Why You Might Have to Sell Your House During a Divorce in Texas
A home sale during a divorce process is not always the perfect remedy. Every divorce is different, so it depends on your relationship with your spouse, each partner’s financial situation, and the home’s specific circumstances. Here are a few reasons why you might choose to sell your house during a divorce in Texas.
Table Of Contents
- How Does Selling Your House During a Divorce Work in Texas?
- How to Sell a House During Divorce
- Frequently Asked Questions
How Does Selling Your House During a Divorce Work in Texas?
Divorce Selling Can Help With Finances
A family home is often purchased by the couple when they are married. This might mean you bought the house when you both had income, so paying mortgage payments was much more accessible. If only one party keeps the home, their single income may not be enough to cover all the necessary expenses. As a result, divorcing couples are often forced to sell their homes because neither party can afford to keep the house themselves with a single income.
If you and your spouse sell your house for cash quickly to a firm like A-List Properties, you can take advantage of the equity you have built over the years. As long as the parties agree on splitting the home equity, you can both walk away with profits to get you started on the next chapter of life. Plus, a fast sale can resolve this emotional process sooner, making the rest of the divorce easier to navigate.
The Court Orders the Sale
A divorcing couple may not agree on who contributed more to the purchase and ownership of the home. Even though Texas is a community property state and most marital assets are considered co-owned, there are still plenty of disagreements about selling these homes. The divorce court will settle the matter for you if an agreement cannot be reached.
The judge in your case will decide on the best way to handle selling the family home and divvying up the profits from the sale. Court battles usually end with one or both parties unhappy with the outcome, so agreeing with your former spouse about selling the property before proceeding to a drawn-out legal battle is best. Forced sales typically only occur when couples cannot agree on the settlement phase.
Homeowner Liability Risks
Owning a home is a privilege, but it is also a massive responsibility. If one spouse intends to keep the house, they will maintain the property and make all mortgage, tax, and insurance payments. In many cases, one spouse will need more bandwidth to keep up with all these responsibilities, especially on a single income.
Selling a house to avoid these liability risks is wise if you need help maintaining the home. The biggest obstacle to taking over ownership from an ex-spouse is that the lender may hesitate to grant a refinance loan or second mortgage to someone with only one income to cover their payments.
You can completely avoid the issue of liability as a homeowner by selling the house to A-List Properties for cash and then using that money to get a fresh start.
Selling a House During Divorce Can Help You Move On Emotionally
A marital home is a property you and your spouse have emotional ties to. The pain that comes with divorce could be prolonged if that home is still part of the equation in your life. Sometimes, couples want to move on after the divorce proceedings are over, but living in the same house you owned with your spouse could make that difficult.
A home sale would help you cut those emotional ties and look toward the future. Both of you can sell the house, find a separate property, and move on with your lives to put the divorce in the past.
Selling a house to move on emotionally can be accomplished in 14 days or less when you accept a cash offer from A-List Properties. As your neighbors, our team can support you during this difficult time by facilitating a quick home sale.
How to Sell a House During Divorce
Navigating the process of divorce selling is more complicated than a typical home sale. The best-case scenario is that both of you are on the same page about how to proceed, but this is only sometimes the case. If you want a smooth real estate transaction when selling your marital house, here are the steps you must follow.
Understand How Texas Handles Split Assets
There are two ways that states deal with splitting up assets during a divorce process: equitable distribution states and community property states. In an equitable distribution state, the net proceeds from an investment are split relatively but not necessarily equally. If one spouse were the primary buyer of an asset like a house, they would earn more from the sale than the other spouse.
Texas is one of nine community property states. In these states, assets acquired by married couples are considered co-owned, even if one spouse spent more money than the other. This means that, in most cases, assets sold will be split evenly between both parties in a divorce settlement. Understanding this is essential, as it will affect how the home equity is divided.
Determine How the Sale Will Go
You and your ex must decide the sale result to avoid a lengthy court proceeding. There are a few ways to proceed with a divorce sale, so choosing the best option for your needs will ensure both parties get what they want.
