Sell or Stay: The Pros and Cons of Splitting the House After Divorce

The house is one of the biggest discussions in divorce. Homeownership plays a large factor in a couple’s finances and can mean a great deal to a partner who is financially dependent on another. In addition, the home may hold strong emotional meaning for one or both spouses. After all, you bought it together when you were happy and possibly raised (or are raising) children in that home. That’s why splitting the house not just one of the biggest divorce discussions, but one of the biggest arguments.

Who Owns the Home?
To decide what to do with the house, the first step is to know who legally owns it. In many cases, both partners’ names are on the deed. If the house is legally owned by only one partner or another, it’s best to speak to your attorney about how to best move forward.

Splitting the House: Sell or Stay?

Assuming both partners own the home, you have two options: sell or stay. Before you make a decision either way, it’s important to first have the house appraised. Both you and your partner need to know the home’s cash value. You must also make an assessment of the home’s monthly or yearly cost to you: mortgage payment, insurance, upkeep. Financial advisers encourage us not to spend more than 25 percent of our income on our homes. Staying in the home is often a financial mistake.

You may also want to review our 13 Short Facts About Property During Divorce.

Once you have the math figured out, it’s time to consider the pros and cons of both options.

Stay

• Pro – If you have children, it may make sense for partner with majority custody to remain in the home. That way the children are not uprooted, moving to a new home and a new school all while dealing with their parents’ breakup. For the partner who stays, it also means no moving headaches.
• Con – The partner who remains may not find it pleasant to live in what was once their happy marital home. Plus, he or she might not be able to afford the mortgage and the upkeep. While people often worry about the children, experts say people are more important than place for children. So it’s more important for them to feel secure and not see mom or dad worrying about paying the bills.

Sell

• Pro – This often easier for couples fighting hard over who gets to keep the house. This way, neither of you keeps it, and your lawyers can help decide how to divide the profits. It also means you both get a fresh start in a new home.
• Con – Divorce doesn’t always come at the best time for the housing market. Depending on real estate in your area, you may not get as much for the house as you want. Plus, selling means moving and those associated costs and the trouble of figuring out a new home and possibly new schools for your children.

Other Options

Some other options for dealing with the house:

• One partner buys out the other from the home.
• Both partners continue to co-own the home for an agreed period of time. Sometimes this option works for those with kids, who want to remain in the home until the children are 18, for example. Some couples choose to rent out the home, whether co-owned or not.

If you’re not sure what to do with the home, here are 8 No-Fight Ways to Divide Property During Divorce. Or join us for our next Second Saturday Divorce Workshop, where an attorney and financial adviser can answer your specific question.