Many divorcing couples have to figure out what to do with a marital home. Some couples opt to sell the home if they have equity in the residence. In your case, you may not have paid off your mortgage yet. You may face selling the home at a loss while needing to work out how you and your spouse will pay the remaining mortgage. However, a short sale may serve as an alternative.
The Motley Fool explains that a short sale happens when you sell a home for less than you owe on the mortgage. You might find this a viable option if you are in financial trouble or if your divorce is likely to pinch your finances. Still, short sales have both benefits and drawbacks.
How short sales may benefit
You might want to dispose of your marital home quickly and move on. A short sale could accomplish this because you are selling it for a cheaper cost than a traditional real estate sale. As a result, buyers may find your property more appealing. Your lender may also go for a short sale to avoid foreclosure and reduce losses. Additionally, if you prevent foreclosure, you may also prevent damage to your credit.
The drawbacks of short sales
Be aware that short sales can drag out. Short sales involve selling a property without negotiations to make repairs or improvements to it. A buyer might like the lower price on your home, but he or she might not want to take your property as it is. For this reason, your potential buyer might take longer to investigate your home just to be sure your residence does not have any serious flaws.
Also, all parties involved must agree to the sale, including you, your spouse and your lender. This can create a string of negotiations that prolong the sale process. If you have another party like a secondary lender attached to the home, the negotiations and delays may take even longer.
Short sales and divorce
Given that different factors can complicate a short sale, you should consider whether selling your marital home in this manner will simplify or hinder your divorce. If you have an amicable relationship with your spouse, a short sale might not be a problem. Otherwise, you might consider other options such as buying out your spouse’s interest in the home and then selling it yourself if you wish.