Breaking up with your home: Handling homeownership during a divorce by Randee McDonald

Sometimes love is fleeting and marriages end, but that mortgage you agreed to pay together back when you were in love is still your responsibility…until you find a way to divorce that, too.

Usually, the mortgage is the biggest liability a divorcing couple must split, but divorcing your mortgage isn’t always easy. As far as your mortgage lender is concerned, if the mortgage was taken out in both of your names, then you are still required – and expected – to pay that every month.

Here are a few options that you should consider when deciding how to handle the house and mortgage if you find yourself going through a divorce.

Selling the house

If neither party is interested in keeping the house, then selling it and splitting any profit after the mortgage is paid off from the proceeds is a decent and fairly straight forward option. Keep in mind other factors like the current housing market and how much is still owed on the mortgage versus what you can sell the home for. It needs to make sense to be able to sell the home for at least what is owed on it.

Keeping the house and refinancing

Maybe one of the spouses has a strong preference to stay in the house versus selling it. In this case, they will need to make sure that the other spouse is off the hook from any financial responsibility to the house, free and clear. The best way to do this is for the spouse wishing to keep the house to refinance the current loan themselves.

For this to work, the mortgage should not be “under water.” In addition, the other spouse agrees to relinquish their share of the house; and the spouse wishing to keep the house has sufficient credit and income to qualify for a loan and subsequently continue to make mortgage payments alone every month.

Keeping the mortgage as is

This is obviously a risky option, especially depending on how amicable the divorce actually is. But if neither spouse is able to refinance the loan on their own, unable to sell the home, or pay off the existing mortgage, the mortgage could be left as is. This is certainly a risky scenario, as one spouse has to hope that their ex is making the payments each month. If not, both sides will get tainted credit as a result.

Any divorce decree should specifically spell out who will be responsible for the mortgage and what happens if that party misses a mortgage payment, such as stating that the house must be sold or refinanced within a specific time period.

Remember: just getting yourself off the deed does not mean that you are off the mortgage! This is a very important distinction that should be understood up front. Your title company should be able to help you with documents required to make this happen for a smoother (if that’s possible) divorce process.

Steps to finding great tenants by Amy Krikken

How do you find good tenants? Start by using your sphere of influence to locate potential tenants, in other words, advertise your rental property by word of mouth mentioning it to friends, family and colleagues. 

If that doesn't work, use flyers posted in local spots, for example: convenience stores, grocery stores, town office, schools, gyms. Don't forget signage at or near the property itself. Use social media to promote your rental, as it is easy for people to share with others.

Once you have found a potential tenant, you will want to meet them in person and show them the home. Seeing your prospective renter in person can give you a chance to listen to your gut feeling about the person(s). 

If they pass the meet and greet, and you wish to consider them as a tenant, the next step would be to have them fill out an application. Find a template online and be sure that it follows the rental laws of your state. Your rental policies will be in writing and address basic items; What is your policy on pets? Is this a strictly non-smoking home? This gets all parties on the same page from the beginning.

Next step is to check their references. This includes calling any and all former landlords, their current employer, and their personal references. You should call all references and pay close attention, were there awkward pauses, or did the person on the other end of the line speak freely about his or her former tenant/employee? 

Don't be afraid to ask former landlords if they paid their rent on time. If they aren't able to answer, this should be a red flag to you. One key question to ask a former landlord, (one that they will answer without feeling like they could find themselves in deep legal trouble) is; "Would you rent to them again?" If they pass the reference check, we move to the next step. 

The background check is important. My favorite service is Experian. It is easy for both the landlord and the tenant. Using this type of service means that you won’t have to handle paperwork and you won’t be in possession of your prospective tenant’s sensitive information. You create an account and send the potential tenant the link. They pay a fee, $14.95, and fill out the proper information. 

Experian then lets you know whether or not they are likely to be a good tenant. Easy peasy! There are other companies that offer this service, a quick internet search will yield you a multitude of choices. I like Experian because they can also perform a credit check. Which bring me to the next step.

Check the potential tenants credit history! Using the applicant's Social Security number, you can get a credit report from credit bureaus including, Experian, Equifax, etc. If their credit checks out, and you have completed the aforementioned steps, congratulations, you are well on your way to securing a great tenant. 

The final step is signing the lease -  make sure all the inhabitants sign the lease, and collect first, last and security deposit. 

I am proud to help my clients move to the next chapter of their lives. Call Amy Krikken, The Rock Star Realtor/Better Homes and Gardens/Masiello if you wish to buy or sell. 207-317-1338 abkrikken@gmail.com.

