One of the most stressful parts of getting through a divorce is dividing assets, including the marital home. Negotiating whether to sell the house or not can take days or even months.
However, the best decision would still be to sell the Colorado home and divide the profit so both parties can move on with their lives.
The process of selling a house during divorce is very similar to how you would sell a typical home. The home could be sold with a real estate agent who will manage the listing and stage the home.
Or, the home could be sold as is to a cash buyer who simplifies and speeds up the entire home sale. Either way, once an offer is accepted and the deal is closed, the profit is divided between the two parties based on the state’s divorce laws.
Selling a home during divorce can be complicated depending on which route you take. The more decisions that have to be made, the more disagreements that often arise during the sale.
Divorce laws vary state to state– we recommend seeking out an attorney in family law specific to your state regarding capital gains tax and dividing assets.
If you are going through a divorce or are just plain curious, we’ll help you understand better how to sell real estate during this tough time. Make sure to bookmark this page and share it with others who might need it!
What Happens to the House in a Divorce Colorado?
Deciding on selling a house during divorce is never easy as couples find it difficult to arrive at a consensus. While one among the couple might want to retain the marital home, the other might want to sell. Sometimes though, they both might agree not to sell the home in Colorado.
So, what happens to the home? Who gets the home in the end?
The answers to these questions are not easy because every divorce is different and comes with various emotions linked to the marital home. It lies with the parties to decide on selling a property during divorce and splitting the profits. This is typically the preferred option amongst divorcing couples as it is the easier way – sell marital assets and divide the proceeds of the sale.
Generally, there are four options before couples about selling a house during divorce.
1. Avoiding stress while splitting large assets
Splitting large assets like a family house or a vacation home so that both spouses get an equal share is somewhat tricky. The way out is to first make an inventory of all large assets like cars, houses, stocks, jewelry, art collections, and other similar assets. Based on their approximate value, the couple can then take possession of assets that work out to a rough division by value.
The advantage here is that both partners do not have to go through the stress of marketing their properties for sale. Divorce proceedings are usually more than what an individual can handle without losing sanity!
2. Co-owning the home
In rare cases where the divorcing couples are amicable towards each other, they might want to retain the house and co-own it instead of selling the property during the divorce. This arrangement usually takes place when they want the children to stay in the same house.
However, a few formalities must be completed first. The two should work out a co-ownership plan clearly stating who would pay for the repairs, maintenance, taxes, and how the mortgage would be split. A person should also be designated who will handle all the legalities should the house be sold in the future.
On the flip side, such an arrangement means that the couple will be financially tied to each other even after the divorce is finalized.
3. Buying out the house from the other spouse
A buyout is when you want to retain the house and buy out your spouse’s share of the property. The amount you pay will be about half of the market value of the property but that again depends on the income of both the parties, the contribution of each to the property, and what earnings you can get from the property.
When is this option preferred? An example is that the spouse with rights over the children wants to stay in the same house because of its proximity to schools.
If instead of selling your house during divorce in Colorado you want to retain it, ensure that the cash you are paying is not a part of the divorce proceedings. Also, take this step if you are on good financial grounds and have the resources to pay for the mortgage alone.
4. Sell the house
Selling a property during a divorce is advisable only when some equity can be extracted from the house. With equity present, divorcing couples can use the cash to settle debts, pay the divorce attorneys, and clear any pending bills apart from getting a place to stay individually. Selling the house is a relief too as it means full and final closure of all financial aspects connected to the divorce.
Keep in mind though that either of the parties should have stayed in the house for more than two years to avoid paying capital gains tax on the sale proceeds.
Do I Have to Sell My House in a Divorce Colorado?
If you are finding it hard to decide whether selling a house during divorce in Colorado is advisable, here are a few points to help you make up your mind.
1. Legal battles
Do not get into legal battles about whether to sell your home during divorce. It is better to mutually agree to avoid the matter going to court. Rarely do court orders work out to the satisfaction of both the parties.
The most common example is when both parties contribute to buying the house, even if it is not precisely half a share, and both want to retain the house for themselves. On the other hand, if one party wants to retain the house and the other wants to sell, it is an easy process to execute.
