for a buyout, it is not uncommon for him or her to continue to pay the mortgage until the kids turn 18, after which the home would be refinanced or sold and the payments delivered to the ex-spouse.

Talk to a Divorce Attorney Today to Discuss Your Options

Deciding who keeps the marital home can be stressful, but it doesn’t have to be. If you have any questions about how to choose, the costs of appraisal, or whether you might be able to negotiate home ownership by compromising on other financial aspects of divorce, speak with an Aurora divorce attorney.