Where Am I Going to Live?! Why Real Estate Shouldn’t Be an Afterthought in Divorce

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com/.

To learn more about how Laura can help you, you can visit her website: https://laurarumford.premierepropertygroup.com/

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com/.

To learn more about how Laura can help you, you can visit her website: https://laurarumford.premierepropertygroup.com/

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Steve Altishin 0:28
Hi everyone, I'm Steve Altishin, Director of Client Partnerships at Pacific Cascade Legal, and today we have Certified Divorce Realtor, Laura Rumford, to talk with us about why buying or selling real estate should not be an afterthought in a divorce. Hey, Laura, how you doing today?

Laura Rumford 0:28
I'm doing great. Thank you, Steve. And I appreciate you inviting me to join you today.

Steve Altishin 0:38
Oh, this is gonna be great. So before we start in, why don't you just sort of tell us a little bit about yourself, and you know, how you came came to be to this particular sort of spot?

Laura Rumford 1:07
Well, yeah. So as Steve said, I am a certified divorce real estate expert. And very broadly, what that means is that I'm not only an accomplished realtor and principal broker, I have also sought out a very specific designation called a CDRE, Certified Divorce Real Estate Expert, which sets me apart as somebody that has gone the extra mile, and I'm constantly working on even expanding my knowledge and my skills, specifically in the divorce realm as it pertains to real estate. If you're wondering what my accent is, by the way, I'm from South Africa I've been in the United States have since 2006. And you asked me as well, what brought me to wanting to study to be a CDRE? Well, personally, very personally, I went through a divorce myself in 2018. So I understand firsthand, the process and what's involved. In addition to that, I, when I lived in South Africa, I was a chartered accountant in this country, it's called a CPA. So I have an in depth knowledge of numbers. And I really, really understand how important it is for us to take care of our financial, state of affairs, and how important it is for people to make wise financial decisions, especially at this juncture in their lives. It's a really big, emotional time. And we need to be mindful of making good choices. So I hope that brings you a little bit of understanding.

Steve Altishin 2:35
Oh it's perfect, you're perfect for this. Because, you know, as much as anybody, you know that divorce is inherently stressful. I mean, legally, financially, emotionally. And, you know, I imagine that when you need to decide where you're going to live afterwards, the strain is like, just ramped up. So you know, what can you say to a person who is in a divorce or even contemplating divorce, about buying and selling their house at this time?

Laura Rumford 3:08
Well, absolutely, it is a very big stress in life. And it's not to be underestimated. That's the first thing that I really want to, first of all, praise you for taking the time to listen to this, and recognizing where you're at right now, it's a particularly stressful time, you're not only dealing with the emotional side, you're also dealing with financial design, you're dealing with a lot of administrative tasks. And on top of that all, you're dealing with the legal side of the divorce process, it maybe the first time probably is the first time you've ever been in a litigation situation. So that's a huge stressor. And then on top of that, you're not sure where you're going to live, whether you're going to stay in your home or move, you're probably taking care of administrative things like changing your bank account, maybe changing your personal name. And if the kids involved, likely that's adding a whole new dimension of stress, where you're not sure, if they don't know yet about the divorce, you don't know how they're going to deal with it emotionally. And you also have uncertainty around how they're going to respond to potentially moving homes. You might have a lot of emotions tied up in your marital home. Maybe the kids were born when you live there. You know, and again, that uncertainty, just as as a little point that I looked into stresses, and the Holmes-Rahe Stress Inventory, actually lists divorce as the second biggest stressor in our lives, potentially affecting our physical health. The first stressor is the death of a spouse. And the second to that is divorce. And then very high on that list, and on that scale, are also things like a major change in your financial situation, and moving home. So you're putting all of those things together into one bucket, and trying to navigate it all at once. And that's enormous.

Steve Altishin 5:00
It's crazy. And I'm coming into the end, I've got, again, all these different stressors, including numbers, you talked about being a numbers person, and I'm not a numbers person. And so there's that going on. There's the kids going on, there's where am I going to live going on? And so maybe, can we just start also with some options that might be available for someone in divorce, you know, that, you know, with their new living arrangements, you know, maybe permanent type, maybe temporary type. But if I say, “Where do I go from here?” what kind of things can they do? What are some options from living arrangements?

Laura Rumford 5:44
Absolutely. And as you say, the financial side of things is a big component, but also the emotional well being of kind of trying to visualize what your future may look like. Now, while the financial side is going to impact that, here's some things that I've seen people doing and my perspective on them. Every single situation is different. Every single relationship is unique, and every single divorce is unique. And so only you can really answer how these things resonate with you. But I have seen people continue to cohabit, sometimes for a very short period of time, sometimes for a long period of time. And again, this is going to depend on how you and your soon to be ex, how you're able to navigate that, whether or not this works for you. I would think that long term, this is definitely not going to be a great arrangement. Especially if in the future, there might be a new partner that comes along. So this really should be thought of as a very short term option. And it's often done just because of the financial logistics and trying to just navigate what you're going to do next.

