Season 3 Episode 8: Buying and Selling a Home During Separation

Note: Our Podcast, “A Year and a Day: Divorce Without Destruction”, was created to be heard, but we provide text transcripts to make this information accessible to everyone. All transcripts on our website are created using a combination of speech recognition software and human transcribers and could contain errors.

Jaime Davis: Welcome to Episode 8 of Season 3 of “A Year and a Day.” I’m your host Jaime Davis. Today, I’ll be speaking via Skype with Julie Bell, Christina Cataldo and Deon Bradford, a team of real estate professionals who specialize in working with divorcing couples. Julie Bell is the owner of both Julie Bell Real Estate and Julie Bell Real Estate Divorce Specialist at Keller Williams Platinum.

Julie went through her own difficult divorce almost eight years ago. Ever since she has wanted to help make the home selling and buying process better for those going through what she did. In December she started a new business, Julie Bell Real Estate Divorce Specialists, which incorporates a new model in real estate to better serve divorcing couples, a team approach to the entire process from start to closing. The team consists of Julie as owner, listing agent, Christina Cataldo as buyer’s agent, Deon Bradford as preferred lender and Arnette Law as their dedicated closing attorney. All have been through divorce specialist certification and work together to make the process as easy as possible while still hitting your real estate goals. We will be discussing the process of buying and selling a home following separation.

Here’s our call.

Jaime Davis: Julie, tell us a little bit about yourself and your team.

Julie Bell: Um, hi Jaime. So, uh, I was raised pretty much in the Triangle. I’ve lived here almost all my life, except for two years. Um, and I have lived in about 10 different cities around here. I love the Triangle very much. I used to work with older adults, um, until I got my divorce. I got, uh, it was a very contentious divorce about eight years ago.

Um, and I stayed home with my daughter for a little bit. And then I got, got into real estate, which has done a really great avenue for me. I, uh, when I went through my divorce, there were so many issues that were coming up. And when I became a realtor, I started thinking about how I could make that process easier for other people going through what I went through.

Um, for example, now that I’m a realtor, I know that I probably lost about $60,000 on, on my house, um, in, in the settlement process. So that’s something that I want to help other people avoid, obviously. Um, and of course there’s a lot of other issues that we’ll get into that we’ll try to help other people with.

But so when I was thinking through it, uh, I came up with a team approach and we can’t really find any other teams out there. I’m sure there are, but from what we found, it’s, it’s really us right now. Um, I wanted a holistic approach to the selling and buying process. I wanted like a one-stop shop for everyone’s issues at play like custody, um, equitable distribution sometimes even abuse issues, uh, that we want to make that process as easy as possible for them.

So I got Christina and Deon involved. Christina’s our buyer’s agent. Deon is our lender lender. Um, and then we work with Arnette law for her close and attorney. All of us have been, uh, trained as certified divorce specialists, which we’ll talk about a little bit. But basically there’s only one other certified divorce specialists from Mebane to the Outer Banks.

Um, it’s a, it’s a great certification, if you’re into a divorce in real estate, um, or if you’re just a divorce professional, um, in general, and we can talk about that as well. But it’s given us a lot of skills, uh, that we’re, we’ve put processes in place to help the entire situation from the beginning to the end to try to help it be less contentious.

Jaime Davis: So, Julie, let me stop you right there. What is a certified divorce specialist?

Julie Bell: All right. So certified divorce specialist is, uh, it’s, it’s a certification basically where, um, you learn about the overall issues involved in divorce. So we learned about two different things. The first was communication. The second one was the general professional things like real estate, uh, legal issues, um, mental health. With the communication piece, it was half of the program because as you know, in divorce, it’s usually not a very happy time. A lot of times people don’t get along and that can really affect the process of, of selling your home.

And so it teaches you how to help negotiate between parties who really don’t like each other, but they have to come to terms on when probably one of the biggest assets that they have and what they’re going to do with it. Um, it also taught us things like the mental health issues, um, children’s issues, uh, everything that’s involved, so that you’re looking at it from a very holistic approach, um, and looking at the people in a very holistic way.

Jaime Davis: So what are the requirements for becoming a divorce specialist?

Julie Bell: So we had to take a four day long course. So Christina, do you remember the name?

Christina Cataldo: It is the National Association of Divorce Professionals and NADP for short.

Julie Bell: Thank you. So we went through them, um, and it was a four day course, like I said. Uh, we have to do 10 hours of continuing education every year, um, specifically divorce related. Uh, and that’s, that’s pretty much the process. Um, it was a lot of interaction on in the class. We broke out to groups and things like that and discussed, uh, you know, clients that we’ve had situations that we’ve had so that we can learn from each other. And we, we do have a group that we’re involved with, um, through them as being part of their certified people. Uh, and we keep up with them online and we have a Facebook page as well.

Jaime Davis: Yeah. This sounds like a great program and I’m sure that there are a lot of divorcing couples out there that can really benefit from the services that you all offer. Um, I’m really excited for you guys. I think this is going to be great. So if you could, Julie, tell me in general, what is the process for selling a home?