Rather than go into large legal battles, divorcing couples should sell the home, even though it takes time and energy, split the proceeds, and move on.
2. Liability risks
What happens when selling property during divorce is not preferred and instead one of the partners wants to buy the other one out?
In effect, this means sole ownership and taking on the liabilities that come with it. Let us consider that you want to buy out the house. First, you have to talk to the lender and find out if they want to finance the house on a single income. If the lender decides that you will not be able to pay for the increased mortgage liability, the plea for single ownership will not be approved.
Further, if at some stage one spouse stops making the mortgage payments and you are unable to afford the total payment, you run the risk of foreclosure.
Selling your house during divorce instead of buying it out from your spouse helps avoid unnecessary complications.
3. Financial reasons
When both partners do not intend to live in the house anymore and the divorce decree has not yet been announced in court, it makes financial sense to sell the house. The proceeds can then be divided as the court deems fair.
To understand the financial pros and cons completely, it is best to seek legal advice from an attorney who’s an expert in taxes, tax law, capital gains tax, and other financial matters related to divorce. Call us at Just Livin Realty to learn more about whether you should be selling your house during a divorce.
Selling Property Before Divorce Settlement Colorado
When the house is put on sale in Colorado after a divorce is filed, potential buyers would know how eager the couple is to sell the home. They would then give lower offers for the property. To avoid this, the family house should be sold prior to the divorce.
Here are a few notes when selling a home before divorce:
If both parties want to sell the home for market value, they should still live in the same home so potential buyers wouldn’t sense that separation is in the works.
If staying is not possible, don’t clear out all the things of the other spouse.
When someone comes forward with an offer, the two should get the deal done together, not just one spouse.
Again, the couple’s goal should be to prevent the buyer from sensing how desperate they are to get rid of the home to avoid receiving a low offer.
Pros of Selling a Home Before the Divorce
Home value is protected.
The negotiating power of the seller is still intact.
Disputes as to who gets the house after divorce would be avoided.
Con of Selling the House Before a Divorce
Staying together or pretending to still be together after a marriage falls out can be difficult.
How to Sell a House During a Divorce Colorado
While it is not suggested to sell the Colorado home when the divorce is being processed, some couples still opt to do this.
There are a lot of things to consider when a couple takes this path, especially when they aren’t living on the property anymore…
Home maintenance
Approval of showing requests
Mortgage payments, property taxes, home insurance
Repairs after the home inspection
If you’re curious about how to sell a house during a divorce with a real estate agent, it is similar to any other home sale; however, the varying interests of the two parties complicate the sale, especially when setting an asking price.
Check out the detailed process of selling a house during a divorce:
The process of selling a property during a divorce is not much different from any other typical real estate transaction. The only difference is that all costs related to selling a house during a divorce must be shared between the spouses. The same goes for decision-making and both must come to a consensus in all matters.
Let us go through the steps now of selling your house during divorce.
1. Make home improvements
The couple must decide whether the property should be sold in as-is condition or some repairs and renovations should be made to increase curb appeal and hence the value. If the latter is chosen, the couple must decide the financing of the renovation route and which spouse will take care of all the details.
2. Hire a real estate agent
Hire a real estate agent who is a specialist in real estate transactions on behalf of divorcing couples. That way, you can avoid lowball offers as the agent is knowledgeable in selling houses during divorces. The agent must also be acceptable to both parties to ensure transparency in the real estate deal.
3. Staging the house
Staging a house does not come cheap, especially if the house is not well-maintained, and it might cost a lot if you decide to hire a professional stager. However, expect a higher price for your house if you stage it. Decide with your spouse how to divide the cost of staging and who should oversee the project.
4. Set the asking price
Any one spouse should not decide the asking price of the property. It should be set by both based on the fair market value. Involve a real estate agent and a divorce attorney to set the price as the money can affect the divorce proceedings.
5. Accept an offer
Do not make an arbitrary decision when you receive an offer, the onus of either accepting it or making a counteroffer lies with both parties. No decision regarding selling the property during the divorce and closing should be taken without the consent of both parties.