Laura Rumford 6:48
The next option I've seen is something that you've probably heard bandied about called nesting, that's when two partners, especially when kids are involved, the kids stay in the home. And instead of the situation where the children pack a bag and navigate each week between those two homes, this is where the children stay in the home. And the partners rotate out possibly each week, it may be to a location such as an apartment that they've rented that each of them rotates into, sometimes it's to a parent's house or a friend's house. And again, this I see as a very short term solution. And it's not really a solution. Ultimately, the kids are going to have to navigate this. And as hard as that is, they'll do pretty well. Mine personally, mine did really well in the long run.

Laura Rumford 8:03
Then the next one that we often hear is called an equity buyout. And this is where one spouse decides they want to stay in the marital home and the other spouse agrees to move out. And then there's a shared equity in that home that they've accumulated over the course of their marriage or time that they've owned the house. And so there are various different ways to arrive at net equity. But an equity buyout essentially involves removing the out spouse, the person that's moving out from title and also removing them from the mortgage. So that's something that I'll dig into a little more further on. But it is important that they're not only removed from title but also removed from the mortgage.

Laura Rumford 9:02
And then the other two options are selling the home and potentially renting for a while. A lot of people don't want the permanence of buying a new home right at the outset of their separate life. They want to figure it out. But there are a lot of people who've lived in an area that they're familiar with, and very happy with and perhaps they have children that go to school in that area, and feel very comfortable buying a new home right away.

Steve Altishin 9:47
A lot of options, a lot of great information there. And so you're beginning to consider these options, we're going to start looking at how do I evaluate these options? And I'm maybe looking at it from a sentimental point of view, an emotional point of view or a point of view of what's best for my kids. But you're also looking at it from, like you said, one house, two people. And that's where numbers can come in.

Laura Rumford 10:36
Absolutely. And I'm often speaking to people early on in the process when they're still considering divorce. Sometimes they come to me confidentially for some advice on their options. And I always welcome those opportunities to assist people in trying to decide what their options are. Also, I will give attorney referrals or couples choosing me due to my designation later on during the litigation process when they've already decided what they want to do.

Laura Rumford 11:08
But in all those instances, there's a few key things that people need to have a handle on. And one is, do they know what their house is really worth? All too often, I see people signing a settlement agreement just based on a Zestimate or Zillow estimate or Redfin estimate, or these computer generated valuation models. Now, they're pretty smart, these valuation models, but they're not human. And so when you have a human being going in and actually seeing the house and walking through it, they can get a perspective on the actual condition of the home, the actual circumstances in that neighborhood, etc.

Laura Rumford 12:03
There's three different kinds of valuation type scenarios that we see typically. One, most people have probably heard of, called a CMA, also called a Comparative Market Analysis. These are typically performed by real estate professionals when somebody is considering listing a home, or even if they're representing a buyer in the purchase of a home. A real estate professional will go and look at the house, they'll take into account all of its significant comparable factors like how big it is, the condition of the home, where it is, the kind of neighborhood, maybe the schools factor in, and the actual location.

Laura Rumford 13:10
Now, a BPO, also called a Broker Price Opinion, is very similar to a CMA. But it's normally used in a different scenario typically prepared for a third party, like a judge, or the IRS, or it may be prepared very often when a lender asks for it during a distress sale, such as a foreclosure or short sale. And this is typically a more in depth analysis.

Laura Rumford 14:01
Appraisals, on the other hand, are where a licensed appraiser will come to the home and they will not only look at the home, they will also measure it accurately for square footage, they will look clearly at various different aspects of the home, they will go into the attic space and the crawlspace. An appraiser is the only person actually licensed especially in Oregon, to define exact value.

Steve Altishin 14:55
That leads to another question people aren't completely sure about, and that's equity position. So can you talk about what that difference is? And why what the house sells for isn't necessarily what you get?

Laura Rumford 16:02
Exactly. So you know, there may be a lot of costs to establishing that selling price. Perhaps the house needs a new coat of paint, perhaps it is in desperate need of a new roof. There are significant costs. We need to be aware of what the likely costs are going to be to sell that home, as well as the costs of actually the escrow and sales process. Realtors don't come free. And so that's a cost of selling the home. There are also closing costs and escrow costs and various different things.