Julie Bell: Okay. Let me back up though, Jaime. I kind of forgot to add something that makes our team different, um, since we’re talking about the team and then our certifications. Uh, there’s five real value added things that we can bring to people. You talked about, um, us, being excited for us. Um, so what we are where we’re neutral and unbiased, Uh, we work with both clients, both sides of the deal as our client. We have to be very unbiased and make sure that both are getting what they need. So we meet with them both individually and separately, depending on the situation, but we each strive to maintain minds of communication, not only between them, but also with you as their attorney.

We help, we can help reduce legal fees and a lot of situations because instead of them calling you all the time, we asked them to call us first. Um, and we try to work the situation out before it goes up to your level. We also try to minimize chaos. Uh, like I said, with everything else going on in divorce with custody, all those issues, this is something that we can make easy for everyone.

Jaime Davis: Resisting chaos in a divorce cases is crucial. Um, and you know, if you all can help them with questions concerning the sale of their home, you’re certainly in a better position to do that than their lawyer is going to be, and it sounds like it’s going to be a lot more cost-effective if you guys help them with that part of it.

Julie Bell: Absolutely. And you know, part of our thing is we start with goal setting, um, what each of them wants to get out of it at the end. So that’s always the end goal and we’re striving along the way to hit those goals. Um, if somebody wants to keep the house, then that’s the goal. If they want to sell and move on, then that’s the goal and it’s going to be different for everyone.

And the steps getting there will be different from everyone. But planning for us is a big deal. Um, which, you know, as realtors, that’s not something we’re really taught to do is goal planning with clients. Um, of course everybody looks at goals, but the actual steps involved. Uh, and then we, the financial issues is a big deal because, like Deon is very versed in foreclosures and short sales, which happens a lot during divorce. If you don’t have the right realtor, you don’t have the right lender, uh, you can really get in trouble with things like that. And your credit score is crucial when you get divorced. And Deon’s going to talk about that later, but we have ways to help you kind of pull out of that short sale, hopefully, and look at other avenues. And so I think those are some the things that separate us from a regular realtor.

Jaime Davis: Back to our original question, um, what is the process for selling a home for folks who may not have had to, you know, sell a home in the past 10 or so years?

Okay. So in selling a home right now, and Christina is going to get into it, but the market’s crazy right now and selling a home is pretty easy in this market. We have a very low inventory. So basically you start out by meeting with your realtor. And, um, you know, I really encourage people if they’re not getting a realtor who is specialized in divorce to really ask great questions. Ask them why they’re in it, um, how many homes they’ve sold, ask them what their overall kind of mission vision is. And, uh, there’s a lot of good questions on the internet that you can look up, uh, about what you should be asking a realtor. But you need someone good because so many different issues like court and things like that can come up during divorce cases, right? And if you have someone who’s not versed in going to court, or working with a court decree or short sales, it’s going to be more difficult.

So the first thing is finding the right agent. When you get the right agent and you’re going to sign a lot of forms, um, disclosures, your listing agreement. Um, we make you sign an agreement with us that we’ll get into in a bit that specifies the rules of working with us. Um, and then after you’ve done that you, depending on your house, you may have to get some work done in order to get it ready for market. Get it painted, um, get some landscaping done, uh, things like that. I tried to sell the house, um, in, in the shape that it’s in, if possible, especially during divorce, because that’s not really on the radar, getting your, your yard landscaped.

So sometimes, um, your price is going to be dependent on what shape your house is. It, it may be worth it to come down a few thousand dollars so that you don’t have to worry about that kind of thing. So then you list your home, um, get your sign up, get your locks up, and then you start the show. Showings can take, it depends on your home. Right now it can be a day when with, before you have an offer. Um, and that’s just our crazy market, but it can also, you know, it can go a month. You never know how long it’s going to take to sell your home. So you’ll have to approve showings, um, which could be difficult if you’re both living there. Um, so that’s something that we help people with. We can set different times during the day that are specific for showing.

Um, somebody, when you get the offer, uh, you can either take the offer or you can counter it, or you can just say no, and we help guide you with that process. Uh, so say you take the offer and it’s time to move on. There’s two different, parts of being under contract.

Okay, Jaime. So if people have not sold within the past 10 years, there’s just a new thing called due diligence that we will go over. Um, I’m I want to say I’m dumbing down this process very much. So when you do meet with your realtor, uh, you know, this is something we’ll go through in depth.

But so say you go under contract, you’ve decided this is the one, this is the offer you want to take. There’s two steps from contract to close. The first is called due diligence. And then the second, um, is basically a waiting period. So due diligence in North Carolina, not all states have it, uh, due diligence is a time for people to come in your home, do an inspection, do the appraisal and make sure they still want to continue on with, with the process. In your offer that you take, there’s going to be two different money amounts. One is a due diligence fee, and one is an earnest money fee. The due diligence fee is they’re giving you money basically to take your home off the market and come in and do all their stuff. So, you get to keep that no matter what. If they decide to walk the next day, you still get to keep it.

The earnest money on the other hand is for, um, kind of more of a good faith effort that they’re going to stay in the deal. And that money goes straight to the closing attorney’s office when, uh, when you get the contract signed by everybody.

