Thursday, January 29, 2009
What If You Can't Sell Your House?
Divorce doesn't happen only in the best of economic times.
Last fall, the economy replaced wars and foreign affairs as the most important topic for most people during the Presidential campaign. The "housing crisis" is a major component of the economic downturn. While the stock market has been going up and down (mostly down), house values have been steadily going down. Add to that the "mortgage crisis" and we have suddenly gone from an environment of steadily rising house prices and readily available mortgages to falling house values and a very restricted mortgage market. I know this isn't news to you and you aren't interested in rehashing current problems. Actually, I'm writing to suggest some solutions.
So, what do you do if you what to get divorced, but you can't sell your house? Here are five ideas to consider.
1. Stay together. This may not be what you want to hear, but counseling is cheaper than paying for two households. While this won't be appealing to a lot of couples, others may see the logic. If it is not a dangerous situation, maybe the economy will encourage some couples to try harder to save their marriage. There are excellent counselors available everywhere. They can be effective, if you make the commitment and really try hard to adjust and make changes. For many people, there is still value in their relationship and often there are kids who can benefit from an intact family, if the parents try to resolve their differences.
2. Refinance. If you don't want to stay together, maybe you can refinance. The key is to work with a mortgage specialist who is well connected in the mortgage industry. If you can find a mortgage specialist who focuses on people who are going through a divorce, you may discover that there are several different ways to solve your financing problems. You might be able to get some cash out or maybe you can lower the monthly payments so that one of you can afford to keep the house.
3. Lease your house. If you can't sell it and don't want to stay in it, maybe you can lease your house to someone else. There can be tax benefits from that and it can help your cash flow as well. It does take either a professional property manager or a willingness to provide or supervise the property maintenance and make sure the rent is received on time.
4. Sell creatively. Some couples are selling their homes by having a lottery. They sell a large number of inexpensive chances to win the house. You might be able to get some free publicity by donating some of the proceeds to charity or by using the money in some fashion that would be appealing to the public. Another approach is to have an auction. Don't let yourself be limited to selling in the traditional manner. Talk to some marketing people for ideas!
5. Wait for Congress. There is a huge push in Washington to come up with new programs to help solve the mortgage/housing/economic crisis. There will probably be some new programs in the very near future to help avoid foreclosures. The new programs could include ways to help you sell your house (by improving the credit markets) or make it more affordable so you don't need to sell it.
Couples going through divorce often need to sell their homes for various reasons. If you are facing that issue, consider using one of the approaches mentioned above. If you have any other ideas for solutions, please share them by sending a comment.