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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #1  
Old 06-30-2020, 10:10 AM
PotatoLogic PotatoLogic is offline
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Default Devaluing the Matrimonial Home

Hey everyone!

Happy to have found this forum because there seems to be lots of useful advice, and I don't feel like I'm the only one going through this situation.

My ex and I are working on coming up with settlement proposals. One of the main issues are the value of the matrimonial home.

1) The home as of Feb 2020 was worth $650K. The ex was able to get a real estate agent to value the home. I suspected this valuation to be on the low side (because I knew the ex wanted to purchase the home) but had no way to prove otherwise. I was okay to accept this because it meant we can settle all the other outstanding matters.

2) The home as of today is worth $750K. A neighbour contacted me privately and said he is interested in buying the home for $750K. He was able to confirm this in writing as well. He is willing to get financing and a pre-approval if the ex and I agree to sell it to him. Note: this neighbour is a neutral third-party, not related to either the ex nor I.

I advised the ex about this offer (and invited her to compete with this bid) and, to my surprise, she was extremely angry that I would solicit buyers outside of the agreed-upon value of $650K. First, I did not solicit this buyer, they contacted me. Second, the $650K valuation was as of Feb 2020, and the offer to purchase the home is in June 2020 - there's clearly some notable increase in value between February and June. Additionally, she was not able to obtain financing for the home between February and June for $650K.

So the next best option would be to sell to the neighbour via private sale, right? Well, the ex approached the neighbour directly and told him to withdraw his offer and not to bid on this house. The neighbour called me to tell me of this - I am working on getting an affidavit from him to this effect. The ex is looking to purchase this house for $650K (which was out of reach for her in the first place) and the offer of $750K will only worsen it.

The ex is clearly trying to devalue the home by approaching the neighbour in bad faith so she can purchase it for less-than-market value. I'm pretty sure this works everything the judicial system aims to solve (maximize the value of the matrimonial home to benefit both parties). The courts typically don't care who buys the home - they just care that the home sells for as much as it can.

The ex prefers to have the home listed on the market, leaving it open for bids. The problem we face here is the house will need to close for $787,500 for us to see $750K ($750K + $37.5K in realtor commissions). There is a risk the house may sell for less than $787,500 which will leave us both in a shortfall (compared to selling it to the neighbour via private sale).

I've spoken to my lawyer to put an equalization contingency (50% of the difference of the closing costs and $750K, which will effectively give me the same amount should the house close for less than $787,500) but I think the ex will need to agree to this contingency - I cannot force this upon her.

Has anyone ever seen anything like this before?

Cheers,

PotatoLogic
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Old 06-30-2020, 10:41 AM
rockscan rockscan is offline
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Where you live do they have a company that allows the sellers to list it? Something commission free which was an Ontario company a few years ago? If yes you may consider that.

You could also put a sign out front and list it yourself in a few places. Anyone looking in the neighbourhood or a realtor may see it. That keeps you still at no commission.

I wouldnít put the contingencies on it because it could backfire but if you want to avoid the commission fees there are options.

If your ex was unable to get financing in five months she wonít get it now so someone needs to be brutally honest with her. Not you though!
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Old 06-30-2020, 10:55 AM
PotatoLogic PotatoLogic is offline
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We can list it through something like PurpleBricks to save on commissions, yes.

However, we will still have to pay 2.5% in commission to the buyer's agent (assuming the buyer is represented - agents charge nothing for buyers, so we're expecting any prospective buyer to come with an agent). There's no real avoiding commissions here, but I see what you're getting at - I'm going to look into more cost-effective commission structure options.

She wants to list the house, but put no effort (money) into staging or presenting it. I'm willing to front those costs (and will collect on equalization later), but when I ad She wants only contractors to come in and view it. She's clearly trying to limit the exposure the home will get, and by extension, limit the number of offers she will have to compete with.

I feel like there's got to be something I can do to prevent her anti-competitive behaviour here. Between her restrictive listing desires and her approaching the other buyer to withdraw their more-than-$650K interest in the house, I feel like the courts will not be sympathetic towards her. It's clear she's doing everything she can to hold onto the home but hasn't come to terms with the fact it's outside of her reach.
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Old 06-30-2020, 11:56 AM
rockscan rockscan is offline
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Default Devaluing the Matrimonial Home

I think you can look at that commission structure and reject it. I have never heard of a buyer having their realtor fees paid for by the seller.

If your home is in a desirable location then it should not be an issue and you will have lots of interest. If the clause in your agreement outlines if she cannot find the financing and it is to be sold then she canít be dictating how it goes. Are you both living there? Can you have someone view it with you? There may be ways around her demands.

Its great that you have a cash offer but I am always fishy about those as it speaks to someone knowing the house is worth more than they are offering and you are desperate to sell. If you listed it on your own you can send the listing to prospective agents for their clients too.

ETA: I just looked up how it works. I was lucky that my sister is a realtor and helped me buy and sell my first home and waived her commission both times. I would suggest then that you take offers. Where I live many homes are going for $25,000 to 50,000 over asking just to get the home even with no inspections etc. Might be worth doing it yourself to save that commission and taking offers. Fuck your ex. You are an equal owner and deserve to get the most out of your asset.

