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Jessica: Welcome everyone to today’s episode of Divorce etc… with the exEXPERTS. This is Jessica. I’m here alone today. T.H. is not joining us. But we have a great conversation for you today with information that hits home for me personally because I love real estate. We have with us, Melissa Rubenstein, a realtor with Christie’s International in New Jersey. She’s also a former real estate attorney.
She has all of the perspectives on what goes on in real estate transactions, buying and selling, and when you’re getting divorced, obviously, real estate – where you’re going to live, whether or not you’re going to be able to purchase a new home or rent a new home, whether you should sell your existing home, these are all very important things that we all have to deal with from the get-go. Melissa, thank you so much for joining us today.
Melissa: Thank you for having me. Definitely, a big topic in divorce is real estate, what’s going to happen to the family home, and where’s everybody going to go? It’s a big topic.
Jessica: And you yourself are also divorced?
Melissa: I am. Yes.
Jessica: So can I just ask what did you guys do with your living situation?
Melissa: I was able to stay in the marital home with my children. My ex-husband is now about 15 minutes away. We’re close, and he’s in and out of the house all the time. And so we’ve really made it a great situation for the kids.
Jessica: That’s awesome. That’s awesome. All right, get us started. People come to you, let’s say they’re selling their home because they’re getting divorced, what are some of the things that you need to make them aware of that other clients who are not getting divorced, that may not be relevant to them?
Melissa: Well, first, I would encourage anyone who’s even thinking about divorce to consult a realtor or somebody in the profession before they get to the mediation table, before they get in front of a judge.
I want them to know who holds their mortgage, what mortgage is left on the house, things that everyone should know become amplified in the divorce situation. Before you even think about putting your home on the market, it’s important to have a basic knowledge of is our first mortgage a second mortgage? How much equity could you possibly have in your house? What are your monthly payments? There are basic questions that I would hope everyone asks before they even think about considering selling their home.
Jessica: I hadn’t even thought about that. I mean, we’ve had so many conversations with divorce lawyers about the things that you need to know with regards to your finances. But I bet there are so many people who are like, yeah, but I don’t know how much is owed on the mortgage or the specific amount of the mortgage each month even.
Melissa: Right. I mean, those are the basic questions. You should know the login to your mortgage account. Just like any bank account, there’s a mortgage account that you should have the login and the password to know exactly how much equity is in your home.
Jessica: I think probably something also that people should be aware of, which I was not aware of, and it had nothing to do with either of my divorces, but I’ve owned my own home before and I recently bought a new apartment, theoretically, I got my mortgage through Citibank, but almost immediately, they sold it to send Cenlar. You as the person getting divorced may recall that your mortgage was from Chase or your mortgage was from Citibank, but you really need to check because there’s a very high likelihood that they’ve sold your mortgage as part of a package to another company.
Melissa: Exactly. There’s likely somebody servicing your mortgage, and that’s going to be a completely different login, completely different information, and it’s great to have that before you even go into mediation.
Jessica: Okay, so those are things that they should know hopefully before they even are potentially coming to you for the opportunity if they want to sell it or trying to figure it out.
Jessica: What are the conversations you’re having with them? I mean, are people coming to you to help also value the home? Oh my god, I have so many questions. First of all, do you recommend that people hire an independent appraiser just for the purpose of getting the value of the home for the divorce? Because, obviously, if you are going to sell your home, if you’ve already decided with your spouse that you’re going to sell it, then the buyer’s mortgage company is going to come in and appraise it. What part of the process–?
Melissa: Before we even think about buyers and sellers, you should go into your mediation or in front of a judge with that information. It could either be a third-party appraiser, we have professional appraisers who do this or a realtor who can come in and give you an educated value on what your house is worth at this moment.
Because the big conversation right now is that during COVID, from 2020 to 2022, we had a massive shift in the market. What your home was worth in 2020, in our area of Bergen County, we’re talking about a 19% increase on average. You may have no idea what your home is worth in this market. When prices first started going up, appraisers really had no idea what to do with houses because we didn’t have those comparable sales.
Now we have a year of comparable sales that we can work off of to give you a real-time valuation on your home, which is just important. You should know what’s in your brokerage account. You should know what your home is worth in real-time, not what it was worth maybe five years ago or when you purchased it.
Jessica: And also keep in mind for people listening, depending on where you live, that may not be the case. I mean, I live in New York City, so apartment values plummeted initially during COVID. They are recovering, and the market’s definitely stronger today. But if you live in an area where the home values have gone down, you need to be aware of that too. That would for sure factor into whether or not someone’s going to sell, potentially depending I guess on who wants to stay in the house. Because I think that one thing that a lot of people don’t necessarily think about because they aren’t aware of it because they haven’t been divorced before, is it’s not as simple as who’s going to stay in the house. If I’m going to stay in the house, I actually have to buy my husband out of his portion of the house. You don’t necessarily want to have to sell it in a down market, but you have to figure out what you’re going to do financially to compensate for that.
