Divorce And Real Estate Mistakes: My Story

 

Two thousand and two was the year it finally happened. After two of the most stressful years of my life, my divorce was finally official and I was able to move into the next chapter of my life. Even now, with many chapters completed since, I can’t help but think “I wish I knew then what I know now about divorce and real estate.” 

My ex and I lived in our family home for five years and when it came time for the decision on what to do with the home after the divorce, our attorneys advised us to order an appraisal to place a value on the home.

On that particular day, the home was appraised at $700,000.  We owed $400,000 (our mortgage) which means we had $300,000 in equity. Since the equity was divided equally, we each received $150,000.  

I was keeping the house so I not only needed to qualify for a new loan (refinance), but the mortgage was now much higher, $550,000 ($400,000 to take over the outstanding loan balance plus $150,000 to buy out my ex’s equity).

Back then, I wasn’t a real estate agent, nor was I a Certified Divorce Real Estate Specialist. I didn’t know that this plan would lead to several hardships down the road. I compiled a short list of lessons learned that can help anyone who is sharing a similar struggle. 

Here is what I wish I would have known about divorce and real estate:

1. I wish I had worked with a mortgage lender who is an expert in divorce (CDLP) from the get-go. This would have allowed me to fully understand if I could actually qualify for a mortgage since the equity in the home would be reduced (since I had to give my ex $150K)  Also, no one took into consideration the upfront fees for a refinance, as well as tax consequences and capital gains. Who pays for these? I did.
2. Our agreement was that I would take care of the expenses of the home and he would pay for his new rental and we would split the real estate taxes. Good idea? Nope. Why didn’t anyone suggest that we have a home inspection during the negotiations?  If any unknown issues had been raised, I would have been able to address them, but they weren’t.
3. Keeping up with the routine maintenance around the house, the yard in the summer, and snow removal in the winter was exhausting and expensive. I was also left with a house and garage full of items that neither of us wanted.  I had the burden to sell, toss or donate many of the items.

Divorce and real estate can get complicated…

One year after the divorce, I ended up putting the house on the market and it sold pretty quickly. Here’s the problem. The buyers asked for repairs to be done or a $10K credit at closing.  I also had to pay for closing costs, an attorney, and my real estate agent’s commission.

In hindsight, these fees should have been taken into consideration to determine a more accurate figure of what I had to pay my ex-husband for the home. The point is, instead of me paying him $150,000 for the home, a more accurate figure would have been $110,000.

I recommend structuring a property management agreement between the spouses so everything is outlined upfront.  This becomes an invaluable tool as the stress levels tend to escalate over the course of a divorce.

My story is part of the reason I decided to become a real estate agent and a Certified Divorce Real Estate Expert. Serving Chicago and the suburbs for 17 years and having the personal experience of going through a divorce, I have a passion for helping people get what’s fair and more accurate when it comes to their divorce and real estate.

Don’t get me wrong. Your divorce attorney might be wonderful, and your real estate agent might be great, too. But there’s a difference in hiring someone like me and it has to do with my training and education in divorce real estate. In many circumstances, I work as a neutral third party, in order to get the most amount of money for my clients in the least amount of time.

I have been trained to know what questions to ask, what variables and hidden expenses there are in real estate properties, and what the laws are when it comes to divorce and real estate.

In closing, divorce is difficult enough without the financial stress it places on a couple. One of the hardest things in this regard is when one or both partners walk away thinking their settlement is unfair. I know that feeling, which is why I’m here to take that possibility away.

I’d love to help you or at least be a part of your journey. Feel free to give me a call, even if you just have a question or need some information.