Too close to home: When the COVID-19 shutdown leads to divorce, how to sell your property amicably.
By Megan Johnson Globe Correspondent, Updated August 16, 2020, 12:00 a.m.
When guests sign in to Loren Larsen’s weekly digital events for people affected by divorce, they are asked to check a box next to the issues they have questions about, on everything from legal advice to emotional support. Since the pandemic began, however, the majority have real estate questions.
“I’m getting a lot more people checking off ‘I need to talk to a realtor.’ If I had to guess, 60 percent more attendees are checking that box now than they were before COVID,” said Larsen, a former divorce lawyer who now works as a realtor with Compass, where the majority of her clients are people going through a divorce.
Certainly, there are data to demonstrate that pandemics wreak havoc on relationships. Back in April, some cities in China experienced a spike in divorce applications, as people started leaving their homes for the first time after months in quarantine. Here in Massachusetts, that increase could be right around the bend.
“I think what COVID is doing is catalyzing them to move out of their home. People going through a divorce don’t know what the next step is. They’re usually just paralyzed. They don’t know what they need first. A lawyer? A mortgage?” said Larsen, who hosts the events with Vesta, a network that helps people experiencing divorce. “Now they walk into that room saying: ‘I need to talk to a realtor. We need out.’ ”
Thanks to COVID-19, it’s become nearly impossible for unhappy couples to use physical distance as a means of keeping the peace.
“It brought everything to the forefront and threw it out there,” said O’Necia Simpson, a real estate agent with Coldwell Banker in Cambridge. “When you can be away from the person, you can kind of mitigate it. There’s no mitigation now. Within a week of being confined in that space with someone you’re having issues with, it’s gonna blow up.”
But if getting a home prepped and ready to sell is a challenge under normal circumstances, it can seem unachievable during a divorce. Monica O’Neal, a Boston-based clinical psychologist and relationship expert, said patients frequently bring up the trials and tribulations of selling a home during a split.
“The home is emblematic of loss of marriage or feeling of helplessness,” O’Neal said.
If you’re considering selling your home during a divorce, here are important things to keep in mind:
Align your goals. The first step is determining what you want your endgame to be. By solidifying your ideal outcome, you’re able to start working backward to achieve those goals. “Get a Google document or spreadsheet, and start writing down everything,” Simpson said. Construct a solid timeline in which both parties settle on what dates you want everything to take place and when you want to see the sale close. “Going into it blindly can bring up a lot of issues along the way, and it could derail the entire transaction,” Simpson said.
Timing is everything. One of the most important issues couples face when selling a home during a divorce is determining when to put the home on the market. “In most cases, it is advantageous to sell before your divorce is final,” said Larsen. Why? Doing the home inspection while you’re still married lets both parties determine which repairs need to be performed and allows you to work those expenses into your settlement agreement. Some prefer to wait to sell until after the divorce. “If the spouse is out of the house, the process is streamlined with only one spouse calling the shots,” Larsen added, pointing out that it also protects against one spouse using the home as leverage to win on another issue. But sometimes the preferred sell date isn’t always what’s quick and easy. Matt Dolan, a realtor with Sagan Harborside Sotheby’s International Realty, said there are a variety of factors that go into determining when to sell. “Just assuming everyone wants to sell now for a lot of money isn’t correct,” Dolan said. “In a recent divorce situation, they wanted me to sell the home quickly, but not before high school graduation.”
Settle on the maintenance. You will need to put money into the home to sell it — and determine who is going to pay for it. “I have never walked into a home that didn’t need something done to it,” Simpson said. While sellers struggle to understand that, a good listing agent can clarify how these updates will affect your profits after the sale. “We are not in a market right now where you just throw a home onto MLS and it sells for over asking,” Larsen said. “If that home is not primed and perfect for buyers, you will lose money.” Ask your real estate agent to provide hard evidence of what your return on investment will be.
