Dividing Property After Divorce: Sell or Buy Out Your Ex?

The family home is often the most emotional and financially complicated issue to deal with during a divorce. Its value extends far beyond the four walls. It represents stability and the family’s largest shared asset. But figuring out what to do with the house can be a daunting task.

Generally, divorced couples face a choice between selling the house and splitting the cash or have one spouse buy out the other so they can keep the home. Both options have pros and cons, depending on your personal financial situation and where you live.

As a Triangle area realtor, my job is to provide a neutral, real estate professional’s perspective to help you make an informed decision about your next move.

This article is intended for information purposes only and is not meant to be taken as legal or financial advice. Every divorce situation is unique and you should talk to an attorney or financial advisor before making any decisions.

Figuring Out Your Options

Unfortunately, there’s no one-size-fits-all solution when it comes to dividing up real estate assets. What makes sense for you depends on a complex mix of financial realities and personal needs. Before making a decision, it’s worth thinking about these factors:

- Equity: How much of the house do you actually own?
- Mortgage Terms: Are you swimming in a low interest rate that you’d lose if you refinanced?
- Income: Can one spouse realistically afford the home on their own?
- Stability: Is keeping the home really that important for your kids and school districts?

Option 1: Selling the Home

Selling the shared home is often the cleanest solution. It turns a big asset into liquid cash that you can split up fairly and easily.

Good things about selling

- Clean Break from the Past: Selling just severs the financial tie to the property and stops any future headaches with the mortgage or maintenance.
- Equitable Equity Split: It gives you a straightforward way to divide the equity fairly by the market value.
- Fresh Start: Both of you get to start fresh in a new space that reflects your new lives.

Bad things about selling

- Getting out of there can be tough – especially if you have a family or are attached to the neighborhood.
- Market Timing: You have to put up with what the market is doing. Selling in a slow market might mean taking a lower price.
- Expenses: You have closing costs, real estate commissions, and moving expenses to worry about.

Option 2: Buying Out Your Ex

A buyout happens when one spouse keeps the home and pays the other their share of the equity. This is often done with a cash payment, refinancing the mortgage, or trading off the value with other assets like retirement accounts.

Advantages of a buyout

- Steady as she goes: This works best for kids, allowing them to stay in the same school and home environment.
- No anxiety about the market: You don’t have to think about prep work, showings or waiting for a buyer.
- Emotional comfort: You get to keep the home and the memories that go with it.

Disadvantages of a buyout

- Financial burden: The buying spouse takes on all the mortgage, taxes, insurance, and repairs. This can sometimes lead to being “house poor”.
- Refinancing risks: If you have to refinance to remove your ex from the loan, you may be trading a low historic interest rate for a much higher current rate.
- Qualification challenges: The buying spouse has to qualify for the mortgage on their own income.

Local Market at Play

You can’t make a real estate decision without thinking about the local market. Emotions may want you to stay, but the market dictates the financial reality.

In a strong seller’s market, listing the home may bring a good return on investment, giving both of you more cash to move on with your lives. In a high-interest-rate environment, a buyout might end up more expensive than you think if it means refinancing. Knowing local pricing trends is key to understanding how far your equity will go.

Common Mistakes to Avoid

Divorce property division can be complicated. One common mistake is letting emotions drive your financial decisions, like fighting hard to keep a home that’s just not affordable on your own.

Another pitfall is skipping a professional valuation. Relying on online estimates or tax assessments can give you an inaccurate view of what the home is really worth. Finally, agreeing to timelines that don’t align with the market can just add to the stress. For example, trying to sell a home in a slow season without the right prep work may mean fewer offers.

How Emily Weems, Realtor Can Help

When in the middle of a divorce transition, you need a real estate team who can separate the facts from the emotions. We help clients by providing objective pricing and market insights, so both parties have a clear understanding of the true value of the property. We work with a deep understanding of the challenges you’re facing. We collaborate with mediators and lenders to make sure your real estate piece gets sorted out as smoothly as possible. Our aim is to safeguard your financial future without adding unnecessary stress, so you can move forward with a clear picture of what comes next.