[Okay, Jaime. So if people have not sold within the past 10 years, there’s just a new thing called due diligence that we will go over. Um, I’m I want to say I’m dumbing down this process very much. So when you do meet with your realtor, uh, you know, this is something we’ll go through in depth.

But so say you go under contract, you’ve decided this is the one, this is the offer you want to take. There’s two steps from contract to close. The first is called due diligence. And then the second, um, is basically a waiting period. So due diligence in North Carolina, not all states have it, uh, due diligence is a time for people to come in your home, do an inspection, do the appraisal and make sure they still want to continue on with, with the process. In your offer that you take, there’s going to be two different money amounts. One is a due diligence fee, and one is an earnest money fee. The due diligence fee is they’re giving you money basically to take your home off the market and come in and do all their stuff. So, you get to keep that no matter what. If they decide to walk the next day, you still get to keep it.

The earnest money on the other hand is for, um, kind of more of a good faith effort that they’re going to stay in the deal. And that money goes straight to the closing attorney’s office when, uh, when you get the contract signed by everybody.]

Earnest money will come into play after the due diligence period is over. And the due diligence period is specified in the, in the contract that you signed. And it’s usually about two weeks.

Jaime Davis: Is there an amount that’s a typical amount for the due diligence fee?

Julie Bell: Right now it’s crazy. Um, it can be anything from, I would say it could be possibly up to $5,000 right now because of all the bids that we’re getting, um, before it would have been more about like $2,000. So, um, it’s very dependent on the home and that’s why you really need a good realtor to help guide you through.

And you’ve got to look at all the other aspects of that contract, too. If they’re giving you way over asking price, they may give you a little bit lower due diligence. So like I said, it depends on the home. So the, so you’ve got to about two weeks for due diligence, and at five o’clock on that date that it’s done, if they decide to walk after that, you get the earnest money. It kind of helps make sure that everybody stays in the contract if possible.

Between the, the due diligence period until closing, you’re really just doing some forms for the lawyers or getting your loan ready and all of that, or the buyers are getting their loan ready for you. So you’re not doing much. And then when closing comes, uh, they come to the closing table and, uh, once the date records, you’re sold.

Jaime Davis: It sounds like, uh, you know, it could be a pretty complicated process, and I can see where having an agent who is skilled in this area is really important. How does this process differ for a couple who’s going through a divorce in your experience?

Julie Bell: Well, there’s several issues. The first is finances. Um, you know, most, uh, most people getting divorced, have some kind of financial issues going on between them. So what, they may be in a situation where they’re not able to get as much as they want for it, um, in order to get rid of the home, right?

Also sometimes the, the court will take over and declare what’s going to happen. They it’s, it’s called a decree and they will say which lawyers, uh, sorry, which, um, realtor is going to help you, um, who’s going to do what, and basically give a timeline sometimes as well as to when the house has to be sold by.

You can also expect to hire more people when you’re going through a divorce to get the house ready. Um, if you’re going through all these other issues, you’re not going to want to sit there and paint your house yourself, the inside. So, you know, do a favor to yourself and just kind of pay the money and let somebody else do it for you. Since you’re going through so much already, someone may want the home, one of the parties may want the home. Um, like in my situation, my ex wanted in the home.

They, in order to do that, they have to be able to get a loan on their own. Uh, and that’s not always possible when you’re splitting up, you know, what you made, um, all of a sudden, you’ve got half of your income that you used to have. And then when at child support and alimony on it, that it can even reduce your income further. So that’s how you work with a really great lender in order to see what you can afford. Emotions are a big thing, pretty much everything with divorce, but pretty much no one understands how much the home means to them until it’s about to be taken away.

And it may hit you at first, or it may not hit you until, you know, you sign that contract, but people need to be aware that it’s okay to have emotions about having to leave your home. Your home is your safe space, but hopefully we can find you another safe space of your own. And then another thing is thinking that the kids want you to stay in the house.

The kids want you to be happy. If you’re happy in another house, they’re going to be happy there as well. Trying to keep that house for the kid, if it’s not in your best financial position, is probably not the best thing.

Jaime Davis: Yeah. I think that, that’s a really good point when we are working with divorcing folks, you know, from the legal standpoint, one of the things that I really try to counsel my clients about is that at the end of the day, this should be a business decision for you.

Yeah. I mean, whether or not you stay in that house, it really needs to be about whether or not, that is the best financial decision for you. And you know, sometimes it’s not and that’s okay. And you can find a new home that’s going to be even happier than the last one. Um, and so I think it’s really important when working with divorcing folks to make sure they can get past that emotional attachment to the home.

Julie Bell: And it’s hard. I mean, from my, my experience, it’s very hard. It’s also freeing when you finally do it because you leave a lot of the bad things behind, all the fights that you had in the house. Especially if there’s abuse going on, you leave that behind and you go and have a fresh start. And like I said, you know, Christina will talk about ways to make it easier for kids when you move, but they’re going to be happy if you’re happy. If you’re unhappy, then they’re going to be unhappy too so.

Jaime Davis: Yeah, it’s been really cool about getting a do over, right? Like it’s not often, if you get a second chance to do something and you know, that can be the one bright side of a divorce, is that you actually get a chance to start a new chapter.