Buying Out The Other Spouse
A home sale could end with a spouse selling their share of the property to the other. This method can be challenging because the purchaser must have enough money to cover the other party’s share of the property with cash that is not subject to different stages of the divorce.
The buyout cost will depend on numerous factors, such as the home’s fair market value, your contributions to the property, and your income. This specific scenario is often called a partition sale during a divorce proceeding.
Co-Owning the Home
Perhaps a sale is not the desired outcome of the divorce because you have young children and don’t want to uproot their lives entirely. If you have an amicable divorce from your spouse, you can agree to a co-ownership plan where one party remains in the home, but you are both financially liable for the mortgage payments.
If you choose to co-own the home, you may split monthly payments or make one party responsible for them while the other handles the house’s upkeep. You will also decide how profits would be divided from a future sale. Under a co-ownership agreement, both parties are financially tied to the property, so missed payments would hurt both of your credit scores.
Fairly Dividing the Profits
The final option is to sell the house to other interested buyers and split the profits evenly with each other. As a community property state, Texas dictates that both parties will receive 50% of the profits from the home sale, with some exceptions.
If navigating the current real estate market is overwhelming, a cash offer from A-List Properties will allow you to sell the house as is and avoid all the typical property preparation, repair work, and cleaning.
Determine the Ideal Timeline
Selling the house will significantly impact the net proceeds, the divorce process, and the speed of the sale. Together, you might decide that a quick sale is better because you can receive the profits sooner and start moving on with your lives. If you want to wait, that could mean a more significant payout after a bidding war on your house. You also should decide if the sale needs to occur before or after the divorce is finalized.
If you want to rush through a sale while still getting a fair offer, A-List Properties is your best option for a Texas home sale. Our team keeps funds to buy houses in as little as seven days. Plus, you won’t have to worry about spending time or money on repairs or cleaning. Once you decide on the timeline for your sale, you can start considering which buyers can work with that timeline.
Prepare the Home For Sale
If you want to attract potential buyers, your house must be appealing. Selling a home during a divorce is no different from a traditional sale; nobody wants to buy a house that needs significant repairs. To prepare the house for a successful sale, you should tackle all the essential maintenance issues, clean the property, and get ready to show it to prospective buyers. If that sounds like too much work, you can always sell to a cash-ready firm like A-List Properties instead. Our team will buy houses in any condition for a fair cash offer, so you can even leave your unwanted junk behind for us to handle.
Hiring a real estate attorney could also be helpful. A legal professional who understands the complexities of selling during a divorce can help you navigate this complicated process while still looking out for your interests during the sale. A real estate attorney is unnecessary, but it could be beneficial if you disagree with your spouse about the sales process.
Research Real Estate Agents
A real estate agent is a great third party to bring into a divorce sale. Their goal is to find the best listing price for your home and get as much money as possible from the home sale. This serves the interests of both parties in the divorce. Research local realtors to find the most experienced real estate agent. These professionals are also plugged into your market’s more significant housing industry, so they could recommend contractors or other services that will help you prepare the house for sale.
Real estate agents can also help you choose the right asking price for your property. They can provide information about other properties in your local market and what they are selling for. Once you decide to list the home, your real estate agent will be crucial in marketing the property, scheduling open houses, and hosting private viewings. With the right real estate agent on your side, selling your home during a divorce will be much easier.
However, remember that you must pay for their services, which could mean a commission fee between 5 and 6% of the home’s purchase price. By selling to A-List Properties for cash, you can avoid realtor commissions entirely and keep more money from the home sale.
List the House With Your Real Estate Agent
The next step is to decide on a listing price and list the home for sale. Consider getting the property appraised to determine a fair value for the house. Your real estate agent will also know how to choose a reasonable price depending on your home’s market and your town’s current real estate conditions, so follow your agent’s advice. The correct listing platform is also a consideration, as many options like Zillow, Realtor.com, and Redfin exist.
Even though you are selling a house as part of divorce proceedings, this should not be advertised when the house is marketed. Although a divorce may not impact the condition of a property, it can make buyers nervous. It is easier to sell a marital property if the buyers are unaware that a divorce is ongoing. You should also research the current market conditions to learn about the best strategies for selling.
