Proceed with Caution: List Price in Court Orders for divorcing homeowners

by | Jan 10, 2024 | Client Resources

When divorcing spouses have agreed or have been ordered to sell their home and divide equity, it is not unusual that some MAY disagree on list price. 

Inserting a specified list price in the agreement or court order may seem like a good idea to “resolve” the list price issue, but there are certainly potential dangers and drawbacks to stipulating the list price this way.   

Image of miniature house on a table with a piggy bank and magnifying glass in foreground

It’s important to consider the following risks:

Market Fluctuations

Real estate markets can be highly volatile and subject to fluctuations in property values.   If the agreed-upon list price is not reflective of the CURRENT market conditions and the CURRENT location stats and comparables, this puts both parties at risk of undervaluing or overvaluing the home.   The market can fluctuate in even a matter of 30-60 days, so it’s extremely important to have flexibility in adjusting the list price according to what the market dictates.   Even if spouses order an appraisal of their home to determine the agreed list price, that appraised value does not outlast new comparables that may come out just 30-60 days later.   

Prices are fluid. Undervaluing the home reduces potential profits, leaves money on the table and/or a disproportionate equity trade value between the spouses. Setting a fixed list price may make it challenging for the property to sell if it’s not aligned with the market condition.  Sitting on the market leads to additional costs for maintenance, property taxes, mortgage payments (that both spouses would share), and possibly a staleness stigma.  A home that has been sitting on the market can create buyer perception that something is “wrong.”   Additionally, If one or both parties seeks to sell quickly, having a fixed list price that is too high will create challenges and not accomplish their sales goal, as buyers will be hesitant to make offers on a property they believe is overpriced.  

Image of couple upset looking over papers

Unforeseen Diminishing Value Factors  

Buyer perception and marketable price of a home can be influenced by a wide range of factors, and some of them may not be immediately obvious by sellers or appraisers or can change unexpectedly. Here are some unforeseen factors that can affect the value of a home: smoke, pet smells, tenant upkeep, uncleanliness, neighborhood changes, construction of  commercial businesses near the home, natural disasters, infrastructure changes, health and safety issues, etc.    Having a real estate expert that conducts due diligence to foresee the impact that some of these factors may have, and also having flexibility to adjust the list price for the unforeseen is more effective and efficient.  

Another challenge that we face   

Selling a home often involves various expenses, including cleaning, repairs or renovations to prepare the property for sale.   If these expenses are not explicitly addressed in the agreement, disagreements can arise over who should cover them.

How I can help

To mitigate these dangers, divorcing couples should consult with real estate professionals before agreeing to a list price or before drafting the order so that the price matches the current market conditions and allows for adjustments.   

If you have any questions about this matter, or other real estate matters in relation to court orders or spousal agreements, please feel free to reach out to me.  I’m here to help.

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