Julie Bell: Yes. Um, one more thing too, is nesting. Have, have you heard, I know you’ve heard nesting, but a lot of, uh, the listeners probably haven’t.

Jaime Davis: Yeah Julie, tell us about nesting.

Julie Bell: So nesting is when the parents decide to keep the home, uh, together and they go in and out while the child stays in the home. So for example, in my, I have my examples, obviously. Um, we did nesting while we were separating to try to transition my daughter to what was going on. I was there, um, Wednesday, Thursdays, my ex was there Monday, Tuesdays, and then we split the weekends and Jaime, let me tell you that is not a way to live.

You don’t have your own place. Um, usually you, you can’t afford two apartments and a home. So like, I lived with my parents when I wasn’t in the home and he lived with his brother and sister. So you have no space, you know? Um, I think for the children too, for my daughter, at least it was kind of confusing.

Um, so my suggestion is always to go ahead and try to sell the home and then find your own place, even if you rent, just because of everything that I’ve seen. Um, so nesting is, is very, it’s a popular concept, but in theory, it’s, it’s more difficult to implement and makes successful than it seems to be.

Jaime Davis: No, I, I agree with you a hundred percent. Um, having listened to many, many clients talk about nesting that they’ve tried it, it seems like there are some real problems with a lack of privacy, one, and very small logistical things like who’s going to fill up the refrigerator, who’s going to take out the trash, who’s going to be responsible for cleaning the bathrooms. And I think it can lead to more disagreements between couples who are, you know, they’re already in that heightened sense of emotion anyway, they’re already not getting along and it’s just presenting more things for them to disagree about.

Julie Bell: Absolutely. For sure. And when you’re not really talking to each other, those are hard things to, to figure out. Um,

Jaime Davis: Absolutely.

Julie Bell: So, you know, the trash stays there, like you said, you can take it out, nobody wants to do it and you can get, people get passive aggressive with each other too. And don’t do things on purpose just to, you know, make the other one mad.

Jaime Davis: Right. Get another job in there while you can.

Julie Bell: Right. And then, like you said, security, computers, you know, don’t leave your computer there, um, or get some various secure, uh, uh, what do you call it, software? Um, whatever you need to do to make sure that your information is protected because you have a lot of information coming between you and your lawyer that you don’t really want the other side to see no matter how good the divorce is.

Jaime Davis: Yeah. That’s a great point. So we talked about some roadblocks that folks can encounter, um, when they’re divorcing and they’re trying to sell their home. Have you implemented any practices to try to overcome these obstacles?

Julie Bell: Yes. Um, so we have a contract that we have people sign in order to work with us. We do not charge any fees for our services. We discharge a regular commission rate. Um, we just do this because this is what we love and we want to help people. So we have a contract that everyone’s signed, setting every expectation possible. Um, for them, we also have kind of rules that we ask them to. For example, we asked them to call us before they call you. That’s for both us so that we are making sure that we’re kind of helping them through the process, but we also want to make it easier on you guys.

Um, so say, you know, we work with you, you help us clients. We’re really trying to ensure that we take that burden off of you so that you can look at all the other issues that are going on. And you know that we’ve got this. Um, we meet, like I said, both separately and together with them, if possible. It may not be possible to meet separately, I mean, together. Uh, there’s things you can do, like zoom so that people aren’t in the same room, uh, which makes it a little less emotional. And like I talked about before goal setting is very big for us. Uh, we sit down with them, uh, usually in the first meeting and talk about what they want to get at the end. Um, so we’re always working towards that goal.

And that helps people stay on track, um, instead of helping the emotions and all that get involved. It’s more, okay, this is, this is this step. This is the next step. This is what I have to do. So nobody’s surprised at any point in the process. Um, as a team, we work together on every case, even if say they’re not buying, Christina so involved with the case, just to make sure that, um, there’s nothing she can help with.

And we’re very cohesive and fluid, and we help people get through it faster because we do have the experience. And then of course, with our training, we’ve learned very hardcore negotiation techniques, um, diffusing, anger, collaborating, and things like that.

Jaime Davis: That’s great. I mean, I think anytime that you’re working with a divorcing couple, having a document that very clearly sets forth what the expectations are, is crucial. Um, as divorce attorneys, that’s what we really try to do with the separation agreement. You know, it’s a contract between both of them that sets forth who gets, what, who pays, who, how much money and they both know what the rules are right, moving forward. And so I think that’s a great way, um, for you all to help a divorcing couple as well.

Julie Bell: So Jaime, there’s a couple of things that we can really take out of the mix with, um, the process in the contract. Um, so we take the emotions out of it. Um, we also can get to the deep financial issues that are going on, um, that are going on already. But then that might get exacerbated with, when you start splitting everything up and adding alimony and child support. There’s capital gains taxes I’m not going to go into, but they really affect your home. And you’ve got to decide if you’re going to sell your home together or separately.

Um, and then moving out, that’s a big thing. You know, people, you don’t have to tell the buyers that you’re divorcing you really don’t want to let that information out, honestly. So if somebody moves out, try to keep to some clothes in the closet, uh, of both peoples so that it’s not completely clear that somebody has left.

