Looking to buy a home? Buyers should beware of the consequences of purchasing a home from a divorced couple.
According to CNNMoney.com, there are about one million divorces a year in the United States. The majority of houses owned by divorcing couples need to be sold, and many of them well below market price.
That may seem like good news for buyers, but if both divorcing spouses haven’t signed off on the selling agreement for that property, the deal could be easily derailed.
Alt=divorce House Buying GuideJoint ownership is the only remaining tie that connects couples. Sometimes they want to cut that tie as soon as possible. The problem is that while one spouse may want to get out in a hurry, the other might want to maximize profits.
So how do you protect yourself from disappointment and the potential waste of your time?
Real estate and mortgage expert Stuart Vener, President of Wilshire Holding Group, recommends against dealing with the owner directly unless you’re quite knowledgeable in real estate.
“First find yourself some competent representation such as a real estate agent. However, one of the best sources of information would be a good title officer who works at a title company — someone that works on conveyances and transfers.” Unlike a real estate attorney, a title officer won’t charge you $400 an hour.
Next, buyers should talk to their real estate agent about placing protective language in the offer. “They need to have it written iron-clad, so if the sellers accept the offer, they can’t get renege and back out of it; there wouldn’t be an escape clause in it,” advises Vener. On the other side of the deal, however, “Buyers need to have some kind of an escape clause, so their earnest money deposit can’t be held by the sellers. And because it’s a divorce, they really can’t deliver a clear title.”
One might think the court appoints a trustee to be in charge of selling the home for the divorcing couple. “They are not doing it, but they should,” Says Vener. “Quite often if it’s not a contentious divorce, the couple may ask one lawyer to sell the home, as a trustee-like position. However, divorce lawyers are not really knowledgeable and experienced in real estate conveyances. Likewise, a real estate lawyer really doesn’t want to do divorce work, so it’s kind of a catch 22.”
Vener also has some advice for the divorcing couple looking to sell their home:
“Be realistic. A property is worth what it’s worth today, and not necessarily what it was worth when you purchased it. If there is equity in the property and one person wants it, that person needs to be prepared to buy the other out. Couples going through divorce looking to sell their homes must look at it as a business decision; it’s not an emotional decision. These couples have to find a way to take the emotion out of the equation.”
You may find the home you’re looking for when a couple decides to divorce and sell, but take the necessary precautions to protect yourself. Make sure both parties in the couple are on the same page, and enroll the help of professionals who can be your knowledge bank and advocates.