In a divorce, you usually have two choices for what to do with your house: one of you buys the other out, or both of you sell the home and split the proceeds.
Even with a friendly separation, figuring out how to sell a property and divide the proceeds equitably can still be complicated. You’ll likely need to work with an experienced real estate agent and an attorney. Both will ensure the division of property goes smoothly and according to state law.
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Why do I need to sell my house?
Common reasons for selling a house in a divorce:
📜 A judge or court requires the sale. If a divorced couple can't decide on what to do with a jointly owned house, a court will mandate the sale.
✍ Neither spouse is eligible for the mortgage on their own. Mortgage lenders add the income of both spouses to determine if they’re eligible for a mortgage. If either of you wants to keep your home after the divorce, your lender will have to reevaluate your debt-to-income ratio (DTI) to decide if you're still eligible.
For example, if your combined level of DTI was 39% but your individual debt level is 42%, you may not be eligible for your loan anymore. Or if you bought your home using a government loan, you might pay a penalty for selling it before a certain period.
💸 One spouse can’t afford housing expenses alone. Even if you're still eligible for a mortgage, you might not be able to afford all the costs that come with homeownership, such as property taxes or maintenance.
Buy out vs. sell together
If you want to keep the house, you'll need enough cash to not only buy out your ex but also afford monthly housing payments on your own. Otherwise, selling the home could be the easiest way for both parties to get their fair shake.
One spouse buys out the other
In a divorce buyout, one spouse buys the equity of the other spouse and continues owning the home. For example, if you and your ex-spouse have $100,000 in home equity, a buyout might involve paying your ex-spouse $50,000 for sole ownership of the house.
The best reason to buy another spouse’s equity is to maintain a family home, either because you need the location for work or your children need it for school.
Both spouses sell the home and split the proceeds
If you and your spouse agree to sell the home together, you can divide the profits however you agree on (50/50, 40/60, 30/70).
Need to move fast? Try an iBuyer
If you’d rather sell your home fast versus getting top dollar, consider selling to an iBuyer. An iBuyer will evaluate your home online and make a quick cash offer, putting you on the fast track to closing.
Even if you sell to an iBuyer, we still recommend working closely with an attorney. Clever's licensed concierge team can connect you with top-rated realtors to perform a free professional CMA on your property.
Selling a house in a divorce: Step-by-step
The process of selling a house is generally the same as any other situation. But here are some differences and callouts to keep in mind.
1. Connect with a lawyer
Since each state has different laws regarding property sales in a divorce, you’ll need to consult a real estate attorney for legal advice on how best to proceed. If you’re already working with a divorce lawyer, they may be able to advise you on your home sale.
2. Find a real estate agent
A realtor can provide immense relief for spouses who are simply too tied up in the divorce to invest sufficient time and effort into their home sale. Their goal is to sell the home for the most money possible within a reasonable amount of time — something both spouses can agree is important.
It’s always a smart idea to enlist the services of a good real estate agent when selling your home — but especially so when you’re in the middle of a divorce.
3. Order an appraisal
An appraiser will help you figure out the market value of your home. This number could help you calculate your expected equity and set a listing price.
|Equity = market value – amount owed on mortgage|
Based on your equity, you should agree on how much you’d like to sell the home for — before listing.
4. List the home
You’ll typically encounter less hassle and disputes when you sell your home BEFORE filing for a divorce because you can keep:
- The property title in both your names and continue sharing housing expenses
- The proceeds from the home sale in escrow until it comes to divide them equally
Of course, this isn't always possible. Keep in mind if you’re selling AFTER a divorce, you’ll need to decide whose name will be on the title. You’ll likely need to create a new deed for the property, too.
🤔 Listing during or after a divorce? Consider these questions
- Will one person go on living in the home? If so, how will their living expenses factor into the home sale?
- Who will pay the mortgage during this time? Will they get more of the proceeds to off-set the additional costs?
- How will showings be handled? Who will be responsible for keeping the home in "show ready" condition?
- If the buyer requests repairs, who will pay for them? Who will be responsible for lawn care and daily maintenance?
If buyers know you’re listing because of a divorce, they might seize the moment to make a low offer in the hopes that you’ll be motivated to sell fast. To make sure you get a fair price, compare offers from a few buyers. Clever Offers can help you compare cash offers from multiple buyers, including companies and investors.
5. Agree on how to handle offers and negotiations
Signing a listing agreement before putting the home up for sale can help avoid conflict when it comes to points of negotiation. A listing agreement can outline:
- The price range in which you and your ex would like to sell the home
- Any contingencies you'd agree to accept
- A potential closing and move-out period
Your agent or attorney could also step in when needed to settle any disputes.
Closing on a home sale during a divorce generally works like a typical home sale, with some extra steps If you finalize the divorce before closing day:
- A review of your settlement. Your real estate agent and lawyer may look over your divorce agreement to confirm the home sale complies.
- A new title search. Buyers may check the title for any judgments or liens. This is more common if a title search was done before the divorce was finalized but not after.
7. Divide the sale proceeds
Jointly owned assets are typically split 50/50, while each person tends to keep whatever you brought into the marriage.
You can split the proceeds of a home sale 50/50, though a few things could justify one spouse getting a bigger cut, such as:
- Higher equity. If one person continues to pay the mortgage while the other doesn’t, they would have more equity.
- Maintenance and repairs. If one spouse pays for upkeep while the home is being sold, they might get more of the profits to reimburse themselves.
- An exchange of assets. You or your spouse may get an investment account, or other assets, instead of home equity.
Community property states
📍 Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin (opt-in states: Alaska, South Dakota, Tennessee)
Community property states require spouses to divide assets 50/50 in a divorce. This could be 50/50 per asset, or a 50/50 split of all assets combined. If one person bought the home before marriage, however, they might not have to split the sale 50/50.
Do I need to sell my house in a divorce?
You may need to sell your house in a divorce if a judge requires it, you're not eligible for the mortgage, or you can't afford it anymore.