Accept a Strong Offer
The timeline of your home sale should play a significant role in hearing and accepting offers. If you want to sell your house as quickly as possible, consider skipping all the other steps and selling directly to a cash buyer like A-List Properties. However, if you have some time to be flexible, you can wait for a solid offer to sell the house.
The best offer will depend on your circumstances. If you must complete the home sale quickly before the divorce is finalized (often for capital gains tax reasons), you may need to accept a lower offer early on. However, if there is no incentive to sell quickly, you can wait for a better offer or a bidding war to escalate. Remember, since Texas is not an equitable distribution state, you and your spouse will likely walk away with similar profits.
If you are concerned about a lengthy bidding war that holds up your divorce, you can always request a cash offer from A-List Properties to save on closing costs and expedite the sales process.
Divide the Net Proceeds
This stage of the process should already have a formula in place. Before listing your home, you should have worked with your divorce attorney to determine how the profits will be split. If both spouses and divorce attorneys have already reached an agreement about the net proceeds, it will be easy to divvy up the cash once the deal is closed.
Once the closing day arrives and the sale process is over, you will receive the funds from the buyer. Whether the transaction was a forced sale because of a court order or a mutual agreement between you and your spouse, you can now split up the profits as laid out in the contract with your divorce attorney. You can finally move on to the next stage of your life now that the home you shared has been sold. Remember, if all these extra steps sound too complicated and you want to sell your house as quickly as possible, A-List Properties can buy the house in as little as seven days.
Additionally, as you plan the next chapter of your life, it might be worth speaking with a financial advisor to help you maximize the profits from the sale. Many divorced couples struggle with their finances because they are forced to do things alone that they have been doing together for years, so consider hiring a professional to navigate your new financial circumstances.
On Capital Gains Taxes
A capital gains tax is paid whenever a property is sold for a profit. If you have lived in your house for at least two of the past five years, you are eligible for the home sale tax exclusion. This means you won’t have to pay a capital gains tax on profits up to a specific limit. For a single person, this limit is $250,000. However, for a married couple selling a house, this limit increases to $500,000.
For this reason, many couples choose to sell their homes after a divorce agreement has been signed but before the divorce has been finalized. If the divorce ended and you sold the house as the sole owner, you would have to pay taxes on profits exceeding $250,000. You would only pay taxes on earnings over $500,000 by selling before the divorce is finalized. If you have a lot of equity in the house and both parties have signed the divorce agreement, this is a huge incentive to sell before finalization.
FAQ
Who gets the house after a divorce in Texas?
The divorce agreement determines assets acquired after a divorce. If you both agree to sell the house and split the net proceeds, the house will go to a third-party buyer. However, you can also sign a co-owner agreement to maintain home possession with one party still living there. Another viable option is for one spouse to buy out the other’s share of the house and take over all mortgage payments, property taxes, and insurance expenses.
Can a court order a marital property to be sold in Texas?
If the two parties cannot agree on what happens to the house, the judge in a divorce court can decide how the property will be sold and who will receive the profits. Most couples agree before the court is necessary because they have an equal interest in getting what they want from the sale, whereas a court order could leave one or both of them dissatisfied.
Is it better to sell a house before or after a divorce?
It depends on your circumstances. If your home would sell for a massive profit because of equity, then selling before the divorce is finalized can be financially wise because of capital gains taxes. However, selling after the divorce can leave more time to figure out how to adjust to the divorce. The home sale cannot be a bargaining chip during the divorce settlement. If you want to sell before the divorce is finalized but only have a few weeks to do so, A-List Properties can work around the closing date of your choice.
Do you have to sell your house when you divorce?
Selling your house during a divorce is entirely up to you and your soon-to-be ex. Many amicable divorces do not end in a home sale, especially when children are involved. Often, both parents want as little upheaval as possible, so one parent will move out but continue to help with the home, or there will be a buyout. However, if the divorce involves a lot of disagreements or a property dispute, you could face a forced sale under a court order.