Divorce lawyers always advise their clients to try and approach matters in the most amicable way they can. In fact many of the country’s divorce lawyers are members of an organisation named Resolution, formerly known as the Solicitors Family Law Association (SFLA). The organisation states the following on their website, which best describes what they do.
“Membership of Resolution commits family lawyers to resolving disputes in a non-confrontational way.”
“We believe that family law disputes should be dealt with in a constructive way designed to preserve people’s dignity and to encourage agreements.”
You can find Resolution’s code of practice by clicking here.
Every person I’ve known or met, who was getting divorced, was advised by their lawyer not to leave the property they shared with their soon to be ex-partner. Now, I’m not qualified to provide all the legal reasons why a divorce lawyer will give such advice. However, from my experience as an estate agent, I can tell you why leaving the marital home can compromise your position when trying to sell it.
In a particularly acrimonious divorce, when selling the former marital home, the partner in residence can – if they’re that way inclined – cause all sorts of problems and delays for the partner who’s moved out. And while a consent order may prevent them doing so indefinitely, such individuals have been known to push the boundaries.
Instructing the agents
Firstly, disagreement can ensue over which estate agency to select. One example, albeit a unique one, was the former estate agent having to sell his three bedroom semi. Several years prior to his divorce, this chap had worked for a large estate agency as manager of the branch located minutes from his home. As you would expect, his experience of the local house market meant he also knew which estate agents were good and which should be avoided. And he often spoke about this with his wife.
A few years later, when it came to the divorce and selling the former marital home, his wife did not want her husband’s former employer and colleagues involved. This wasn’t an unreasonable request; after all, her husband still had friends working in that branch who may not have been neutral in the matter. So, what did the wife do? Not only did she invite the estate agents whose practices she knew her husband disapproved of, but made sure one of them who attended was an arch rival of his. And when it came time for the husband’s agents of choice to appraise the property, getting his wife to confirm a convenient time for them to visit wasn’t an easy task.
While most sellers will not experience the exact same scenario as above, there may very well be arguments over which estate agents to instruct – even if just to annoy one another. My advice would be to use the guidelines I mention in my article How to successfully sell a property – an insider advises, plus also consider the selection criteria I mentioned in part one, such as age and experience. Now I know that in some cases it may be easier said than done, but try to select one estate agent you both agree on and do not commit to a lengthy contract with them. A six week sole agency agreement is ample time for them to have a go at selling your home. You can always renew an expired contract if you like the agent, but cancelling a contract of one you don’t is a harder task.
Problems with viewing appointments
Ask your estate agent to accompany prospective buyers viewing your home whenever possible. It has been known for the partner wanting to delay the sale, to eagerly point out all the property’s defects to people viewing it.
A classic stalling tactic by the husband or wife in residence of the former marital home is being awkward with viewing appointments in general. A seller cancelling viewing appointments at the last minute or not being available at the agreed time is a common ploy in such scenarios. I remember one divorcee giggling as she told a friend: “When people turn up to view the house, if I’m not in the mood to show it, I’ll pretend I’m not in and won’t answer the door!”
I have also known situations where the agents had to work with just a one hour slot once weekly to get buyers in to view. In such cases, unless they set up an ‘open day’ viewing, inviting several buyers to view during that hour, they’re going to struggle to do their job.
At the point where you instruct the estate agent to sell your former marital home, all three parties – the agent and both partners – must agree on the viewing arrangements. Plus, the agent should keep a log of all the viewings. Should a problem arise (like those mentioned above) there is a record of events to pass on to the divorce lawyer if the matter has to go back to the family court. As mentioned earlier, a consent order stating that the property must be sold, will prevent any fun and games going on indefinitely. However, the task of enforcing a consent order can be costly and time consuming. So, coming back to the advice of the divorce lawyers – always try to resolve matters amicably.
Keeping both partners updated
A good estate agent, experienced in selling properties forming part of a divorce, will know that they should keep both partners updated on progress with marketing and offers. This will double the agent’s work load, especially when having to negotiate an offer between three parties – the buyer and both sellers.
Unfortunately, I’ve seen times when the non-resident partner wasn’t updated as frequently as they should’ve been and received information second hand from their ex. Unless communication between the divorcees is good, both of them should receive updates and notification of offers directly from the agent. If your partner and you are on civil terms, and you’re happy for the estate agent to update either one of you, tell them so at the beginning of marketing.
