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When Divorce Means Selling Your House

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Every once in a while, I hear someone comment that the Denver housing market isn’t suffering as much as other states.

That may very well be, but with single-family home sales dropping an average of 19.6% since last year and median home sales prices down 3.4%, I have also seen how hard it can be for divorcing couples to sell their home for their asking amount.

For that matter, it can be hard for Denver couples to sell their home in a timely manner at all.

Selling a house can take a long time””sometimes months or even more than a year. As of May 2011, the average length of time that a single-family home stayed on the market before being sold was about three and a half months””a month and a half longer than this time last year. That number may also rise depending on the price of your house. The more expensive your home’s listing price, the longer it may take to sell. A house that you owned with your spouse can rapidly become an albatross around your neck if you are still paying mortgage on a relationship that has ended.

So what do you do if you want to move forward with your divorce sooner rather than later, but your house isn’t selling immediately?

  1. Transfer mortgage over to one person’s name ”“ If one of you can afford to pay for the mortgage, you can refinance the house into that person’s name. Pro: Reduces some urgency, giving you more time to sell the house. Con: Requires legal and financial paperwork as well as negotiation for a fair and equitable buy-out.
  2. Joint mortgage responsibility ”“ During the process of your divorce, you can determine a fair division of the mortgage so that both parties remain responsible for the house payments. Pros: The entire mortgage payment will not fall solely onto one person. Con: Your finances and obligations will be tied to your ex until the house sells””potentially long after the divorce has been finalized.
  3. Consider short sale ”“ A short sale is essentially selling your house very quickly for less than the mortgage amount. It requires an agreement with your lender and is frequently easier to accomplish if the couple has good credit. Pro: Enables you to break ties with your (soon-to-be-former) spouse in a quick manner, without defaulting on your loan. Con: House will sell faster, but neither of you will make money from the sale. Research has also proven that short sales may be just as damaging to your credit as a foreclosure. Consider this option carefully.

Conclusion

I know that a house””or any jointly owned land or property””can be one of the biggest challenges in any divorce, outside of children. While Colorado’s housing market has fared better than some, it is still slow, and selling your house can be both an expensive and drawn-out process.

While it may seem overwhelming or painful to deal with right now””as you are eager to start the next phase of your life””the decisions you make regarding your joint property now will stay with you for the rest of your life.

Each individual and couple has different needs and obstacles to face when selling your house, so there isn’t necessarily a right or wrong path to choose. Hopefully the information I have provided has left you with the comfort that it’s not hopeless, and there are options available to you.