Laura Rumford 16:48
Not only that, there are liens attached to the property almost in every single case. Most likely there's a mortgage that has to be paid off. There may be property taxes that are due, there may be spousal support judgments, and there may also be home equity lines of credit. Sometimes unfortunately, there are liens that perhaps one spouse is not aware of.

Steve Altishin 17:47
That gets to the mortgage issue. Can Doug just sign something and then I walk away and don't have to worry about any of that anymore?

Laura Rumford 18:12
Well, this gets back to what I referenced a little earlier on. A huge problem I see very often in divorces is sometimes people will come to me a little too late in the process. They may already have a judgment that says something like spouse X will be removed from title and spouse A will remain on title and remain on the mortgage and spouse X will be removed from the mortgage. Well, there's not an easy way to remove somebody from the mortgage. Whilst one spouse can sign off on title, the contract between the lender and the parties on that mortgage is a private contract. The court cannot dictate to the mortgage company that they should remove somebody from the mortgage.

Laura Rumford 19:05
The only way to do that is either through refinancing completely, which is not always as favorable as we'd like it to be right now. Interest rates are higher than they were and a lot of people are in the low 2% or 3% mortgages. And sometimes people think about assuming the loan. I'd caution you that that is extremely difficult. There's a very slim chance somebody can assume the loan.

Laura Rumford 19:40
People sometimes say, “I'm going to move out of the house and I'm just going to stay on the mortgage.” That might sound like a good solution for some people, but the party that's moving out essentially becomes divorced from their spouse, but married to the mortgage. They can't really move on because they are still jointly and severally liable for the payments on that mortgage.

Steve Altishin 20:21
That kind of upshot then becomes, well, what do I do? How do I know if I can afford to even stay in the house? Or can I afford to buy a new house?

Laura Rumford 20:45
Absolutely. Those are financial things that need to be looked at really early on in the process. Please, please talk to me early. And I'll put you in touch with a qualified divorce lending professional, a certified divorce lending professional, who can help you navigate some of those questions as regards what you can potentially afford for the future.

Laura Rumford 21:25
In almost most scenarios, one has to anticipate that if you are currently living in a home together, your outlook for the future is going to be a smaller home. It makes logical sense because you have two incomes, and now you're only going to have one income. I personally went to a house half the size when I went through my divorce. I don't want to discourage you, but I also want you to think about what you can truly afford.

Steve Altishin 22:23
So eventually people are going to ask you this question: Should I sell the house?

Laura Rumford 22:37
Absolutely. And I cannot answer that question. But I can certainly give guidance and counsel based on my experience and my knowledge of real estate. Basically, you've got three options on the table. One is you keep the house. The second is maybe to buy out your spouse. And the third option is possibly to consider listing and selling the house and both of you making a completely fresh start.

Laura Rumford 23:30
The most important thing is that even though you've got to navigate super important things like the children and spousal support, real estate is very likely your singular largest asset that you've accumulated. So it's going to have a very big impact on your financial outlook and your financial future. Again, I can't overemphasize: talk to me early in the process.

Steve Altishin 24:08
That makes such sense. The need for a realtor who knows how divorces work seems so important, especially if you are ordered to or agree to sell the house and then you both go your separate ways.

Laura Rumford 24:43
Well, yeah, I would typically come on board in a few different ways. One is by mutual agreement of the spouses. The other would be maybe an attorney will refer me onto the case and sometimes I'll be court ordered specifically as an expert on the case to list and sell the home.

Laura Rumford 25:12
It's important to understand that while my background apart from being a financial background, my background as a principal broker and an accomplished realtor, real estate transactions where divorcing is involved are not the same as traditional real estate. These are situations where you have two parties that are potentially in litigation against each other, potentially not even talking to each other. And there can be conflict.

Laura Rumford 26:05
My job and my training have qualified me to really bring neutrality and a lack of bias to the table, no matter what the circumstances are. My job is to sit in the middle as a third party trusted neutral that both parties can communicate with, and not even have to talk to each other if they don't want to.

Steve Altishin 28:53
Unfortunately, we are out of time, we blew through 30 minutes. I really want to thank you for being here to talk about this subject of buying real estate, not as an afterthought, or thinking about it after the divorce has been decided and everything has been decided. But getting in on it early, so that you learn more, you know more and you can make better decisions even during your divorce.

Laura Rumford 29:39
Thank you very much, Steve. If you want to reach me, you can visit https://laurarumford.premierepropertygroup.com/ and my number you can call me or text me at (503) 927-8770. I hope I'll be a good resource for you.

Steve Altishin 30:19
So thank you for being here and everyone else, thank you for joining us today. If anyone has any questions about today's topic, you can also post it here and we can get you connected with Laura, or you can connect with her directly. Until next time, stay safe, stay happy and be well.

Outro:
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