Waste of the Home in Divorce
Deciding whether or not a waste claim exists — and should be awarded — is an argument for legal professionals to make and for the Court to decide. But if we’re defining waste as “intentionally diminishing the value of a marital asset,” then as a listing agent in divorce cases, I can give you examples to consider.
Timing, price, and appearance are the name of the game when establishing value in real estate. When any of these three factors are jeopardized, the value of the property diminishes. Let’s explore:
Timing: It’s a fact that unlike fine wine, the longer a house stays on the market, the more it depreciates. In every market and in every neighborhood, there’s an “Average Days On Market” figure that Realtors can access. When properties linger past this, they become stigmatized and buyers want a “deal.” So when showings are denied, offers are ignored, or the house is made undesirable, listings linger longer than they should — and depreciate in value.
Price: Buyers search for properties within the brackets they can afford. If a listing is overpriced, it’s also overlooked, and therefore sits on the market (refer to previous paragraph). When one party refuses to price the house according to its value, or they refuse to sign off on price modifications to lower it when the market necessitates a price correction, this causes the sale to lag — and thus, depreciate.
Appearance: Buyers who pay top dollar expect to walk into their dream home, and that means it’s spotless, depersonalized, smells fresh, has plenty of natural light, and is decorated like a model home. When they instead walk into a house that’s dark and dirty, stinks, and is cluttered with the owners’ “stuff,” some buyers turn and walk right out. For those who put in an offer, the appeal is the price rather than the appearance. This means a lowball offer.
In divorce listings, the party living in the home holds a disproportionate amount of power over its value. The in-spouse dictates access and condition. Those who routinely refuse showings and keep the property in poor shape diminish the home’s value and hence, any equity that may help them in their next chapter. It gets even worse if they influence buyers by telling them about their divorce drama, exaggerate issues with the house, allow pets to run loose, refuse to maintain the landscaping, allow the pool to turn green, and so on.
If you believe this is happening in a case, it’s a good idea to obtain a written report from the listing agent about what recommendations they’ve made to the parties, the parties’ response to their recommendations, as well as an “as-is” value versus an “after implementation of recommendations” value. Also, consider requesting from your listing agent an accounting of buyer feedback on showings.
Lastly, disclosing that the house is a divorce sale is a sure-fire way to attract buyers whom we refer to as “vultures.” It’s akin to advertising that the house is on the clearance rack.
Rest assured, I’m committed to maximizing the value and equity in the home. I’m a phone call away for any questions or cases that you may have involving the listing and sale of real property in your cases.