Melissa: Right, and to go back a little bit, two years ago, before I really started thinking about divorce, I didn’t realize that when you go to buy your house from your spouse, I think what most people think is okay, can I cover the monthly payment? Can I cover the mortgage and the taxes? They think, yes, I can cover it. I can pull it together and I can cover the mortgage and the taxes. Well, that’s not the whole picture. You have to first have the equity. There’s equity in your home, what’s left after you pay your mortgage company their loan, you have to pay usually half of that to your ex-spouse. You first have to have a sizable amount of money, cash basically, to pay your ex-spouse to buy him or her out of the house. Then you have to be able to qualify for a mortgage on your own. If you’re not working, it can take six months of alimony and support payments to show the mortgage company so that you may be able to qualify for a mortgage. It’s not as simple as just covering your monthly payment.
Jessica: I’m so glad you brought that up because I think that a lot of people are very unaware of that. By the way, I would just say anybody out there, I mean, even more of a reason to try to have an amicable divorce with your ex, because depending on your circumstances, they may be willing to keep their name on the deed and keep the mortgage in their name for a little while to be able to help you get back on your feet or whatever the case may be, or have some kind of a legal written agreement written on the side that says that they know, that you own it, whatever the case may be. The more you get along with your soon-to-be ex-partner, the more beneficial that might–
Melissa: The one thing I would caution against is deciding on support or any payments based on future evaluations of the house. We can’t predict the future. Everybody asks me where are the markets going? Is it going up? Is it going down or staying the same? We can’t predict the future. So you don’t want to peg your valuation on what it’s going to be worth, let’s say when your kids go to college, and basing it on that.
Jessica: You’re never going to know. I mean, it is way too volatile, the market.
Melissa: It’s completely volatile. You really need to base it on what it’s worth at this moment, which is a plus and a minus to people who are selling the house and both people are moving and going their own ways. They’re going to have a bit of a windfall, at least in my area. But if one person is staying in the house, you’re going to be paying your ex-spouse considerably more than you would have two years ago.
Jessica: Okay, so they have to figure out the valuation of the house and get some of that preliminary information, know how much is left on your mortgage, get your logins, and know what your payments are every month. Now, what are some of the other parts of the conversations that you have specifically with divorced clients?
Melissa: Sure. I think there’s the financial aspect of it, which we kind of talked about. Then there’s the emotional aspect of it. You represent each party equally. So you represent both spouses, which puts us in a unique position that’s different from probably all other areas of divorce, in that we are communicating with both spouses equally. That’s something that we make very clear from the first day we meet everybody. And it may be that everybody can be on a group email, and maybe everybody’s on a group text, or it may be that I’m communicating with separate attorneys directly. It all depends on the situation. It’s what everyone agrees to and what everybody’s most comfortable with. I’m not the wife’s realtor. I’m not the husband’s realtor. I am everyone’s realtor. We have to make that clear from the get-go that everyone is going to have equal access to every piece of information. Everyone will know when the open houses are. Everyone will know the showings to the extent that they want to know. It also means that everyone is in the process of valuation. Sometimes the spouses can agree on my or another realtor’s expertise and what we suggest to list it at. Other times, it has to go through third-party appraisers who will then go to the mediator or the judge, and in a more formal process, they’ll figure out how to list the house.
Jessica: How challenging do you find it if the couple miraculously was able to agree on a single broker, but you come in with your expertise, and you’re like, look, we should list the house for a million dollars. Here are the comps, and here is why I’m just picking a round number. One of them is like, it should be 1.3. The other one is either okay with a million, or whatever. I mean, look, I understand in real estate, everybody wants to get the highest price possible. That goes without saying.
Melissa: And that’s the goal of the realtor is to always when we’re selling your house get the maximum dollar value with the most qualified buyer.
Jessica: That’s right, and I totally get that. But I also know, I have my license as well, that, look, you can want it to be worth 1.3, but if you listed it that, you’re really not going to be getting the buyers that you want. And so I’m just curious what it looks like when you have a soon-to-be-divorced couple who’s just not even agreeing. Maybe they’re not agreeing on the list price. Maybe they’re not agreeing on what the counteroffer should be. Maybe they’re not agreeing on the end sale price. How do you deal with that?
Melissa: This happens all the time.
Jessica: It does.