Last edited by rockscan; 06-30-2020 at 12:05 PM.
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Old 06-30-2020, 12:36 PM
Selfrepmom Selfrepmom is offline
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Quote:
Originally Posted by rockscan View Post
I think you can look at that commission structure and reject it. I have never heard of a buyer having their realtor fees paid for by the seller.
This is actually the norm. Most people donít realize this.
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Old 06-30-2020, 03:02 PM
PotatoLogic PotatoLogic is offline
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Quote:
Originally Posted by rockscan View Post
If your home is in a desirable location then it should not be an issue and you will have lots of interest. If the clause in your agreement outlines if she cannot find the financing and it is to be sold then she canít be dictating how it goes. Are you both living there? Can you have someone view it with you? There may be ways around her demands.
The home is in an alright location, but needs some renovations and work done to it. She moved out in April 2020. I can surely bring in people to view it without an issue. Having her sign off on the sale will likely raise some conflict (because she wants to purchase the house at below-market).

Quote:
Originally Posted by rockscan View Post
Its great that you have a cash offer but I am always fishy about those as it speaks to someone knowing the house is worth more than they are offering and you are desperate to sell. If you listed it on your own you can send the listing to prospective agents for their clients too.
The neighbour is a private contractor himself, looking to move his family into the home. He currently lives in townhouses adjacent to my home, but looking to move into the detached house we live in. He's particular on our house because he has family who live (quite literally) across from us. I can see why he's willing to move here, and the price he gave us is relatively in-line with other homes that sold recently on the street. This is actually a serendipitous situation for both myself and the neighbour looking to move into the home (but not so much the ex who wants to keep the house for herself).

I suspect if the ex buys the house at the $650,000 valuation, she will likely turn around and immediately sell it to this neighbour for $750,000 and pocket the profit. That would work well if she was able to obtain financing, but she can't.

Quote:
Originally Posted by rockscan View Post
Fuck your ex. You are an equal owner and deserve to get the most out of your asset.
Agreed, but if she feels she can get more from a private sale, the same concept (of getting the most money out of the house) applies for her as well. The problem is as soon as we list the house, the private buyer will no longer be interested. He will have to compete with other bidders for the same house, and would effectively have to place a bid for $750K + (3.5% to 5% realtor commissions) = $776,250 to $787,500 for a house he could have otherwise bought for $750K. There's another house for sale on our street for around the same price. This is why I was thinking about the contingency agreement - if we lose out on the private buyer's interest (as a result of the ex's decision not to sell to him), at least I'll be safeguarded from financial loss.

I won't be upset if the house sells for more than $750K + commissions (I'm highly doubtful), but I will be if it sells for less. Maybe I should add a second contingency agreement - one that sweetens the pot for her. If the house sells for anything above $787,500 she's entitled to keep 100% of the surplus.
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Old 07-01-2020, 09:47 AM
rockscan rockscan is offline
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What you could do is put a sign on the lawn and post it in different places like Kijiji and facebook marketplace. Tell the neighbour you are trying to get some other offers to prove to the ex she is wrong. Then see what you get via email. Present everything to her and her lawyer and outline how much you will lose fighting over it and then tell them you will seek a judges order to sell if they continue.

You may be surprised. I live in a location that is not an ideal economy and houses here are still going for a lot even with work needed. Your renos may not be needed as a lot of people like to make the house their own.

Plus it will give you an idea of interest and prices.
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Old 07-01-2020, 06:39 PM
PotatoLogic PotatoLogic is offline
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Thank you for the advice! I'm going to do this and see if I can get offers to better gauge the value of my home.

I believe the house is worth more than $650K. The market value is more or less around $750K. I would be content if the house sold for $750K. If the house sells for anything more, I am content with the ex having the surplus. I just want my share of the $750K of the house - no more, no less.
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Old 07-01-2020, 06:56 PM
rockscan rockscan is offline
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Having additional interest might bolster your case.

I got the idea from a neighbour who found out his kids put the house up on kijiji. He got a pile of emails from realtors and a few people offering about 50 grand over normal asking for others on the street.

If anything you will have proof that it would sell for more than your ex can afford and it needs to be done asap.
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Old 07-02-2020, 09:27 PM
PotatoLogic PotatoLogic is offline
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Just an update:

I have taken photos an posted my home on Kijiji for $750,000 and to my surprise, I had quite a few people interested at that price point.

My ex found out very quickly too, and asked me to take down the listing. She advises me she will not agree to sell the house to anyone who comes to view it off of Kijiji.

She thinks she has some say as to who buys the house (she doesn't). She is still of the opinion she can buy the house (she still cannot get financing). She has said she still wishes to buy the house at $650K... but when I offered to buy the house at $650K (I can get financing for this), she declined. Her reason: "the house is obviously worth $750K". Are you f***ing kidding me...

I'm at a point where I think I need to force the sale of the house now. This is getting ridiculous.
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