Jaime Davis: So why is that? Why don’t you want the buyer to know that you’re divorcing?

Julie Bell: Because then they know that you need to sell your home and they might give you a lower offer than they would have before.

Jaime Davis: I see that makes sense. Do you have any tips for separating couples who are considering listing their home?

Julie Bell: Finding the right realtor. Getting your finances in order so you know what you can, and can’t do. Working with a good lender. Letting other people take care of your home, painting and all that, so that you can focus on other things.

And just remembering that it’s going to be hard, not, not exactly the selling process, but letting go of your home. It’s going to be hard and giving yourself that permission to grieve, I mean, you need to grieve. It is a big part of your, of your life and it’s okay to feel bad, but don’t, you can’t let that affect your decisions. Um, like you said, it’s a business decision. It’s about money. The money is going to take you into your next life. And so you want to be clearheaded as much as possible.

Um, selling as fast as you can is another tip. That way, as you notice, as you go along in the process of divorce, sometimes it can get worse and that animosity and contentiousness could get worse and worse. So the faster you sell it, normally the better you’re going to get along while doing it.

Jaime Davis: Julie, I think these are some great tips. I just have one more question. Recently, I’ve heard a lot of clients talking about institutional buyers. Um, what are those? And are they a good idea?

Julie Bell: Okay. So there are called iBuyers for short, and they’re like Zillow, Opendoor. In our market, there’s Mark Spain. Um, they give you a cash offer based on your house. They don’t, they’ve never seen your home. And so they don’t really know how to price it as effectively as a realtor. In general, if you sell to an iBuyer like Zillow, you’re going to get about 80% of what you would get when you list the home.

It’s maybe a good idea for people when they can’t, they just can’t get along. Um, it’s an easy cash offer. You sign, they, they add repair costs and you’re done. Um, but again, you’re going to lose quite a bit of money. You’ve got to decide if that money is worth the ease or not. If you’ve got a good realtor, then you’re going to be able to, they’re going to be able to make it easy for you as well.

A good realtor too, I always do a net sheet with people to let them see how much they will make on both deals. But this is my main point about ibuyers. Please, you guys out there, do not use an iBuyer cash offer or the Zestimates on Zillow to price your home and then try to sell it yourself. They are not correct. Uh, you could lose a lot of money because of it. And it said, just get a realtor to do, to do, uh, a CMA for you, um, to find out how much your home is worth. And any, any realtor will do that for free.

Jaime Davis: And for folks who may not know Julie, what is a CMA?

Julie Bell: Um, it’s basically, it’s comps, if you’ve heard of comps. Um, it’s, you look at all the different home and around your neighborhoods, uh, that are very close to yours in size, bedrooms, um, yard, and you see what they sold for. And then you can come up with a price that is pretty accurate based on what sold’s in the past six months.

Jaime Davis: Okay. Well, thanks, Julie. We’re going to shift over and talk to Christina now. Um, Christina, tell our listeners a little bit about yourself and your role on the team.

Christina Cataldo: Well, um, let’s see. I am married. I have four children. I moved here from Brooklyn, New York, about five years ago. Um, I wish I had done it sooner because I absolutely adore this area. Um, I wish my children were slightly younger when we came here. Three of them are teenagers and one is 10 years old. Um, I think they missed out on a lot of what this area has to offer. Um, I am the buyer’s agent on Julie’s team and um, yeah, what else?

Jaime Davis: So, what does that mean that you’re the buyer’s agent on the team? How do you help?

Christina Cataldo: I help, um, when clients are ready to purchase a home. Um, I look for homes with them, um, in their price range and see what they’re capable of doing. Um, sometimes, you know, buying is not necessarily the right answer for them.

You know, renting also gives an opportunity to, um, see where you want to end up. Um, you know, a lot of times when children are involved, the school assignments is important. And if you want to remain in that school district, um, one of you needs to maintain, um, a home in that area. Um, is, uh, you know, do you want bus service, because you also have to think about, um, transportation. One of you will have to drive that child to school every day. Um, is consistency important to you? Um, so, you know, renting gives you an opportunity to take a moment, relax, and kind of see where you want to be. Um, and not just jump into anything and then regret it later.

Jaime Davis: Yeah, that’s a, really good point. Um, renting can be a great stop gap for folks to give them time, to really get their feet back under them, um, and, and figure out what they want to do moving forward. But let’s say they are ready to buy. Um, how would you describe the general market in the Triangle area?

Christina Cataldo: Well, the general market right now is pretty crazy. Um, it’s definitely a seller’s market. Uh, Julie touched on that briefly, um, saying that it’s fairly easy to sell right now because there’s such a low inventory. Um, from the most current numbers, I believe that there are 64 people a day moving to this area. Um, another thing that Deon will will, um, touch on in a bit is interest rates are amazing right now, they’re under 3%, and that compounded with a low inventory is going to give you a very crazy market.

Um, there was something that I had, um, looked up. The month’s supply of inventory in 2019 of December was roughly two months worth, which is still very low. Um, last month it was under a month’s worth, which is crazy. So that was a drop by 65% of inventory in this area, um, in one year’s time.

