Sale of house question

[simplycanadian]

I was wondering what's standard for determining the value of house if one spouse plans to keep the house (the other spouse doesn't have the financial capability pay the mortgage if they were to want it). A buyout of the equity would be required.

For example, house is jointly determined to be worth $500,000. Remaining morgage is $300,000. Is it as simple as a $100,000 buyout to the other spouse. Or can realtor fees (as if the house would have been sold to get the equity out) be included in the mix to reduce the buyout amount. So, if the realtor fees were $27,500 (standard 7.5/5 realtor fee) could you say the $200,000 equity would have been reduced by $27,500 for a remaining equity of $172,500 which is then split in half. This would result in a buyout of $86,250.

Thanks for any advice.

[Linjohn]

simplycanadian:

Using your figures as an example, if the house is valued at $500,000 and the mortgage is $300,000, the joint equity in the house would be $200,000. If one party plans to buy the other out, nominal real estate fees (I believe 3% is normally used) are deducted as well, so the buyout figure would be $85,000, and the party who is buying the other out would either assume the existing mortgage or refinance.

Don't forget that any equalization payment owing would also be factored into the equation, so the buyout figure would either increase or decrease, depending on who owes who what.

If an agreement can't be arrived at, the house would be put up for sale so both parties can obtain their respective equities in the house.

Linda

[Linjohn]

simplycanadian:

My math was a little off in my initial response to you. The buyout price for the house would be $92,500 ($500,000 minus $315,000 divided by two), and any equalization payment owing would either be deducted from, or added to, that figure to arrive at a final buyout price.

Linda

[wondering50]

Are the real estate fees not calculated at 3 % for each party? i.e 6% total.

[Linjohn]

wondering50:

If one party is buying out the other party's share of the matrimonial home, I believe the real estate fees are only calculated at 3% instead of the usual 6% since the home is not being sold.

Linda