Beware buying a home from a divorcing couple
01.01.2011 00:00
Beware buying a home from a divorcing couple
Megan McGuire and her husband Josh Ledeen bought the house at right from a divorcing couple. The deal almost didn't close.By Les Christie, staff writerDecember 29, 2010: 5:21 AM ETNEW YORK (CNNMoney.com) -- Marriage break-ups can be tense. And when divorcing couples sell their homes, it's buyer, agent and everyone else beware.
There are about one million divorces a year in the United States and in most cases, there's a home that needs to be sold. That can mean great bargains, because couples divorcing -- like those in foreclosure -- are often among the most motivated of sellers, willing to accept offers below market value.
Still, house hunters may well pay the price in terms of aggravation and time when working with these sellers.
Buyers must wade through the venom generated by the divorce. Often, one spouse is anxious to sell while the other tries to sabotage the deal -- either out of spite or an unwillingness to end the marriage.
"Most of my divorcing clients dislike each other very much so navigating the transaction can be tricky," said Scott Weeda, a Seattle-based real estate agent who specializes in divorce.
In other cases, one spouse may delay signing off just to aggravate the ex. Other times, one party may want to maximize the profits while the other just wants to get out.
"In many cases, the joint ownership is the only remaining tie that connects couple selling," Weeda said. "They sometimes want to cut that ASAP."
Buyers may find themselves in agreement on a deal with one spouse until the other vetoes the deal. Sometimes, buyers don't even know there's a problem until the last minute.
Charles Vallis, a Massachusetts-based agent for discount broker Redfin, had a recent sale in which his buyers went to contract and had a closing date, but then the wife in the divorce disappeared.
"She was nowhere to be found for the last few days before closing," said Vallis. "The day before, their attorney notified us that they might not be able to close because the wife was unreachable."
One of the buyers, Megan McGuire, who works in public relations for a large law firm, said she "floored" by this. "We thought it was really reckless on her part."
She and her husband, Josh Ledeen, had already given notice at their rental and had made a date with the movers. "We would have been out on the street," said McGuire.
Vallis kept leaving messages for the wife and calling her attorney, who couldn't reach her either. Luckily, her husband was anxious to sell. He even changed the locks before the final walk-through because he feared his wife might damage the interior.
After days of desperately trying to contact the wife, the sellers' attorney finally got a call back and read her the riot act about the legal consequences of breaching the contract. The sale closed on time -- but the agitation cost the buyers sleepless nights.
To try and avoid these situations, Randy Morrow, an Arlington Va.-based real estate agent who represents divorcing couples, tells potential buyers to find out early whether a divorce is acrimonious.
"Then, there's a very good chance the settlement will not happen on schedule," he said. "Buyers should talk to their agents about placing protective language in the offer. If a case is really nasty, I would tell my clients to run."
Carol Ann Wilson, an expert in divorce financial planning, also advises house hunters to delve deeper into the sellers' backgrounds if the sale involves a divorce.
"If buyers find that both parties haven't signed off on the selling agreement," she said, "buyers should back off. The deal could be easily derailed."
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