Divorce can ensnare home sales

HACKENSACK, N.J. -- Months after they agreed to split up, Jaimie and Michael Bolnick continued to live together as they tried to sell their house in Oakland, N.J.

“It was really hard,” Jaimie Bolnick recalled. “You're living in the house and trying to stay out of each other's way. Mealtimes were awkward — are you sitting together as a family?”

The Bolnicks' house sale took a year, and is just one example of how a slow real estate market can complicate matters when a divorce forces a sale.

“Selling a home is an emotional experience for most homeowners,” said Terri Golden, a Coldwell Banker agent in Fort Lee, N.J. “Selling as a result of divorce makes the experience even more emotionally difficult.”

In many divorces, “listing the home becomes another huge symbol of their losses,” said Deborah Innocenti, a Keller Williams agent in Ridgewood, N.J.

And worse yet, the decline in home values in the past several years means that many divorcing couples are “underwater” on their mortgages.

“The house used to be the major asset for people; it's not anymore,” said Bruce Chase, a matrimonial lawyer in Hackensack. Divorcing couples used to divide the equity in the house, but many now owe more than the property is worth. Often, Chase said, that leads to a short sale, in which the lender forgives part of the mortgage and allows the homeowner to sell the house for less than is owed.

Sometimes, if they can afford it, “one of them stays in the house, hoping that the housing market will change, they'll eventually have some equity,” said Chase, who is co-chairman of the family law committee of the Bergen County Bar Association.

A divorcing couple must first decide whether to sell or whether one will buy out the other's share. If they decide to sell, they must agree on when to put the property on the market, how to price it, how to prepare it for showing and how to handle offers. Those can be thorny questions, even for happy couples, never mind those in the middle of divorce.

But divorcing spouses are much better off if they can keep their emotions under control, real estate agents say.

“If they're smart, they'll work hard to agree on as much as possible so as not to churn up unnecessary attorney fees,” said Robert Lindsay, a Coldwell Banker agent in Wayne, N.J.

“In good situations, they act intellectually and price the house for the market so that they can each get their portion and move on,” said Alberta Ceres-Buda of ERA A.J. Cali Real Estate in Hawthorne, N.J. Often, however, “the partners can't agree on anything because their emotions are running strong.”

Spouses who aren't ready to let go of a home can do plenty to delay a sale, real estate agents say. For starters, they can insist on an unrealistic asking price — a deal-killer in the current buyers' market. They can then refuse to lower the price, even after months go by without an offer. To avoid this scenario, Chase said he recommends that the couple agree in advance to price cuts if the house isn't sold after a specified time.

Others sabotage a sale by refusing to keep the house clean; being “too busy” to arrange showings or even cooking smelly foods before prospective buyers tour the home.

Market conditions sometimes force couples to stay together in the house long after they're on the road to divorce, as in the case of the Bolnicks.

“You see a lot of couples staying in the house together until the bitter end,” said Jaimie Bolnick. “People in this economy can't afford to have two homes and a big mortgage.”

“Couples sometimes postpone the sale of the house, thinking they cannot afford to sell now and live separately. So they may make a conscious decision to live in the same house until the economy picks up and raises the home's value,” said Randy Douglass of ERA Douglass Realtors in Montvale, N.J.

Other divorcing couples reluctantly accept a lower price, so they can move on.

Mark Rogers and Dary Strauss, for example, sold their Mahwah, N.J., town house at a loss, after it was on the market for close to a year. They had paid $660,000 for the home in 2005, in a hot market, and sold for about $500,000 last year.

“We got killed,” Strauss said. “It wasn't a wonderful feeling, but we were happy we got what we got,” considering the market. They both believe that if they had waited longer, they might have gotten even less.

And they took some comfort in the large gains they'd made in two previous home sales.

“I've been lucky before,” said Rogers. “This time I took a loss.”