Melissa: And I’ve had it where the situation that you presented, where one person thinks it’s worth more. Actually, more common is when we have one spouse who doesn’t want to leave the home and doesn’t want to sell. They want it priced at 1.5 knowing that it’s really not going to sell at that price. Unfortunately, that’s when we have to get the lawyers involved. As everybody watching knows, the more you get the lawyers involved, the higher the fees go, and the less money you get from your sale. It really is advantageous to find a price that everybody agrees on. What we always tell people, regardless of divorce or not divorce, the market will bring it up to where it should be. It’s very hard to price a home too low. It’s very possible to price a home too high, and then you’re not going to get offers. You’re going to sit on the market. You’re going to be forced to lower your price, and that’s I think when you get the lesser value for your property. If you put it at market value, slightly lower than market value, you’ll get multiple offers, and it’ll bring up the value. But unfortunately, that’s when the attorneys have to get involved.
Jessica: It almost seems counterproductive for the person who’s staying in the house to want it to be listed for the higher price because you’re the one who’s going to have to buy out your spouse. I would think if I was staying in the house, I’d be like, no, no, it’s not worth a million. It’s worth 800,000.
Melissa: That happens as well. But sometimes you have a spouse who can’t stay in the house and would be forced to relocate. They’re the one who may want to just delay the sale.
Jessica: Okay. Okay, fair enough. All right, so what are some of the other issues that you find to be specific to clients that are getting divorced?
Melissa: Sure. I mean, in addition to the financial and logistical aspect, you have the emotional aspect. Your home, your marital home, could have been where you brought your kids home from the hospital, or your kids’ first day of school. They are emotional ties to your home that you don’t have to your bank account. Those first few meetings have to be really delicate. I want to talk to my homeowners about what their goals are. Are their goals to stay in town and stay in the same school district? Are they to find comparable school districts so that they have the choice of where to send their kids to school? Is one going to an apartment, but one wants to find another home? So those are all things that we’re going to talk about before we even list your house because there is nothing more anxiety-inducing than not knowing where you’re going to live, and not having options about where you’re going to live. We want to just put those fears aside off the bat so that we can sell your home in a short amount of time and know where you’re going and know that everything is going to work out.
Jessica: Really, these are questions that people should be talking to their spouse about, almost even before they come to meet with you. I mean, it’s great that you’re going to ask them, but it’s like, look, this should be part of the conversation at home. What are we going to do? Where are we going to live? Do we want to stay here? All the things that you just listed, I think are important.
Melissa: In some situations, there are two people who just want the best for their kids. They’re going to make it work so that the kids can stay in the house if possible, and another spouse will leave. There are situations where they’re not speaking to each other at all and everything has to go through the attorneys. The best interests of the other spouse are just not at heart at that time. Every single divorcing situation and every single sale is different. I approach everything with an open mind and know that no two situations are going to be the same. When you said, what’s part of that initial conversation? We’re also talking about what the people are comfortable with who are living in the house. Are they comfortable with a sign going out on the lawn? Do they want their neighbors to know that they’re selling? I mean, obviously, everything’s on the internet these days, so everybody eventually knows what’s going on. But do they want a sign, an open house, versus private showings? Do they want a lockbox on their door? These are all things that come into the process when we’re talking about divorce. In the most extreme situations, sometimes we, unfortunately, have restraining orders where the other spouse is not permitted in the house, where privacy is of the utmost concern, where we can’t hold an open house, and we have to be incredibly careful about who we allow into the house. At times, you may need to show identification. There are things that come up.
Jessica: Wow. What about when it comes to rental properties?
Melissa: Oftentimes, when you’re selling the marital home, if you’re not ready to go into a new sale, especially in an environment like ours right now, where there are just so few homes on the market, I think in my town there are eight homes on the market right now, a lot of times we’re going to be thinking about a rental. In terms of a rental, this is something that you should definitely bring into your mediation. You’re going to need likely three and a half months of rent to go into a rental. The first month, last month, and a month and a half security deposit. You want to make sure there’s cash for those three and a half months to go into a rental.
Jessica: What about just qualifying for a rental?
Melissa: Qualifying for a rental, depends on the rental. Whether it’s a house or rental company, I’m sure you know, in the city, they oftentimes want 40 times monthly rent.
Melissa: Out in the suburbs, it’s typically not as strict, especially if you’re renting a private home, but you are going to have to show either cash in the bank or income, or you’re going to have to find a cosigner.
Jessica: A cosigner or guarantor potentially?
Melissa: Yeah, or a guarantor.
Jessica: I mean, and in the city, the guarantor, I think that they want 80 times the rent.
Melissa: 80 times, exactly. It’s definitely more relaxed in the suburbs. There’s a little more flexibility. I know when I did this I also sold in the city prior to selling in New Jersey, so I know those rental requirements kept a lot of people out of apartments. Out here, renting is a bit easier. They just want to know that it’s nice people who will be good to their home.
