‘World of pain’: The perils of divorce in a falling housing market
When it comes to selling, fighting won’t get separating couples a better price, says one agent. Death, divorce and relocation are the three biggest drivers for people selling a property in a softening market; so when a relationship falls over, some people are biting the bullet and selling, while others are holding off or settling off market.
Harcourts Glenfield real estate agent David Ding has only marketed one property so far this year that was the result of a divorce – and even then he didn’t realise that was the reason for the sale until afterwards.
Ding had presented two offers to the couple, but in the end they decided the price was too low so the husband bought the wife out. “The price I achieved was fair for this market, but compared with last year one party thought if he held for another three or four years the price would come back,” Ding said.
The Auckland North Shore agent said these kinds of private transactions were common in a falling market. “People think all divorces should be ugly, people fight against each other – but for me, what I can see is people are usually pretty reasonable, they interview an agent together and pick the one they both like ... and they both make the decision.”
He said they usually had the same goal of wanting top dollar, and if they couldn’t achieve that then often plan B was for one person to buy the other out, and if that also wasn’t possible they made sure the agent got a reasonable price for them.
If the couple couldn’t agree on what the property was worth, Ding said the best option was to go to auction and let the market decide. “Usually if they have three bidders / two bidders on the day, that’s the market regardless if both parties agree or not agree ... then they need to make a decision, ‘do we accept or what should we do; do we have a plan B?’.”
If one person accepted the price and the other person didn’t, then they might come to some agreement where one of them agreed to give the other more of their share to encourage them to accept it so they could move on.
In his experience, couples who couldn’t sell didn’t usually rent the property out because they wanted it sold and to move on with their lives.
His advice to any couple forced to sell because of divorce is there’s no point in fighting as it doesn’t help get a better price.
Divorce lawyer Jeremy Sutton said when couples couldn’t agree on selling their property, then they needed to look at the reason behind it.
If one person wanted to sell and the other didn’t, they could apply to the Family Court to sell the house and the process usually took between nine and 12 months. However, if it was because they disagreed over the price, then a quicker option was getting a registered valuation or involving a mediator to help reach an agreement.
Agreeing to defer the sale for a couple of years was also common if children were involved as it gave them some stability and allowed them to stay in the same area and attend the same school.
With some houses taking longer to sell or not selling, couples with younger children often opted to “bird nest” which allowed the children to remain in the home while the parents alternated between staying with them and living with family or friends when it wasn’t their turn, he said.
But if the family home was large, he said it was not uncommon for one person to live upstairs and the other to be downstairs or for one to be in the garage or in a second dwelling on the property.
“A lot of the time people who leave the house, there will be some domestic violence. So, if they are getting on OK, then they might decide to stay in the house until the house is sold – but just be in separate bedrooms and do different routines.”
While some divorces could drag out for years, Sutton said the key was to try and deal with it quickly and get support from friends, family and lawyers to help reach an agreement and make a clean break.
“It’s about being practical at the end – if you want $350,00 and the other party is only offering you $340,000, just be practical about it and it’s good enough.”
Easystreet Mortgages mortgage adviser Gareth Veale said it wasn’t the “most optimal time to sell”, but often people getting a divorce didn’t have much choice.
“If you’ve only recently bought and you are in a divorce situation, then you’re going to be in a world of pain because you are going to have to sell to move on. My advice would be to weigh it up and see what’s more important and potentially, if you think that property prices are going to rebound and come back up again then you should work with each other to hold off.”
It was always harder to buy a property as a single person than as a couple so people needed to set their sights lower and remember the home they own right now might not be the home they own forever, he said.