Divorce is rarely easy, and if the divorce is difficult, then dividing up assets can get nasty. There are usually two choices in a divorce: either one spouse gets the mountain home, or the home gets sold and then the proceeds get divided up. If one spouse is going to get the mountain home, then there needs to be an accurate fair market valuation of the home prepared. An appraiser is certified to do this job, but it may be best to agree up front to hire two appraisers and use the average of both appraisals as the number for the value of the home. The reason for two appraisals is that there will be no argument about who selects the appraisers. You may also decide whether you want to then reduce the value by 7% to cover the normal transaction fees that would normally have been paid to sell the property.
If one spouse is getting the home and plans to immediately to sell it, then there are additional considerations. For example, is there equity in the home, what are the capital gains taxes on the sale of the property? Are there transfer taxes, out of state withholding taxes on the proceeds (2% in Colorado), or upcoming HOA assessments? Of course, any debt on the property should be taken into account as well when splitting up everything on both sides of the balance sheet.
It is easy to transfer the title of the property via a quitclaim deed prepared by an attorney and recorded in the county records, or if the property is set up in an entity, then the entity can be transferred from one party to another. What is not so easy is if the second home has a mortgage, second mortgage, home equity loan or secured line of credit. The spouse that does not get the home will want their name as a borrower of any and all loan documents. Refinancing the property, and, if possible, paying of all subordinate debt, can take care of this. However, this assumes that the spouse getting the home can qualify for the new loan and afford to maintain it.
This can be a very tough emotional situation to go through, and divorcing couples may not be able to have open and honest discussions. In the end, the easiest decision may be to just sell the home. Remember, second homes are not liquid assets, and depending on the location, the property, and the asking price, it could take a year or more to sell. An agreed upon strategy to sell should also be put in place up front. Such a strategy may be to set an initial asking price based on an appraisal, and then every sixty days the home has not sold to reduce the asking price by 5%. As you can see, there are many things to consider when selling your mountain home because of divorce. It is wise to move this discussion to the top of the list early on so hopefully the transaction is complete prior to the divorce being finalized, and the proceeds can be split up.
How do banks differ from people? They are unemotional, and their properties sell. They set a price and every ninety days they reduce the price until they get an offer. People have emotions tied to their homes, and often have a difficult time making the right decisions so that their homes will sell as quickly as possible.
How can I help you? I have over 30 years of sales and marketing experience and am a top real estate agent in the mountain town of Crested Butte, Colorado representing affluent clients who are buying and selling their dream homes and ranch properties in the mountains. To see featured properties or search the MLS – visit chriskopf.com. How is the Crested Butte Real Estate Market doing? Click this link to see my monthly Crested Butte Real Estate Market Reports. Whether you are selling your mountain home because of divorce or simply wanting to discuss your options, I appreciate the opportunity to earn your business and be your Crested Butte Real Estate Agent.
Contact me at: (970) 209-5405, or chriskopf@bighornrealty.com
Thanks,
Previews® Property Specialist
Coldwell Banker Bighorn Realty
(970) 209-5405
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