Home buyout question

[Steveco]

Hi Everyone,

Wife wants a divorce. We have 2 children and plan on shared custody. Everything is pretty amicable and we want to not pay what little money we have to lawyers. Anyways, I want to stay in our house and buy her out. House appraised at 280 and we owe 200. I was planning on giving her 40k and upping my mortgage to 240. However my bank said when doing this sort off thing they always reduce the appraised value by Real Estate fees to replicate what monies each party would get if we actually sold the house. This would take my wife's share down to about 33K which she does not agree with.

Hope this makes sense. Any advice out there? Thanks

SC

[standing on the sidelines]

when i bought out my ex we took the apprasied value minus the mortage owing minus real estate fees (can vary) to get the amount I owed him for his half of the house.

[ddol1]

Same deal as standing (hello long time no chat with!).

This should help - go to my last post in the financial board re the filling out the 13.1 statement, which is what you are doing to come up with equalization if any; It is the divorcemate help/description for how, why, cost, value for everything. Scroll to where the form deals with the MH at marriage, MH at date of valuation and the explaination is there for both of you to read and understand. I beleive the MH at least is detailed in the FLA too under its own special section - there for her to read and accept it, maybe the next items swing in her direction - who knows???

Hope she is reasonable to accept something like this author who puts things in easy language to understand the objective. Remember, Good for the two of you to sit as adults and fairly negotiate an end to you relationship as it was and building a new one as it will be as you continue to work together to raise your children - Again, Good for You!!!

[standing on the sidelines]

just remind her that the 7000 grand differerance can easily be blown on legal fees and then some. I bought my ex out and we each had lawyers. At first he didnt want to accept the real estate fees coming off before he got his money so I told him to talk to his lawyer, couple days later after talking to her he accepted the amount I stated.

[Steveco]

Thanks everyone

[billm]

Real estate fees are often deducted, but if it is fair depends on the situation.

If she is planning on buying a house, which she probably is some day, you should NOT deduct real estate fees if you want to be fair. Here is why:

Let's say you have an identical house beside you for sale and one of you is buying that house. The expected sale price of your house is 280 and the same for the house beside you.

What is clear is that to be fair after you buy the house beside and move in, you should both have the same equity.

You don't deduct real estate fees, you obtain a 240K mortgage and give her 40K. She puts that toward the house she buys and also ends up with a 240K mortgage. It seems clear to me that this is fair and this thinking should be applied to your situation.

Also, consider the fees for her to buy a house. To be completely fair, you should split the cost for her to buy another house such as land transfer tax and lawyer costs. This would make it of no financial advantage for either of you to buy out the matrimonial home, which is as it should be.

So, in short, I agree with her, and on top of that, you are financially advantaged by that arrangement because you don't have any expenses associated with buying another home.

[billm]

...
Your ex could learn something from my experience.
...

Sounds like something was learned on both sides

[nogoingback]

I bought my ex's half of the house and we split the cost of the potential real estate fees. The logic behind it was that if I had the sell the house in the near future, I would have had to bear the entire cost of those fees. She was essentially selling her portion of the house, and it only made sense that those fees be equally split. Additionally, we shared equally in the legal, title transfer, etc. fees.

[Canada Gold 2010]

I bought my STBX out of the matrimonial home in April of this year. When calculating the equity, we did not subtract what the real estate fees would have been had we sold the house.

I asked about this to both my mortgage broker and my family lawyer. Both informed me that I could not subtract real estate fees on a buy out because the house is not being put on the market and sold. Simple as that.

The advice I got seems to contradict the advice in this thread, so honestly, I don't know what the right answer is.

Canada Gold 2010

[standing on the sidelines]

I bought my STBX out of the matrimonial home in April of this year. When calculating the equity, we did not subtract what the real estate fees would have been had we sold the house.

I asked about this to both my mortgage broker and my family lawyer. Both informed me that I could not subtract real estate fees on a buy out because the house is not being put on the market and sold. Simple as that.

The advice I got seems to contradict the advice in this thread, so honestly, I don't know what the right answer is.

Canada Gold 2010

my lawyer and the real estate appraiser both told me that taking off the real estate fees was normal

[Canada Gold 2010]

my lawyer and the real estate appraiser both told me that taking off the real estate fees was normal

Wish I had your broker and lawyer at my disposal, lol. I'm not in Ontario, perhaps provincial jurisdiction affects matrimonial property legislation in terms of a spouse buying out the other...........that, or I got bad advice.

[Steveco]

Thanks everyone...

Just an update - So house was appraised at 280 k and my bank agreed I could buy her out ( she will get about 25k after real estate fees etc). She went to her bank and they told her they would approve her for about a 200k house. She says this is unfair because my house is worth more than hers and the kids would still consider my house their "home". Can she force me to sell it?

Thanks

[Berner_Faith]

As long as she receives her pay out, she cannot force the sale, unless she can afford to buy you out...however it really is a mute point as clearly you are approved for a $280K mortgage and she is only approved for a $200K... shall she force the sale, there is nothing stopping you from buying another $280K home.

Also, remind her that just because she can only get a mortgage worth $200K, doesn't mean the house will only be worth that... I know there are some houses worth over $250K around me, that have sold for less than $200K... however her being approved for a mortgage is based on her credit score and income, if you have higher income and a better credit score you can afford more than her... such is life.

[standing on the sidelines]

Thanks everyone...

Just an update - So house was appraised at 280 k and my bank agreed I could buy her out ( she will get about 25k after real estate fees etc). She went to her bank and they told her they would approve her for about a 200k house. She says this is unfair because my house is worth more than hers and the kids would still consider my house their "home". Can she force me to sell it?

Thanks

you have got to be kidding? She knew all this before hand that the kids would always feel a connection to the mat home. You gave her a fair offer, not your fault that she doesnt qualify for more. If she tries to force the sale of the house based on her reasons then she will be in for a big surprise and hopefully hit with costs.

[billm]

Thanks everyone...

Just an update - So house was appraised at 280 k and my bank agreed I could buy her out ( she will get about 25k after real estate fees etc). She went to her bank and they told her they would approve her for about a 200k house. She says this is unfair because my house is worth more than hers and the kids would still consider my house their "home". Can she force me to sell it?

Thanks

No she can't force you.

Her reasoning is flawed. What does the value of the houses matter to the kids?? Even if she forced you to sell, she couldn't stop you from buying a more expensive house anyway!

More importantly, unfair to who? She needs to be kid focused.