Center for REALTOR® Development 030: Divorce Situations in Real Estate Sales with Laurel Starks
For clients who are in some phase of the divorce process, the house is often the largest asset in the case. As REALTORS® in these cases, you can help your client navigate through the real estate aspects of doing what's best for the family and the property. Laurel discusses her work as a court-appointed real estate expert and shares helpful tips for divorce cases that are also great tips for regular listings.
It's important to note that the court has jurisdiction over most things in a divorce case. The first thing that needs to be established is whether the court has made any specific orders regarding the house and the client; the client would be whichever person is on the title. The orders can indicate anything from the list price to certain terms defined. The house often comes into play with other aspects of the case as well.
The title company usually disperses the proceeds, but as the REALTOR®, you want to make sure the title company gets a copy of an order that dictates how these should be dispersed.
Laurel has been involved in some legal work during her real estate career. In family law, the court and attorneys are accustomed to working with experts. In her work, Laurel is a real estate expert that is appointed by the court to handle the real estate aspect of the case, making recommendations and making sure the court orders are followed. Usually, an agent on the deal would be the court-appointed expert.
When you get a client who may be recently divorced, the first step is to do an intake to gather information, like who is and isn't in the house, any court orders, who is on the mortgage, etc. After that, you would generally want to visit the property and do a walk-through; in divorce, there is often evidence of distress. There may be opportunities for improvement so they get the most money. These should always be suggested with discretion and sensitivity for the situation. Asking probing questions to get more information may be uncomfortable, but as REALTORS®, you must own your professionalism. You can't best help your clients without all the information.
Proactive communication is especially important in these cases. When it comes to education, it's really important to take the position of not being attached to the outcome. It's not about trying to get them to list the house, it's about giving all the information so the family can make the best choice for them. Communication helps establish trust and neutrality.
In Laurel's practice, when they do the intake and the walkthrough, she never meets the clients twice. She meets with the parties separately and will alternate appointments. You want to avoid having too much communication with one client to make it look like you're taking sides. Each situation will be different, but it's important to gather all the information so you are considering both person's needs. Laurel shares some best practice tips for when it comes to communicating through emails.
In these situations, it is very common to have pacing issues. One spouse may be ready to sell the house and get everything done, while the other is still grieving the loss of both their house and their marriage. You may have to slow down and get the other spouse on board before you get too far.
When getting a lawyer involved, you want to keep them reasonably updated, but don't bombard them with too much communication. Some things to update lawyers on: when the listing agreement has been signed, the terms, once the house is on the market, when the house is in escrow, and when they are ready to close. Don't involve the lawyers unless you absolutely need to.
There are some things to prevent early on in a divorce listing. Make sure you know who all is on the title, and make sure the title will respect a Power of Attorney in the situation that the client themselves is unavailable. This is helpful even for a regular listing. You also want to check loan payment amounts that may be affected by previous loan modifications. Laurel recommends ordering a mortgage payoff early on. Knowing how to prevent land mines is key — if you think or know something may be a problem, address it sooner rather than later.
Reverse mortgages can be used as a tool in divorce when one person wants to stay in the house or to help a buyer when they want to move into a new house. A spouse who wants to keep the house has to qualify all on their own. With all the expenses surrounding divorce, oftentimes they don't qualify. Laurel is a proponent of not staying married to the mortgage. Reverse mortgages only apply to clients over the age of 62. In normal mortgage situations, you usually will have to refinance to get one person off the mortgage, or sell the house and take the proceeds to find a new living situation.
The rules for ownership and how things are dispersed vary from state to state. When it comes to listing agreements, some states take a listing agreement with whoever is on the title. In some states, you also need both parties to sign the listing agreements. It's important to look up your state's regulations. This determines who the client is — whoever you are taking the listing agreement with.
If you're working with friends or people you are familiar with, it's important to establish professionalism. You should treat it the same as a situation with a new client, and make sure all the education is provided and you're still following through with all necessary procedures.
There are some warning signs when entering divorce real estate situations. One is to make sure your client has an attorney; as a REALTOR®, there is no legal pull, and your client may need help navigating the court system. If one party is trying to sway your allegiance, maintain boundaries and neutrality. Another big warning sign is that lawyers can write into orders a right of first refusal. This can affect the basic rules and regulations of real estate sales. If you take on a case where one spouse wants to buy out the other, make sure that option has been detailed out up front so you don't run into anything later.
As REALTORS®, it's not your position to create a sense of urgency to list and sell a property, but you can help motivate them if they are experiencing grief or anger. It starts by building trust with your client. If you can seek to understand their goals and concerns, you can help guide their actions.
Children are the unintended casualties in divorce cases. Sometimes parents will use the children as pawns to try to sabotage the sale. There is not an obligation to the kids, but you can help to advise your client on how they can help their children through the situation.
Divorce listings are very complex listings. They far surpass agents trying to hit their sales goals; it's about meeting people on their worst day and helping them rebuild.
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Additional Links:
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Host Information:
Monica Neubauer
Speaker/Podcaster/REALTOR®
Additional Bios:
Laurel Starks is a recognized expert in family law real estate, has sold over $120 million in divorce sales volume throughout Southern California, and is often regarded by her peers as the pioneer of the divorce real estate niche. In this capacity, she has advised, consulted, and testified in hundreds of divorce cases, and serves as a court-appointed expert in the disposition of real property. Attorneys, judges, and other legal professionals have come to rely on Laurel's knowledge, judgment, integrity, as well as her ability to explain complex real estate matters to those affected by them.
In 2016, Laurel was recognized as an Inman Innovator by Inman News for her pioneering work in the divorce real estate field, and in 2017, Laurel Starks was recognized once again by Inman, as an Inman Influencer for her contributions to the real estate industry.
Laurel speaks at numerous events around the country each year and is equally at home addressing ordinary homeowners, REALTORS®, or a room full of judges and attorneys. She is the founder and owner of the Divorce Real Estate Institute for real estate agents.
Laurel is the author of The House Matters in Divorce: Untangling the legal, financial and emotional ties to the house in divorce.