You're getting divorced, and your $1M home is your most valuable asset. Sure, you have to consider emotional ties and sentimental attachment, but you're mostly looking at the monetary value. Nothing you own was as big of an investment as the house. Should you sell your home or do you want to try to keep it during the property division process?
While every case is different and some people do keep their homes, many experts agree that selling is the best choice. Below are three reasons why.
1. Profits are easier to divide.
For those with equity in the home, it's easiest to divide the profits. Maybe your house cost $1M when you bought it, but the upswing in the market since 2011 means it's now worth $1.5M. You're not talking about mortgage debt anymore. If you sell, you make $500,000 right away. You split it down the middle, giving your spouse $250,000, and you both walk away happy.
The alternative is to try to divide other assets - cars, art, summer homes - to find a split that's relatively even. This would let you keep the house, but it's far more complicated and you may not actually end up with your fair share. If you split cash earnings directly, you know it's fair.
2. It keeps you both from staying on the mortgage.
Some couples want to keep the house, and they're on good terms. They both agree to keep paying. This sometimes happens, for instance, when one spouse wants to provide a home for the kids even if he or she lives elsewhere. Both people stay on the mortgage and keep paying.
It's not that this has never worked, but it's not smart. Good intentions may not hold up forever. You're risking a lot to stay on the mortgage with your ex, expecting those payments. If your ex stops making them, you're still liable. The house could end up in foreclosure.
3. It allows you to move on.
You want to move forward with your life. Staying in the same house may trap you in the past, obsessing over the failed relationship. Selling and buying a new home, by yourself, is liberating. It's empowering. It helps you actually step forward into this next chapter of your life. This isn't a financial perk, but it can absolutely change your life after the split.
Selling the Home
As you can see, a high net worth divorce leaves you with a lot of big questions about your future and your finances. These aren't questions you want to take lightly. Really buckle down and look into your legal options, the pros and cons, and what is best for you in your unique situation.