This market is a challenge on many levels and the shortage of inventory is a self-fulfilling prophecy. Homeowners don't want to put their house on the market because there's no available housing for them to move to, so they keep the market starved.....and round and round we go.
In the best of situations, this is a problem. But the "nowhere to go" issue couldn't be more prevalent in the divorce seller market.
People don't come out of divorce financially better than they were when married. They don't have more money, better credit, less debt. On the contrary, divorcees are often financially devastated. Headed out into the world without their other half, they usually have higher debt, damaged credit, and either less income, or support payments that can cripple their financial and lifestyle rebuild.
And, they're in a world of emotional hurt.
When the court orders the home sold, they have no choice at that point to find alternative housing. They enlist the services of a Realtor who should know some things about these unique situations:
- Upon closing, clients don't always have access to proceeds. Depending on the status of their case, it is very common for funds to be sent to a trust account that is held until further orders by the court. So you may be representing a client who will have no funds available to them upon closing.
- Discuss their options very early on in the process. They should know whether or not they will qualify for a loan or a rental before the house ever is listed. As we all know, lenders have their criteria and so do landlords. Houses are selling at lightning speed, so help them with a plan for that day when they have to turn over the keys. If they cannot secure their own place, do they have family or friends they can stay with temporarily? Moving day will come much sooner than they expect, regardless of how many times we explain the process.
- Educate them about the ramifications of ruining credit during their divorce process. It's not uncommon for divorcees to run up credit cards to pay for things like attorneys' fees, or to miss payments on joint debt as a bargaining chip to win in negotiations in other parts of the case: "I'm not paying for your car until you sign over the retirement account." And that's what we call cutting off your nose to spite your face.
There may be very little we can do in these situations to provide them with immediate relief. What we can do is put them in touch with credit repair experts and lenders (preferably CDLPs) who can create a 2-year game plan for them so that they can be on a path toward financial health and homeownership. We can also encourage them to put a budget together and utilize an app like Mint, Simplify, or YNAB to track expenses and set financial milestones.
We can also provide hope. We have all seen and heard recovery stories - people who lost everything and then rebuilt. Let them know it is possible, and with hard work, they will be on their feet again in what is their new normal.
On behalf of all of us at the Ilumni Institute, we appreciate and applaud each and every one of you who are committed to raising the bar in real estate.