The agent matters. You may have a friend who’s a real estate agent, but that doesn’t mean you should hire your friend to sell your home. One of the most common pitfalls of selling a home during a divorce is using an agent who lacks experience working with divorced couples. “People … underestimate [the importance of] having a realtor that can communicate with both spouses,” said Larsen, who advises asking prospective agents what their protocol is for communicating with a divorcing couple. If they’re experienced, chances are they have a system in place, such as refusing to reply to one spouse’s e-mails without CC’ing the other. “You are already feeling vulnerable, and the moment you think your realtor is having a sidebar with your spouse, it’s like another person against you,” she added.
Understand the tax implications. The capital gains tax, or a tax on the profits of the sale of your home, is the same for everyone. But if the house you’re selling during a divorce is one with a significant amount of appreciation, then you have to be a bit more cognizant, particularly in a case where one spouse is buying the other out. “Right now, whether divorced or not, we all have a $250,000 capital gains exclusion,” said Adam Waitkevich of Divorce Financial Solutions in Westborough. “As long as you’ve resided in that house two of the last five years, you get to use that exclusion.” But in the case of a home where there’s a lot of appreciation, the spouse who keeps the property may be held financially responsible when finally choosing to sell. “That spouse may be stuck with any gains above $250,000,” said Waitkevich, who points out that there are ways to work that out if the divorcing couple plans ahead.
Your real estate agent is not your friend. The agent is there to sell your house, not mediate marital issues. “Other realtors think it is their job to opine on the marital issues,” said Larsen, who swears by a canned response that allows sellers five minutes to vent with no response from her. “That is certain death. Once you get involved in their personal matters, they will not respect you as a realtor. Should you be a mediator? No. Will they want you to be? Every time, 100 percent, without fail.” Dolan, who has seen everything from a husband living on the couch during the home staging process to a restraining order hung on the refrigerator, said he’ll always listen, but refuses to take sides. “I’m here to give you real estate advice,” Dolan said. “If you want other advice, I’ll let Dr. Phil step in.”
Your children can handle moving. Parents going through a divorce often fear that changing the home’s location will emotionally damage their children. But experts say it’s not the change of residence that throws children off; “It’s the loss of quality of life and friendships,” said O’Neal, noting that a significant change in one parent’s socioeconomic status as a result of the divorce affects children most of all. “The gap that exists between the two parents. That’s the stuff that throws kids into chaos,” added O’Neal, who advises parents to ensure a strong sense of socioeconomic stability between the two homes. “That’s the thing you should be keeping in mind. How do we make sure this is comfortable for the kids?”
Do not use the house as leverage. If you want a quick, profitable sale, avoid using the home as leverage in your divorce. “People will not always act in their own best interest if they can create damage. They might have a good offer and decide they will rip off their nose to spite their face,’’ Dolan said. While you may find yourself wanting to use the house to settle a term in the divorce, it won’t benefit you in the end. “I know you want to hit back, but this isn’t in your best interest,’’ said Dolan, who has brought a good offer to the table, only to have one seller reject it to punish the other spouse. “They’ll say: ‘What does he think about it? If he wants it, I don’t want it.’ They’re just so conditioned in the battle to not agree with something, that if they agree, they feel like they’re capitulating.’’ This will ultimately affect both of you financially. “Because in that time they’re fighting over the parenting schedule, the house maybe misses its moment on the spring market, and now you’re down 10 percent of what could have gained,’’ Larsen said.
Focus on the future. “In some cases, it’s ‘I’m getting divorced and running off with the yoga instructor.’ A lot of times it’s reconnecting with an old boyfriend or girlfriend,” Dolan said. But for people who don’t know where they’re going next, the fear can be paralyzing. It can be especially hard for sellers not to dwell on their anger and resentment when they’re being forced to downsize. “You feel like you’re letting go of the only life you know, and you don’t know where you’re going next,” Dolan said. “I keep them focused on what their next chapter should be.” And while letting go of the marital home is a big step, experts say it’s also one of the most liberating. “They can’t see that clarity when they’re in it, and they’re not expected to,” Larsen said. “Once you get out from under the memories and the weight of it, people just get clarity in a way they never understood they would.”
Megan Johnson can be reached at firstname.lastname@example.org.
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