So the most important thing, I think when, um, deciding that, okay, you want to go ahead and you’ve taken the time to figure out where you want to be, obviously it’s to get a pre-approval. Um, when you buy, uh, with the purchase, you have to have a pre-approval. Um, that’s what is expected in order to move forward with the process.

I did want to mention, you know, covering how crazy this market is. I, um, just closed last month with clients of mine who were from California, and we, um, put in three offers. Two of them were not accepted. We finally, a third time was a charm on this house. They never came here in person. Everything was through FaceTime. Um, and the home was under $200,000, which is a very, very highly desirable number. Um, anything under 350 is very desirable and people jump on them immediately. So there’s multiple offers on each home. Um, we ended up offering over $20,000 over asking and we were finally accepted.

So this is the kind of market that you’re sort of competing with, um, with other buyers. So you want to be prepared. You want to have a pre-approval, you want to know, um, where do you want to be? And when you find something that fits, you need to jump on it.

Julie Bell: For sure. Let me jump in Jaime. Now she went $20,000 over, right? Your house has to appraise for your loan. So if your house, if they went 320 and the house only appraised for 305, the bank is only going to give you 305. You’ve got to come to the table with $15,000.

Christina Cataldo: Correct.

Julie Bell: And that’s where a lot of buyers are having trouble right now.

Christina Cataldo: Correct. And this was something that I explained to them. Um, when you want to go over asking by several thousand dollars, there’s a chance that it’s not going to appraise. Do you have enough money, um, to cover that? Do you want to cover that, um, above and beyond the loan amount?

Um, in this case, we were very lucky because A, they said, yes, they knew what they were, um, moving forward with. And number two, it did appraise for that amount. So we were quite fortunate that, um, it worked out, um, in the best case scenario, but that’s definitely something that I’d go over with my buyers if they want to go over asking in a multiple offer situation, that there is always that chance that it’s not going to, um, appraise, and they’re going to have to come up with th difference.

Jaime Davis: Yeah, and that may be difficult to if you’re, uh, you know, having gone through a separation, trying to come up with that extra cash could, could be hard for someone.

Christina Cataldo: Absolutely. Absolutely. So you have to know, um, you know, mentally where, where you are as well as, you know, in your pockets, how much money do you have to bring to the table?

Jaime Davis: Right. So do you have any tips for a newly separated or divorced individual when it comes to buying a new home?

Christina Cataldo: Um, well I think that, you know, um, you need to be prepared to move quickly once you find something that you love. Um, you need to understand, uh, Julie, again, touched on this, um, what, um, due diligence is because especially coming from a different state and you know, this is relatively new as well. I think in the last eight years, it’s really become popular. Um, the due diligence period is, um, a period of time in which you have given due diligence money to the seller who immediately puts that money in their pocket and takes the property off the market so that you can do what you need to do with the home.

And in that time, for any reason, you can walk away and understand that that money is no longer yours, that money is in the seller’s pocket. And, you know, uh, that’s the way that is, but you have the freedom to, to move on. Um, if you, uh, do that prior to the earnest money period, you do receive your earnest money back. Um, again, if you go into the earnest money period, you still have the freedom to walk away, but then again, you lose your earnest money as well. Um, I think that’s good to know because sometimes when you’re not fully versed in understanding the different, um, monies that are involved, you get a little, um, irritated when you don’t understand that you’re not getting that money back when you decide to walk away.

So, you know, always having, um, a realtor who’s open and explains everything very well, um, I always encourage. You know, even if that is, um, not necessarily something you want to hear. My California buyers were not very happy about that because they don’t do that in California, but they have to understand that that’s how that’s done here.

Jaime Davis: Sure. What if, um, you’re working with a divorcing couple, who has children? Do you have any tips for them in terms of how they can prepare the children for a move to a new home?

Christina Cataldo: Um, I do. Um, I think that, um, telling the children, once you have reached a decision, um, to tell your children as quickly as possible, because you’re going to feel it in the air that something is not right. And I think children sense that very quickly. So tell your children, you know, what’s going on once you’ve decided, um, that something that, you know, you’re going to have a divorce. Um, be honest with them and don’t place blame on either parents. Um, that’s the worst thing you can do and certainly, um, go over and over again and explain that it has nothing to do with the children at all. There’s no blame placed on the children, which a lot of times they internalize that.

Um, acknowledge their feelings. There’s going to be a lot of feelings. I mean, as adults we have them. As children they have them and sometimes they don’t understand their feelings. So to be able to allow them to, um, talk about it and acknowledge it is great.

Let them ask a ton of questions. Um, describe to them what will change in the next coming weeks and months, but at the same time, explain to them what’s going to stay the same, because I think they need to understand that not everything it’s changing in their life.

Um, I would say also try to leave their schedules as, uh, as similar as possible. I know that’s not always, uh, something that you’re able to do 100%, but at least, you know, if they have soccer practice on Wednesdays three o’clock, make sure they keep that, that schedule.

Um, as for, you know, moving into a new home, uh, you know, sometimes it’s, it’s a great idea when they’re younger to maybe keep the decor of their room similar to what they had in their own home. It breeds familiarity. It gives them comfort. Um, when they’re older kids, you know, let them decorate their room and, and, you know, create some ownership on their new space.

