You are getting divorced, and you know you have to sell your house. You also know you need to have an attorney, but every time you open that monthly bill, you really don’t want to incur any more fees than you have to. Besides, you have a great realtor, why would you spend money talking to an attorney? You just want to sell the house fast, for top dollar, and then have the title company hold the proceeds until the personal property and spousal support get worked out.
I just got a call from a potential client last week, who told me that Wife had filed for a divorce, but they were going to sell the house fast, for top dollar, and have the title company hold the proceeds while they worked out the rest of the details. I asked who was living in the house. He said that Wife was, but he just wants to get the house sold, he knows she will do whatever is necessary to sell the house fast. I asked if both of them had signed a realtor agreement. He said he thought so, but couldn’t remember the name of the realtor. I asked if they had agreed on an initial listing price. He was sure that they had agreement, but hadn’t actually talked about it. I then asked if the realtor had made repair recommendations in order to sell the house. There was a long pause, and he just said he wanted to sell the house fast for top dollar.
Now my good friend, John DeCosta, who is a great realtor, has one of two reactions, or possibly both. He either has a shudder that starts from his elbows and works its way up to his neck and ends up in his checks, or he immediately tells me that he is not going to take my referral, at least not until there is a much better understanding between the parties.
Here’s where an attorney can work with your realtor to get agreement on issues before the problem becomes a crisis and you end up losing a great sale because you couldn’t get agreement.
1. Get agreement on prelisting issues:
- Both parties need to sign the listing agreement. If one party wants to sell and the other party doesn’t, it isn’t going to work. The court does not have the authority to order the property to be sold until the final divorce judgment, and trying to push the process hoping that the other side will start agreeing with you is not productive. That may be part of the reason why you are getting divorced.
- There needs to be agreement that the realtor’s recommendations to get the house ready to sell will be done, as well as who is going to do the work, how it is going to be paid for, and how it will be dealt with in the end.
- There needs to be agreement on the listing price, and the parties’ need to get advice from their realtor as to what is a realistic price. I had a client who was living in the house, and his wife just knew in her heart of hearts that it was worth what she had heard about similar houses selling in a different neighborhood in 2007. The realtor wanted the listing, so she agreed to list it for $780,000 with no upgrades or repairs. Guess what? 8 months later, several thousand dollars in house payments that cause deficit spending and $6,000 in repairs later, it finally sold for $625,000. Magical thinking that if you just wait long enough, you will get your price just wastes everyone’s time.
- Get agreement on what property is going with the spouse who is not living in the house, and get it out of the house. Delaying a closing because you haven’t figured out who is taking what property and when it will be moved is a great way to lose a sale.
2. Set up some conditions for selling the house:
- The person in the house will keep the house in clean and marketable condition. The dishes will be done every morning and the toys picked up before you leave the house for the day. The house will be ready for a potential buyer walk through with an hour’s notice. Not 72 hours. Not 24 hours. One hour.
- If the realtor is able to do this, it can be helpful to have two people on the realtor team, one to talk to each side, and build up a relationship, so that each person will feel more willing to accept advice, without thinking that it is really coming from the other person that you are married to. Often mixed genders can work out better.
- Set up an expectation as to how long you will list the house before you reevaluate the listing price. This depends on the market conditions. It used to be that you would always list higher than what you expect to get, so that you can negotiate to what you really want. That doesn’t work anymore in the market condition. If you are asking more than 105% of what the real fair market value is, you won’t sell it, because no one will even look at it.
3. Have a dispute resolution system in place.
- Start with the realtor
- Then have the attorneys talk about it
- Have an agreement in advance that you will go to an arbitrator within 72 hours of an issue coming up, and that both parties agree to the arbitrator’s decision
- If the house is being sold after the divorce trial, go to the judge on an ex-parte basis, and ask for a quick decision with limited facts being presented. You may lose on whether you get the dining room table, but you won’t lose the sale.
4. Title companies do not normally hold money for parties for months at a time.
- That’s not their job. If it is in question what is going to happen with the house sale proceeds, then have one of the attorneys hold it in his or her trust account until there is agreement, or decision of the court, and make sure there is agreement that the proceeds will be not be used pending agreement.
5. Know where you are going to go once your house sells.
- In most cases, you cannot buy another house with the contingency that you are going to start selling your house. Develop a relationship with a mortgage broker, and find out if you are going to be able to prequalify. If the divorce is pending, and not final, you do not want to be surprised to learn that you may not be able to buy a house while the divorce is pending, particularly if there are issues of spousal support, child support and property division to be decided.
Even the most reasonable of people can disagree, and even reasonable people can go temporarily insane during a divorce.If you map out a house sale in advance, you will stand a much better chance of retaining more of the money from the sale of the house, and less money fighting about the listing price, or who is going to get rid of the inflatable pool that has holes in it.Your realtor and both attorneys can make a great team.