Once you have decided on which agent to instruct, you will be required to sign their marketing agreement and provide them with a form of identification, in accordance with the Money Laundering Regulations (2007). Use this as an opportunity to pop in to the estate agency and meet the key people that will be handling your sale. Whether you get on with your partner or your relationship is strained, if you reside outside the former marital home, try to visit the estate agency. As I said earlier, in such scenarios, the partner not living at the property will not always be as up to date on progress with the sale as the resident partner. Visiting the estate agency and introducing yourself to the team can go some way toward you not being left out of matters.
Estate agency agreements
Where a property is jointly owned, estate agents will ask that both the owners sign the estate agency’s contract or agreement, prior to commencing marketing. What happens if at the end of the contract, the property remains unsold and one of the owners decides to give it to a different estate agency to sell? What happens if the other owner wants to keep the original agent on?
A divorcing couple instructed one of London’s leading estate agents to sell their former marital home. The house was situated in a sought after road in a popular suburb. Properties in that area were going under offer very quickly and the couple’s home was no exception. An ‘open day’ viewing on a Saturday afternoon returned five offers above the asking price. The sale was agreed but unfortunately fell through six weeks later. The reason provided by the agent was that the buyer reassessed their finances and had a change of heart. This can often happen when buyers get caught up in a bidding war after being thrown together by an open day viewing event.
Shortly after, a second buyer was introduced who offered at the asking price. Even though this buyer’s offer was lower than the five previous offers, the sales negotiator who introduced the buyer suggested the sellers accept. The husband was reluctant. House prices were still rising and when he asked the negotiator if any of the other five people who offered were still around, the agent immediately said they’d all found other properties. The husband told me that he was now a little suspicious; however, the agent kept reiterating that this buyer was in a stronger position than the others they’d introduced. The man’s ex-wife, who was living in the house, had also found a home she wanted to move to, which was chain free. So if the husband agreed to the lower offer, the sale could proceed. His wife urged him to accept the offer.
The husband told me that at this point he became even more suspicious. Previously, his wife had argued that they’d undersold their home when they received five offers above the asking price. Now, seven weeks later, she and the estate agent were pushing him to accept a much lower offer. Even so, he wanted to bring a distressing situation to a close, so he reluctantly accepted the offer.
One week before contracts were due to be exchanged, the buyer decided to revise his offer by nearly twelve percent. There was no justification for this, the survey and legal work had found nothing wrong with the property but the buyer, rather unashamedly, insisted on the huge reduction in the agreed price. This unfavourable practice of asking for a price reduction in the final stages of a property transaction is known as ‘Gazundering’. Both Mr and Mrs Seller declined the request and Mrs also lost the property she wanted to buy.
The man suggested to his ex-wife that they pause, then start again with a different estate agent. Their property had been with the present firm for nearly four months; the sole agency having expired eight weeks prior. Plus, their property was being marketed with photos depicting a garden in full bloom but they were now half way through November. Anyone looking at the property details online would know at a glance that the house had been on the market for months. Strangely, Mrs Seller insisted they keep the same agent.
Mr Seller called the estate agency to ask that they cease marketing and in a calm yet direct manner, explained the reasons for his request. He was told that because his wife wanted to keep them on, they would continue marketing! So, this estate agency had been unsuccessful in selling this property twice in four months. Their contract had long since expired and yet they were trying to hold on to the instruction, essentially using this family’s awful predicament to their advantage.
When I heard this story, I was shocked. Did the staff of one of London’s leading estate agencies really think they were going to force a man to sell his home through them? And complaining to their head office didn’t immediately yield the result the seller had hoped for either. Instead of cutting their losses, the estate agency’s complaints department kept pointing out that Mrs Seller had also signed their contract and wanted to remain their client.
For the estate agency, trying to hold on to the divorcing couple’s property was a pointless exercise. They must’ve realised this, along with the potential for them receiving bad publicity, so they stopped marketing and released the sellers from the contract. Over and above all the other points to consider when signing an estate agency agreement, the above story raises another. So do ask, in writing if needed, what the procedure is for terminating the agreement at the end of the term. Do they require written notice and if so, is it required from both partners/owners?
