Divorce is a challenge all by itself, and so is the process of selling a home. Having to deal with both of those at the same time might require some expert advice to help guide you throughout the whole process.
We spoke to Sheylah Jordan to learn more about what that process might entail and how she can help her clients along the way.
Jen: I know you recently received a designation that has to do with divorce and real estate. Can you tell us the designation and what made you want to get this?
Sheylah: The designation I received is Real Estate Collaboration Specialist-Divorce. And the reason that I wanted to get that designation was to gain clarity around the process. Having gone through a divorce myself, I am empathetic to the emotional turmoil involved, and now I know how to advise clients better to achieve the best and most informed financial outcome regarding marital real estate on Martha's Vineyard.
Jen: Can you please elaborate on how can you better help your clients now that you have this information?
Sheylah: Divorce is a very emotional process. People aren't necessarily thinking clearly about the agreements they may be making and how it may affect their financial future for years to come. With this designation, I learned how to advise about blind spots that may be overlooked when agreeing on what to do with the marital home or other properties. In addition, I have connected with other people in the industry, including insurance, attorneys, and financial planners, who I think make a good team in helping someone make sound decisions when they're going through this emotionally difficult situation.
Jen: That's great! In my real estate experience working with couples who are getting a divorce and need to figure out what they're going to do with their house on Martha's Vineyard, it has been difficult for me to guide them. So, from personal experience, I know I have no insight or particular expertise for this specific situation. I do know, though, that often the subject comes up of selling the Martha's Vineyard house, and one person or maybe both want to keep it, and they both want to buy each other out. Having that in mind, what is your advice on that? What are the first steps they should take to determine what they should do?
Sheylah: First, I want to say that if the couple can't agree on what to do with the marital home or other real estate assets on Martha's Vineyard, it may end up that a judge decides what to do. However, in the beginning stages of figuring out if one person can afford to buy out the other, they should engage a real estate agent. An agent can provide a comparative market analysis (CMA), a free tool that an individual could use to determine what they may need to qualify for a mortgage. Getting the CMA from an agent and then applying for the mortgage are both huge pieces of information and are generally free for a consumer.
Jen: Often, one of the spouses turns to us - we either know them, or they find us, see our credentials, and want to work with us. Quite frequently, in these situations, the other spouse says, "Well, that's your real estate agent, they're going to give a value on the property, and they're going to try and convince us to sell. They're going to tell you that I have to buy you out at a high price." How do you advise people in those situations to determine the value of what one person would have to pay to buy the other person out and all of that?
Sheylah: Each individual should do their due diligence. Each situation is unique. I would say gathering information never hurts. There may come a time when some tough decisions need to be made about the actual market value to be used. A judge may need to get involved, or attorneys may reach an agreement. Ideally, the couple would come to an understanding together. Please make no mistake; having advice from a real estate agent does not preclude someone from possibly needing an attorney to represent them. If couples can go to mediation and agree, that is lovely, and if they cannot, they need to engage an attorney to represent their interest and help them reach an agreement. Hopefully, I will be part of the conversation before a final divorce agreement is made. If that is the case, then my advice is based on the individual's specific circumstances and making sure they consider different aspects that may affect their financial future.
Jen: I suppose somebody could get an appraisal, too?
Sheylah: An appraisal could be performed. Most of what I learned was how to gather information to mediate the divorce agreement to minimize cost. So, having a real estate agent do some leg work and reduce some of the initial cost could benefit both parties. Usually, mortgage lenders require their appraisal and won't use one the borrower provides, so that is an additional cost. One thing that might make more sense to spend money on is a home inspection. This way, the person taking on the house can plan for any upcoming expenses they may have.
Jen: Oh, right - not only will the person have to be able to pay that higher mortgage after buying somebody else out, but they also could be facing costs for a new roof or things that have been deferred maintenance items.
Sheylah: Yes, and when you're making a financial plan when you're getting divorced, and you're agreeing on the assets that you're splitting, it's supposed to be equitable. In Massachusetts, it's supposed to be equitable distribution. So if someone's staying in the house, if they have a home inspection done, and some items are pending that are going to need to be taken care of in the next couple of years, they may be able to use that as a negotiation for the amount that they would get from the equity in the home.
Jen: What is your advice to couples who are in the beginning stages of divorce proceedings and own a home together? What is the first thing they should do? Other than finding out the value, is there anything else?
Sheylah: They should get a payoff statement for the mortgage, so they know the actual payoff, as opposed to just the monthly mortgage statement, because there's the interest added in if they were to pay it off. Also, it depends on their specific situation. If they have a financial advisor, they might talk to that person. Involving a real estate agent or even a mortgage lender who are free resources to help you find out more information about what you might need to know going into the process is a great place to start.
Jen: We, real estate agents, give a lot of free advice, don't we?
Sheylah: Yes, we do.
Jen: But we don't mind because it's fantastic when you have the knowledge to share it with people.
Sheylah: It is. I like helping other people. That's a big reason why I did this; I wanted to be able to help people make good decisions moving forward. I know I made some difficult financial decisions during my divorce, and I wish I had been more informed.
Jen: Thanks for joining me today! It was a pleasure, and your clients are lucky to have you.
Sheylah: Thank you for having me.