6. Split the sale proceeds
If both parties have an amicable understanding and their house is sold, there should not be any bitterness while dividing the sale proceeds. This is after settlements have been made for mortgage payments, taxes, and closing costs. However, the opposite can be quite complicated and the splitting of the sale proceeds can be dragged to the courts.
What might happen has been explained later in this post.
Pros of Selling the House During a Divorce
This allows the couple more time to plan who will be responsible for what actions.
The divorce attorney can offer counsel to sell the home fast.
Cons of Selling the House During a Divorce
Prospective buyers can use the divorce as leverage.
The stress of the divorcing couple due to the ongoing divorce can negatively affect aspects of the home sale.
Selling a Home After the Divorce Settlement Colorado
Once the divorce is finalized and assets are divided, there is only one person in charge of the Colorado home sale. This means no conflicts when making decisions in relation to the home sale.
In addition, prospective buyers won’t be able to use a divorce to their advantage. There is no blatant desperation to sell the property, so the offers will be as competitive as selling a house normally.
Pros of Selling the House After a Divorce
The spouse who got the house has no one to argue with in terms of decision-making.
Moving out is easier because only one person is involved.
The focus of the spouse in charge is undivided since there’s no more divorce to think about.
Prospective buyers have no reason to offer a lower price because there is less desperation to get rid of the property.
Con of Selling the House After a Divorce
The sale of the house depends solely on you. There is no other spouse to make decisions if things get difficult when selling a home.
How to Divide the Profit From a House Sale During Divorce Colorado
If the family home is sold while the divorce is ongoing, dividing the profit would have to go through the attorneys of the couple.
The attorneys can identify if the real estate falls under community property states or equitable distribution states. This is the difference between community property and equitable distribution is whether the assets are divided equally or equitably.
If the Colorado house is not declared as a community property state, the court and divorce attorneys will negotiate and decide what is equitable. This is right after tax and mortgage payments have been settled.
Splitting the sale after selling the home is complicated. One spouse can demand a larger portion of the sale if they have a larger contribution to the purchasing and upkeep of the house.
When the division of proceeds isn’t settled between divorce attorneys, the court will make the final ruling. Often, the decision of the court is not really in favor of anyone.
Thus, it is really suggested if the couple can reach a mutual agreement on their own.
3 Tips on Selling Your House During a Divorce Colorado
Here are 3 valuable pieces of advice that a couple can consider when selling a home during a divorce.
1. Sell the Marital House During Summer
If there are children involved, sell the house during summer so it won’t impact their schooling. Remember that changing residences is not easy, especially for a child.
If you must sell your home in the middle of a school year keep in mind the impact to your child’s routine and emotional stress, so they feel supported.
2. Sell the Marital House During Spring
If you can wait to sell your house, wait for spring. Buyers are more enthusiastic to purchase a house during spring because it is warmer and the school year is ending. It is also when people receive their tax refunds, so buyers have some tax money to spend.
3. Sell the Marital House to an Investor or Cash Home Buyer
Couples desperate to sell their family home fast should consider real estate investors and cash home buyers. These buyers have the financial resources to make fast cash offers. This lets both spouses extract their equity and move on ASAP.
Unlike selling on the market with a real estate agent, a fast sale with a cash buyer means less months paying taxes, insurance, mortgage payments, utilities, and maintenance. Selling your Colorado house to an investor is a popular option amongst couples getting divorced because of the conveniences.
Key Takeaways: Selling a House During Divorce Colorado
It’s no surprise that selling the marital house during a divorce is stressful. This is to be expected since the two parties involved in the decision-making are divorcing in the first place…
That said, selling your Colorado home should be done before the divorce is filed or after it is settled. Selling your home when the divorce is ongoing could worsen the anonymity between you and your spouse leading to lower value offers on the market.
However, cash buyers are a hassle free solution that many divorcing couples seek out. Divorcing spouses can get cash in an amount they agree upon and close in as little as 7 days. No one has to agree on repair costs or related expenses. It’s fast and easy.
If selling your home during a divorce is causing you headaches, let us help out. Here at Sell My House Fast, we will give you a free, no-obligation cash offer and let you choose the closing date of the sale! Fill out the form below or contact us at (844) 207-0788 if you are interested.