Working With Divorcing Sellers: Therapist or Real Estate Agent?

When working with a couple selling their home due to divorce, sometimes it’s hard to tell whether they want you as a therapist or a real estate agent. While not always the case (there are many amicable divorces) for many facing divorce, emotions can run raw and deep.

Take the case of Jane and John who were divorcing after 12 years of marriage and owned a beautiful waterfront home that was worth approximately $3.2 million. When it came time to sell, there was a problem. Due to John’s emotional attachment to the property and the couple’s differing financial expectations, things were at an impasse.

The primary challenge was the couple’s disagreement over the listing price. John insisted on listing it above market value at $3.8 million. Jane, eager to move on, wanted to list at $3.1 million.

This was more than just a financial dispute; the emotional turmoil of their divorce had much to do with it. John’s attachment to the house was an expression of the trauma he felt, while Jane viewed the sale as a step toward her new beginning.

In time, both Jane and John agreed to a tiered-pricing strategy. The home was listed at John’s desired price for 30 days with the understanding that if it didn’t sell in that time the price would be reduced $150,000 every 15 days until Jane’s preferred price was reached. The compromise acknowledged John’s emotional attachment to the property while also aligning with Jane’s desire for a timely sale.

The property was listed at $3.8 million, as per the agreed strategy. While there was interest, there were no offers at that price. After a month, the price was reduced to $3.65 million and 15 days later, the price was adjusted to $3.5 million. Interest spiked at the $3.5 million price point, and an offer of $3.29 million was eventually accepted.

The impasse required a strategy that addressed both the emotional and financial aspects:

Build trust and empathy: Separate meetings were held with both John and Jane. The position and feelings of each were acknowledged and respected. Neither party was left to feel they were being advocated against in favor of the other. Both discussions were conducted in a spirit of neutrality, using an educational approach. The emphasis was always on presenting market data, evaluating facts and staying focused on their long-term goals.

Mediate and communicate: After the individual meetings, a joint Zoom call was scheduled. Discussion was centered on the common goal of selling the house, moving forward and how best to accomplish it. The meeting was crucial in opening lines of communication and moving toward consensus.

As in the case of Jane and John, it is crucial for real estate professionals to approach divorcing sellers with an extra measure of empathy, understanding and patience. The emotional aspect of divorce cannot be overstated. Legally, situations can be equally complex. Court-ordered divorce decrees may impose specific terms for the sale, such as deadlines, minimum sale price and rights of first refusal. Navigating these legalities requires diligence, attention to detail and often, collaboration with each party’s attorneys.

There are also significant financial implications when selling a home during divorce.

Couples may be dealing with joint mortgages, equity division and debt considerations. In some cases, the couple might owe more on their mortgage than the home is worth, leading to a short sale situation. Alternatively, there might be substantial equity that needs to be divided, which can be a point of contention.

Here are some key strategies for a win-win:

1. Gather information

The first step is to gather as much information as possible. Who is living in the property, and what are their intentions? Why are they selling, and what are their goals in selling? Are there any liens/encumbrances? What does the divorce decree have to say about the sale of real estate? Are they represented by attorneys, and what is their attorneys’ contact information?

If possible, real estate professionals may want to have the initial consultation with the parties individually. Given the personal dynamics between divorcing couples, with the other party present, one party may not be as forthright as they might otherwise be, which could lead to misunderstandings and challenges down the road.

2. Make sure your communications are neutral and impartial

Clear, open and impartial communication is paramount. Real estate professionals must ensure that both parties are equally involved in the decision-making process, and that there is no hint of partiality.

Gain consensus before moving forward on any plan. Also, don’t get too far along in discussions with one party before discussing matters with the other. Such an approach minimizes misunderstandings and conflicts.

3. Be skillful in negotiation

You must be prepared for complex negotiations. This includes mediating between the divorcing couple and handling potential buyers who might perceive a divorce sale as an opportunity for a lower price. Buyers must be informed of any court-imposed requirements/approvals that may be necessary before a closing can take place.

4. Communicate with attorneys

In most cases, each party will have an attorney. Real estate professionals should keep attorneys updated with important milestones, such as the initial listing, contract signing and scheduled closing date. While communication is important, agents should be careful not to inundate attorneys with unnecessary communications. Generally, there is no need to provide attorneys with real estate paperwork unless specifically asked for such.

Challenges and solutions

There are many common challenges when working with divorcing couples. Here are a few common ones and some possible solutions:

1. Disagreements between parties

One of the most common challenges is disagreements between divorcing parties. Whether it’s about the sale price, repairs or the division of proceeds, such disagreements can and will stall the sale process; so be prepared. The solution lies in your ability to effectively mediate disputes, which greatly hinges on the trust you’ve fostered and the neutrality you’ve displayed. If unable to coach the parties to consensus, this is a time when agents might want to involve the respective attorneys.

2. Unresponsive spouse

It isn’t unheard of for one party to go completely silent. In such instances, the court has immense power to move the process along, even going as far as appointing another to act/sign on behalf of the unresponsive spouse. The real estate professional should work with the respective spouse’s attorney to move the process along.

3. Emotional attachment to the property

Selling a family home can be emotionally challenging. Sellers might be reluctant to let go, which can manifest in unrealistic pricing or reluctance to negotiate. Be empathetic, yet firm, in helping clients understand market realities and skillful at crafting creative solutions.

4. Financial complications

Dealing with joint mortgages and equity can be complex. In some cases, one party may wish to buy out the other’s share. In other cases, the divorce decree may outline very specific financial terms with respect to the sale of real estate. To get in front of potential challenges, ensure that a mortgage payoff and lien search are completed early in the listing process. It is also wise to consult with the respective attorneys regarding any financial complications that arise.

5. Time constraints

A divorce decree may have imposed a sale deadline, which can add pressure and lead to rushed decisions. Agents should plan an aggressive marketing strategy and be prepared for quick negotiations to meet such deadlines.

While these challenges may necessitate the involvement of the divorce attorneys, do not take such to mean that every roadblock is an excuse for agents to run to the attorneys. You, as a divorce real estate agent, are expected to have honed the skills and expertise necessary to deal with most problems as they arise, and those agents unable to meet such challenges might reconsider working the niche.

Selling a home during a divorce is a complex and sensitive process requiring more than just real estate expertise. Agents must be attuned to the emotional dynamics at play and be able to mediate between parties and find creative solutions to seemingly intractable challenges.

By recognizing the unique challenges and employing thoughtful, strategic approaches, real estate agents can successfully orchestrate win-win divorce sales. When done right, such transactions leave agents with a deep sense of personal satisfaction, knowing they’ve helped two people move on from one of the most trying and emotionally charged periods of their lives. #

John Michailidis, MSIRE, JD, holds a law degree from Northwestern University School of Law and a master’s degree in international real estate from Florida International University. He is a team lead with Prosperity Group of KW Island Life Real Estate.