Commissions! Commissions! Commissions! By Matt Trudel

Normally in real estate the saying is “Location! Location! Location!”, but this article is more about selection of an Agency to help you with the sale of your home and some things you might want to consider before making that selection. Agencies vary in many different ways, from the number of agents in an office, to the experience and number of years they have been in business, to the type of transactions they handle, and the percentage of what they charge for commission in successfully selling your property. Another difference is how they handle the commission they charge a seller.

General practice was that agencies cooperate and compensate each other equally. Over the past several years it is becoming clear that some agencies are not splitting the commission 50/50 with a Realtor® that is a buyer’s agent and sells your property to their client. An example would be if the agency is charging 6% commission and offering out 2.5% to a buyer’s agent who brings a buyer and sells your property. In this example the listing agency would keep 3.5% for their company. On a $300,000 house this would be an extra $3000 to the listing agency.  How is this relevant to sellers and what are some possible situations where it could become an issue?

The first question to answer is which agent is really selling your property. The one who took pictures and entered it in the Multiple Listing Service, or the one who brings the buyer and writes the contract for your property. Both agents do considerable work and every deal has it’s own different situations, but does either agent deserve more compensation for the work they do?  This is just something to consider when selecting an agency. 

You should know not only how much commission you are paying, but how it is being split and how it may or may not adversely affect the sale of your property.

Don’t think how much commission is being offered by the listing agency affects the sale of your home?  Then why do we see agencies offering out bonuses like “Buyer agent bonus! Extra $2500 to buyer’s agent if under contract by September 30^th”?

As a buyer’s agent, we talk with our buyers and set a percentage amount for the commission we will work for in searching and finding them a home. If there is a bonus being offered, I think that bonus should be credited back to the buyer as long as the percentage that the buyer and buyer’s agent agreed to is being compensated in the deal.

There are other things to consider in this, like advertising, taking photos, gathering documents from the town, and more. A lot of that is what is expected when you list with an agency, it is all part of the deal. The other part of the deal is selling your house which brings us back to the question of which agent is really the one who sells your house. 

Does the listing agent or the buyer’s agent sell your house? Isn’t that why there is a split in the commission in the first place?  Should one agency be compensated more, or should it be equal? These are a few things for you to consider when selecting an agency to work with when selling or buying your next home. 

This article written by Matthew Trudel, owner Five Star Realty, Windham 207-939-6971.

Time to list and upgrade your home by Rick Yost

One of the most common questions that realtors get is, “Is this a good time to list my home?”  While that answer can, at certain times of the year, be complicated, the answer right now is a resounding –YES! The National Association of Realtor compiles statistical data to produce a Buyer Traffic Report. This report shows that buyer demand remains strong and that these buyers are ready, willing, and able to purchase homes. Strong demand is always an indicator of a good time to sell.

  

In the past, the average home owner stayed in a home for an average of between six and seven years. That changed starting in 2011. The loss in value of homes during the recession and job loss has kept the average homeowner in place longer. The average time in a home since 2011 has grown to between nine and ten years.  

The growth in home values and strengthening of the economy have given more current homeowners the ability to move. This is leading to even greater demand in the market. Once again, more demand equals better selling opportunities.

  

Economists say that a six-month supply of houses on the market equates to a normal, healthy market. There is not currently a six-month supply of homes on the market. By normal market definition, there are not enough houses on the market to meet buyer’s demand.  This lack of inventory has been ongoing and it looks to be growing this fall. The best time to sell a house is when inventory is at its lowest. Less competition should lead to a quick and profitable sale.

In a tight market, buyers are doing whatever they can to make their offer shine. Most buyers are getting pre-approved by their lender and not just pre-qualified. This means offers will be cleaner and better prepared. This can make for a smoother, quicker process to get to closing. Everyone wants a smooth quick closing and this fall is the time to get it.

   

If a homeowner is listing, they are typically buying also. Home values have appreciated across all price ranges, but none as greatly as entry level homes. This means an entry level seller will realize the greatest value gains while moving up into a home that has not realized the same percentage gain. 

If home prices appreciate 5.1 percent as some experts are predicting, that trade up home will require a bigger down payment and a larger payment. Homeowners must keep in mind that a 5% increase in value on the $200,000 home to be sold is $10,000, while a 5% increase in value on the $300,000 house to be purchased is $15,000. Now is the time to trade up.

    

The last and greatest reason to list this fall is purely emotional. If a homeowner is considering selling, there is a reason. More room for the kids, a better kitchen, another bathroom, more privacy, a bigger yard, or whatever the motivation are all valid emotional reasons to list a home this fall.  

The most important question is why wait?  Is money more important than health and well-being?  Is it more important than family?  Is it more important than having the dream home?  Only the homeowner knows for sure. My advice to homeowners—life is short, don’t wait.

 

So “Is this fall a good time to list?” Heck Yea!!

Rick is a Realtor, real estate author, and long time Windham resident. You can reach Rick with all your real estate questions and needs at rickyost63@gmail.com