Facing Divorce?

Before we go any further, we would like to share something that happened to us many years ago when we were looking for an investment property. We arrived at an open home where the price of the property seemed cheaper then it should have been. The property was vacant and looked about 95% complete (it was a pretty new home). After all the other people left, we asked the real estate agent what was wrong with the property because it "seemed" too cheap. She came out with "oh, the people are getting divorced and they hate each others guts, and they have already accepted a verbal offer of $300,000". We made a mental note to never ever sell a home through that agent!

It is very unfortunate in today's society that many marriages end and families split because of divorce. Divorce is unpleasant enough without the burden of selling the house involved. In situations like these, the parties involved are usually keen to separate as quickly as possible, sell the house and move on with life.

Flexible terms of sale is an alternative to selling the traditional way which will give you the best possible price for the property. Selling the traditional way, depending on the real estate agent that you have working for you, can often mean heavy reductions in your asking price when buyers know you are keen to sell because of your personal circumstances.

Sometimes one party in the relationship may wish to buy the other party's share in the property.

Maybe one or both parties can see the opportunity by using flexible terms of sale that by leaving behind their equity in the deal for a period of between 2 to 7 years (sometimes longer), means that they will receive the best possible sales price, rather than the lowest to achieve a quick sale to end the pain.

Leaving behind the equity in a flexible terms sale gives a Rent to Buy buyer the opportunity to purchase your property for your full asking price without needing a deposit. The equity that is left behind in the deal becomes the deposit for the new buyer. Once the seller's asking price is agreed upon, the new buyer obtains a bank loan for the outstanding balance on the property. The seller funds the new buyers deposit by leaving behind his/her equity in the flexible terms sale for the period of the term. Contracts are exchanged and settle in 4 to 6 weeks. The title of the property transfers over into the new buyers name. The seller/s take a caveat out over the property to protect their interest (being the equity that was left behind in the deal). This caveat remains over the property until all monies are paid back in full by the new buyer to the seller.

The term of 2 to 7 years is commonly used as this allows enough time to go by so equity can build up in the property, then allowing the new buyer to refinance out this equity to pay the seller back. The new buyers can make improvements to the property also over this period of the term to allow for more capital growth to accumulate. In a flexible terms sale, the equity left behind in the deal funding the buyer's deposit is usually paid back in one lump sum at the end of the term. Doing it this way makes the deal much kinder to the buyers cash flow.

Setting up a flexible terms sale like this in the event of a divorce does have great advantages. The house will be sold for the best possible price. There will be no real estate agent fees or commissions to pay as the house will be sold without an agents involvement. The house will be sold quickly as there are many renters looking to enter the housing market who do not have a deposit saved. Your existing loan will be paid out in full, freeing you to move on with no financial commitments from your past. The equity that is in the property will be paid back at the end of the term - this becomes like forced savings that will be your reward at the end of the term. Selling traditionally you would have probably lost a lot of equity due to heavy reductions with the real estate agent for a quick sale due to personal circumstances - not forgetting to add his/her commissions and advertising fees to your loss as well.

Each party must receive their own independent legal advice - without this things can and will go wrong. It is also critical that all terms agreed upon are documented into the Contract, BEFORE signing and exchanging, including the length of the term, if interest is to paid or not on the money left behind in the deal, etc. This becomes a legal backup to support what has verbally been said and agreed upon.

In real estate terms, this flexible term sale is called a second mortgage carry-back and is a very simple but rewarding concept once understood.

There are alternative options if you are facing divorce to traditional real estate which will more than likely end up robbing you of your equity - but you need to be open and prepared to wait to receive all of your equity at the end of the flexible term.

This Rent to Buy deal type, plus the other Rent to Buy systems are explained in full in our DIY Rent to Buy Houses manual. Steps to take to implement your own Rent to Buy home purchase are also included.

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