Jessica: Right. What would people do if they are currently in a rental and they’ve decided to get divorced and their lease is not up anytime soon? What kind of advice would you give to the clients like that? I mean, one still may need to find a new place, but in the meantime, how do they handle that?
Melissa: I mean, unfortunately, with a lease, you really are both still liable for your entire lease through the duration of the lease. You’re going to have to work out something with your landlord. The landlord can keep your security deposit but once they’ve rented out your space, they can’t continue to charge double rent to the people who are already there. You may have a penalty. You may have a lease break clause, but if you can find a renter for your apartment, typically, not everything time, but typically you should be able to get out of your apartment.
Jessica: Okay, I’m wondering if there–I guess you already answered it, that if two people’s names are on the lease, will they let you take one of the names off so that only one person’s name is still on?
Melissa: It depends on the situation and depends on who financially qualified for the lease. They may make you sign a new lease. They may make you find a guarantor. They’re not just going to say you can just go into your rental office management office and say, take this person off my lease.
Jessica: Right. A good thing for people to know if anyone thinks they’re going to try to underhandedly take their spouse’s name off of a lease. It’s not going to happen.
Melissa: You can’t. That’s illegal, so you can’t do that.
Jessica: I mean I don’t know what I should be thinking about. I feel with my first divorce, we happened to have been in a rental, and the lease happened to have been up, I think, two months later, or three months later. It was fairly easy to deal with. And in my second, we sold our joint home and went our separate ways. It was fairly clean on both sides. I’m curious what other things come up that you see that are specific to divorce with real estate, that other people may not be thinking of, and that they should be thinking of?
Melissa: Well, there are a lot of things that people should be thinking of in terms of the divorce. But one thing I can think of when I did a divorcing couple is that people will look through your house to find any clue of why you’re moving. That is the number one question I get asked when I’m selling a home by the buyers who are walking through. Why are they leaving? That’s everybody’s first question. My answer is always that they’re relocating. Everyone is always relocating. Because you are, you’re leaving your home, and you’re relocating. It is nobody’s business that there is a divorce happening. People want the utmost discretion when they are selling a home in a divorce. That’s one of my highest priorities is to make sure that nobody knows what’s going on in the home.
Jessica: Is that because you think the buyers are then going to try to come in and lowball them?
Melissa: I mean, people think that you’re relocating for work and you have a deadline of when you need to be out. Or if you’re getting a divorce, they always want to get that edge and get that lower number. It’s just also none of anybody’s business. In open houses, we get as many neighbors as we do real serious buyers.
Melissa: Lookie-Lous who just want to see what tile you used in your kitchen. And so the standard answer is they are relocating. But you may want to stage your closets and have two sets of clothes in the closet so that people don’t know. Obviously, the biggest thing that people look at, they open that closet in the bedroom and they say, oh, it’s just the wife. The husband must have moved out. There are creative ways that we can stage so that people aren’t asking those questions.
Jessica: Oh my god, that’s so genius. I never would have thought of that. But it’s so true.
Melissa: It’s just one of those things that people look at, like, oh, half the closet is empty. I mean, it becomes even a superstitious thing. People want good vibes in the house that they’re buying. They don’t want to know what’s going on, nor should they. They should be able to walk in with a blank slate.
Jessica: 100%. 100%. Well, this is all such great information and definitely critical for anyone who’s going through the process. Because again, figuring out what you’re doing with your living situation is for sure one of the first things on everyone’s list.
Jessica: These are the things that you need to know about regardless of where you live. I mean, I said in the beginning that Melissa’s in New Jersey, but it really doesn’t matter. I mean, wherever you live, whatever the market is, these are the things that you need to know about and should be thinking about to be able to prepare yourself for what your next move is going to be.
Melissa: I would just encourage people, whether it’s me, whether it’s someone else in your area, to have that conversation before it gets to the moment where you have to pick a realtor and put your house on the market, because in this market especially, things are moving so fast. Out here, we’re having one weekend of showings and getting 20 offers. Once your home is on the market, you’re not going to have the luxury of time to figure out what you’re doing. Have these conversations beforehand and make sure you’re in the driver’s seat. Once that home goes on the market, you can move full speed ahead to get the best offer and not have to delay it by saying, okay, where am I going? I can’t accept this offer. I have nowhere to go. There are just a lot of questions that should be asked way before that process even starts.
Jessica: Excellent advice. You’re so right. Well, thank you so much for your time, Melissa. I really appreciate it and look forward to continuing the conversation.
Melissa: Thank you for having me.
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