Unscrupulous buyers and ‘Gazundering’
In this last section, I wanted to mention one or two underhand tactics used by a small minority of individuals with regards to properties and divorce. Whilst such situations are rare, they have been known to come up from time to time.
The first is that of ‘Gazundering,’ which was briefly discussed in the earlier story. Gazundering is when a buyer lowers their offer from the agreed sale price at the latter stages of the transaction. More often than not, it’s property investors who employ such a tactic and not the average home buyer. Below is an example of Gazundering.
A couple are selling their former marital home, which is a three bedroom house. In turn, the partners are each buying a two bedroom flat. For simplicity, let’s say one of those flats is chain free and the other belongs to a person buying a newly built house that’s also chain free. All offers have been agreed and the chain consisting of four properties is complete. Surveys and valuations have been carried out and so has the legal work of all the solicitors involved who are now preparing for an exchange of contracts. Preferred completion (moving) dates will be relayed back and forth the chain, perhaps with the help of the estate agents involved.
At this point the buyer at the bottom of the chain revises his offer on the couple’s house by £20,000. The agreed sale price was £320,000 but this buyer is now saying he’ll only pay £300,000 – take it or leave it.
Even worse is the fact that many such buyers, when making their initial offer, do so with the full intention of lowering it just prior to contracts being exchanged. If there are other buyers interested in the property – a common occurrence in today’s market – then it’s likely that there will be competing offers. And if those offers are at or around the asking price, the devious buyer doesn’t stand much chance of getting his lower offer accepted. So he offers high, waits until the later stages of the transaction, when all the other buyers are out of the way, and he hits the sellers with a price reduction. So, the sellers, who up until now thought they were close to putting the divorce behind them and moving on with their lives, now have a decision to make. Here’s what might happen.
If the sellers decline the buyer’s revised offer and he withdraws from the purchase, the chain will collapse. In turn, they will probably lose the flats they were hoping to buy and the owner of one of those flats may lose out on the new home they were hoping to buy. Each will have to put their property back on the market and start again. There’s every chance that a new buyer may be found and the chain stays intact. Equally, there’s a chance that the flats and the new home in the chain are sold to other buyers, which is more likely.
The sellers may firmly decline the buyer’s revised offer and he decides to proceed at the original price – quite possible, but unlikely. Either party may come back with a counter offer in an attempt to keep the deal together – the buyer still gets a reduction and the sellers still get their flats. I’ve seen this happen but not often.
The buyer may maintain his ‘take it or leave it’ stance in the hope that the sellers will absorb the £20,000 loss so as not to lose their connected purchases and prolong the misery of their situation. On very rare occasions, the entire chain, including the estate agents, may make up the loss in order for all the sales to go through. Each seller reduces their price a little and the agents do the same with their fees. In 12 years of estate agency, I only ever saw that happen once; however, market conditions were very different and the requested price reduction was due to a down valuation and not Gazundering.
There is no foolproof way to circumvent scenarios like the one mentioned above. A person in the advanced stages of buying a house might see a similar property that they prefer, leading them to change their mind. If that property is £20,000 cheaper, the buyer isn’t going to worry about losing the £1000 they’ve spent thus far on survey and legal fees trying to buy the first house. They may decide that if they can get the existing property for £20,000 less, they’ll stay with it. If not, they’ll simply drop it and go for the other one. Not as nasty as setting out to Gazunder intentionally, but not nice just the same.
Protecting your interests
Taking into account what I’ve just said, there are steps you can take to guard against a buyer intent on exploiting your situation.
Firstly, ask yourself if your home, at its current marketing price, has investment potential? Now, this may sound like a silly question, given that property prices have been on a constant increase for several years now! What I mean is the profit margins that professional property dealers look for; make the vast majority of properties on the open market financially unviable for them.
So let’s say your home is on the market at the highest asking price suggested by the three agents who appraised. After a few viewings, perhaps even an ‘open day’ viewing, you have three buyers battling it out with offers at and around the asking price. If one of those buyers claims to be a property investor, ask yourself: what profit is there for him? When discussing the offers with your agent, raise your concerns.
