Factors to Consider in a Home Buyout Upon Divorce
Divorcing couples often deal with the family home by having one spouse buy out the other’s interest in it. The custodial parent is usually the one to buy out the other so that the children can remain in the family home and have minimal disruption to their daily lives.
A buyout can occur gradually or immediately depending on each spouse’s financial situation and the circumstances of the divorce. The part of the buyout process most likely to become contentious is determining the value of the home.
Because there won’t be a real estate agent involved in your buyout, you will need to have the house appraised or, at the very least, speak to a real estate agent about the prices of similar homes in your area. An appraisal is the only way to get a clear and accurate depiction of the home’s Fair Market Value (FMV).
Once you have established the FMV, you may need to adjust it for the following reasons:
- Broker fees: The buying spouse occasionally negotiates to have an amount equivalent to part of a standard broker’s fee deducted from the FMV, as the he or she could later incur broker’s fees when the house is sold.
- Deferred maintenance: If there is any necessary repair work that you put off while you were married, the buying spouse may negotiate a lower buyout price with the selling spouse so that he or she can afford the repairs.
- Refinancing: A buyout is often accompanied by refinancing the mortgage loan. The buying spouse will often apply for a new mortgage in his or her name alone, taking out a large enough loan to pay off the previous one and also buy out the selling spouse.
- Spousal support: The selling spouse may agree to a lower price if he or she can also avoid paying alimony as part of the divorce agreement.
For more information on how to negotiate a home buyout when going through a divorce, contact an experienced Long Island family law attorney with Bryan L. Salamone & Associates.