So there’s, there’s a lot of things, um, that can help, you know, with children. I can really go on and on about that. Um, having four of my own, I try to think of things that would um, in, in hard times that would make them feel safe and secure. And I think just, you know, the number one thing is just being honest, because the worst thing you can think of is not knowing, right, what’s going to happen next. So just, you know, allow them to feel it and, and just, um, you know, be there as a safe spot for them as well.

Jaime Davis: Yeah, I think you’ve made some really great points. I mean, I think one of the keys is once you have the plan, then you bring the kids in on the plan. Um, kids want to feel safe and secure and you know, sometimes broaching the subject of separation too soon can lead to some instability and, and a lot of questions if you don’t know where you’re going to end up.

But I think especially if you are moving to a new home and you know that, and you’ve, you know, you’re under contract and everything is good to go, um, you can make that a really positive experience for them. Like you said, you know, bring the kids in on helping decorate, helping pick things out. I mean, those can all be really fun, positive things for them that will help make the new house feel like their home.

Christina Cataldo: Correct. Absolutely.

Jaime Davis: Well, Christina, thank you very much. Um, I’m going to shift gears a little bit and talk to Deon about some of the more number centered, um, topics. Deon, tell our listeners a little bit about yourself and your role on this.

Deon Bradford: Hi Jaime. Deon Bradford here. My, and we do always have to tell everyone, my NMLS ID number is 1408271. That’s my national registration number. Uh, I’m with Movement Mortgage right now. I began in mortgage with JP Morgan Chase. And I want to say that was either 2015 or 2016. I’m, I’m getting older here so I, I don’t remember exactly.

My role on the team again is I am the lender. Uh, I think when we get into the different aspects of this, where it comes down to is that I, I will probably play the role of financial referee. Uh, and hopefully we can do that prior to individuals getting into, um, either a mode where they’re not willing to work together or, or certainly before we get to court.

Um, my job obviously is to make sure that everyone gets their equitable share, whether that’s their emotional equitable share or their financial equity was shared, you know, whatever they, they want and agree to as a, as a couple that are separating, we want to make sure that we meet their goals. And then lining that up so that the process becomes easy for them, as opposed to, um, really adversarial as you go through the, you know, the, the real formal part of the process.

Jaime Davis: Yeah, I think that’s great. I mean, anytime that you can help bring peace to a couple, who’s going through a very difficult separation and divorce, um, that’s definitely a good thing.

Deon Bradford: Yes indeed. Yes indeed.

Jaime Davis: So as a divorce lawyer, I get a lot of questions from clients who want to know what they will need to do to qualify for a mortgage in the future. Um, what information do you think it would be helpful for them to know?

Deon Bradford: I, number one, it’s easier to do it prior to the official divorce than it probably will be afterwards. Uh, some of the things that we hit on earlier with regard to income, alimony, child support, uh, your credit. All of those things generally are, you know what, once you make the decision that “Hey, We’re not going to be together.” Those things are still intact. They are tools that we can utilize in order to get you to what your presumed end goal will be after the divorce.

However, if you engage that process, and especially if you do it in an adversarial way, you know, I would, I wouldn’t say nine times out of 10, I would say 99 times out of a hundred. If you go into that, that adversarial fight, those things don’t become tools any longer for you. They become, you know, ropes hung around your neck for each and, you know, for both parties, and it becomes a much more difficult task, um, to get the necessary financing that you would need afterwards, as opposed to beforehand.

It’s not always the case, you know, sometimes it works itself out. Um, but it, I would definitely say starting the process beforehand, as opposed to waiting until the aftermath of a divorce decree and all that comes with that would be preferable.

Jaime Davis: At what point can alimony and child support be counted as income for a person who is trying to qualify for a mortgage?

Deon Bradford: So, it has to be obviously at, at that stage, we are now post divorce proceedings. A divorce decree is in place and the individual has to be collecting that child support. We have to, we have to see receipt of that child support or alimony for at least two months, and sometimes it’s three months. Um, now that that also comes into play where there may be the, the regulation versus also whatever institutional overlay there might be for it, for the, the bank or the lender or whatnot.

Um, sometimes they may want you to be, or to have received it for as long as a year prior to allowing for that. So it, it kind of depends on the institution, but we would say at a minimum, uh, it’s at least two months.

Jaime Davis: And so does the same hold true if the couple is not divorced yet, but they have a signed separation agreement? Um, since it takes a year in North Carolina for that divorce to be able to go through, right, the folks have to be separated for a year. And so a lot of times during that year, you know, they’re not divorced yet, but they do have a separation agreement. And maybe that agreement says that one spouse gets, I’m going to make up numbers $5,000 a month in alimony. If that’s the case, at what point could that person say, hey, my income is $5,000 per month for mortgage purposes?

Deon Bradford: So again, in that situation, you’re, you know, you’re absolutely correct. They’ve got an agreement in place. Um, there’s evidence that the income has been received for a, you know, for the necessary seasoning period of time.

Um, and give me just a moment here. Um, like I said it in general, what you’re looking at would be a minimum, let’s see here, a minimum of two months, depending on the bank overlays, it could be, it could be as much as one year.