A colleague of mine, when dealing with a similar scenario, just came out with it and said to the buyer: “I don’t see that there’s any profit in this house for you.” The buyer then claimed he planned to rent out the house for a couple of years and move into it at a later time. As this man’s offer was the highest and he was chain free, the sale was agreed to him; however, my colleague told the seller of the conversation he had with the buyer.
The sale moved along slowly and after three weeks the buyer had yet to instruct the survey or his solicitor (both are warning signs). My colleague pushed the buyer for the survey to be carried out and told him that the sellers were concerned over the delay. The survey was carried out some 10 days later and the legal work had also commenced. Shortly after, the buyer told my colleague that he felt the market was cooling and that he’d seen similar properties for less money. So, even though the property had been removed from the market for this buyer to proceed, he was still viewing others (another warning sign).
Some would say that at this point, a good estate agent should advise the sellers to put the property back on the market and start showing it to other buyers. It was a tricky decision to make because the buyer had shown at least some commitment by paying for a survey, plus the solicitors were moving ahead with their work. In fact, the seller’s solicitor said he’d answered all enquiries raised by the buyer’s solicitor. And the buyer’s solicitor confirmed that he would be reporting to the buyer and asking him to provide the exchange deposit and sign the contract. As a result, my colleague and the sellers decided to hold back from marketing, after all, they were nearly there.
A week later, the buyer had yet to respond to his solicitor. When my colleague finally tracked him down, the buyer said he still wanted the property but as he felt the market had slowed, he was revising his offer by £50,000. The seller declined, and quite rightly so. One of the sellers was buying a cottage with her proceeds from the divorce but lost the property when her own sale fell through. A minor consolation was that we eventually sold their property to another buyer for £8,500 more than the first buyer had originally offered.
Renegotiating the sale price
The only time a buyer may be justified in requesting a reduction in the previously agreed sale price is when there has been an adverse survey or the solicitor finds a problem with the property’s title. In such cases, your estate agent will need to obtain proof. For example, your buyer’s mortgage valuation may have returned a figure £10,000 less than the sale price. If the buyer is seeking to renegotiate, first and foremost, your agent should ask to see a copyof that valuation report. This of course should only happen if you are willing to renegotiate your sale price – you don’t have to. While a lender’s valuation is significant, it is the opinion of one surveyor. Another surveyor may not have a problem with the value at which the property has been agreed.
On another note, you may not be in a position to renegotiate. Reducing your sale price may leave you short of the figure you’ve agreed to pay on your connected purchase.
Where an unscrupulous individual senses an opportunity to exploit a situation like a divorce sale, they will try, regardless of how careful you or your estate agents are.
The illicit proposal
When a professional man asked if he could view a house, he came across as a polite honest individual who was in a strong position as a property buyer. At the viewing appointment, he asked the owner, a female divorcee, to convince her ex-husband to accept £20,000 less for their home. Assuring her that in return, he’d give her £10,000 in cash. The only person benefitting from such a proposal was the buyer. Plus, what were the chances of this man honouring the deal, even if it did go through? What if, after contracts had exchanged, he denied all knowledge of the illicit agreement he’d struck with the divorcee? There would be nothing she could do about it. Luckily, this lady declined and told her estate agent about the incident who immediately removed the buyer from their register.
In England and Wales, our house buying system is such that nothing is legally binding until contracts are exchanged; prior to which, buyers or sellers can pull out of a transaction at any time. And as we’ve seen, it’s not always easy to distinguish an honourable and committed individual from one who ends up being dishonest and a waste of time.
A good estate agent can pick up on the tell tale signs of a house sale that isn’t going to go the distance, early on in the process – sometimes even before it starts. Online estate agencies aside, your choice of traditional estate agent may lie somewhere at or between two extremes. There’s the large estate agency whose management structure provides you the assurance of recourse (eventually) if something goes wrong at branch level. And then there are the small independent firms; often run by mature and experienced estate agents who are quite knowledgeable of their local market.
Regardless of which estate agent you select to sell your former marital home, understanding the process and having an awareness of the market conditions in which you’ll be selling, can be invaluable. And above all, if your instincts tell you something isn’t quite right, don’t ignore them.
Once again, you can read my article: How to successfully sell a property – an insider advises by following the link. For more in-depth information on how estate agents operate and buying or selling residential property, read my book, which is available in paperback and Kindle versions on Amazon.