Jaime Davis: Okay. I see. So a lot of that really is just going to depend on the particular bank?

Deon Bradford: Correct. The more, you want to think about it in this way. The more conservative the institution generally, the longer that time period is going to be.

Jaime Davis: Got it. Yeah. That makes sense. Um, do you ever work with couples who have gotten to a point where they really just can’t afford the home any longer?

Deon Bradford: Unfortunately, that is the case quite often. Um, you know, especially if we’re talking about a situation where there was one breadwinner in the household and now they’re separating, so that income is divided in half. And there’s a, a whole financial world that was built around, um, that income staying home, uh, so to speak. So, so yes, uh, that that’s, that’s an occurrence. That’s something that happens a lot.

Jaime Davis: What options might be available for those folks?

Deon Bradford: So for individuals that can’t afford their home, um, again, the obvious answer would be to downsize. Uh, they want to take account of their, their debt and income situation, or debt to income ratio is what we call it. Uh, and then really at that point, we, we want to say, okay, here, here’s what you can afford. Uh, here’s what your status is going to be. You, you may actually qualify as being a new, uh, first-time home buyer, even though you had owned it home previously, there are certain programs that will, that will allow for that, that will potentially help them getting get into something that is, um, maybe not at the same price point or, or area that they were in before, but maybe something close to that.

Um, but at the end of the day they’re going to have, you know, they’re, you’re in a situation now where your income or income scenario does it match what it was beforehand and, and really, you know, that the answer to that is either start cutting expenses. Um, you know, unfortunately you may have to reenter the workforce if that wasn’t something that was there beforehand.

Uh, there are certain circumstances that we can take into account, but in general, you know, if the home is too expensive for you, um, you know, you may have to unload that home. You may have to go through a short sale, uh, and then just prepare for that as best you can so that you can come out of that scenario as whole as you were, um, going into it

Jaime Davis: For any of our listeners that may not know, what is a short sale?

Deon Bradford: Sure. So it was essentially an individual who is selling their home for less, not only less than market value, but also they may be selling the property for less, or they are selling the property for less than what’s owed on it. And in that process, you have to get permission from the financial institution in order to be able to do that.

Um, so again, if the home is worth, you know, for the sake of numbers here, the home is worth $150,000. You have a $100,000 mortgage on it. But it needs to be sold and it’s going to be sold right away and you’re selling it for, um, $90,000. Um, that would be considered a short sale. Uh, in the past and where this became really prevalent was during the financial collapse where, uh, unfortunately let’s say the value of the home at that point in time was less than what the, um, outstanding loan amount was. And so again, the home was being showed sorter, sold short of the outstanding mortgage.

Jaime Davis: And is there a reason why someone would want to pursue a short sale, let’s say, as opposed to a foreclosure. Is one better than the other?

Deon Bradford: The short sale, if you can get through it quickly, um, both have a financial impact to your, or have an impact to your credit score. Um, however, the individual that goes through a short sale can potentially purchase a home much faster than an individual that goes through foreclosure. That is the seasoning timeframe. And that can be a difference depending on the loan product. It can be a difference of, let’s say, two to three years, um, in that timeframe there. So a short sale, if it’s done quickly can lead to better financial circumstances, better credit circumstances for you in a, in a faster period of time.

Uh, the hard part is that, you know, sometimes the financial institutions are a little slow in accepting a short sale. Um, they’ll often, I don’t want to say that they’re dragging their feet, but what you have to realize is that this is a process that, that lender really does not want you to engage in.

Um, and so in that it, it just may end up being drawn out and, um, you just kind of have to take your time in going through that process and be very, be extremely patient, because, you know, if someone tells you that it’s going to take two months, then it’s going to take six months. Um, and I would proceed accordingly.

Jaime Davis: So let’s say that someone does a short sale and using your example from earlier, um, they owe a hundred, they’re able to get 90. What happens with the remaining 10,000 that’s owed on the loan?

Deon Bradford: So in certain situations that money is forgiven. Um, it’s taken as a loss. Uh, in certain situations you are essentially charged back for those dollars, uh, from the financial institution. And, uh, they may seek to collect on that part of it as well. Uh, so there’s kind of an, you know, essentially it could, it could either go away or it could be an outstanding liability for you as well, depending on the institution. And depending on the state that you’re in as well. There are different rules for different states.

Um, so you want to make sure that if you do decide on a short sale that you really stay engaged with the lender. Um, you find out what their rules are with regard to a short sale. And then, uh, again, you want to make sure that you understand what the burden is going to be afterwards. And, and, and this is one of those things where you certainly want to, again talk about this prior to maybe even engaging, not necessarily engaging with the lawyer, but getting into the, um, the formal process, because let’s say you all decide, okay, well, here’s my equitable share in the property, or we owe this amount and you’re going to keep the house over here. But you’re going to take care of the short sale. And I’m going to essentially walk on the other side and I’ll lose X, Y, and Z.

Well, if in that divorce decree, once you’ve gone through that process, it is determined that, okay, the property is going to be sold, you’re going to get this, you’re going to get that. Well, there’s maybe a tax burden that comes along with that short sale that wasn’t necessarily hammered out. And if you’re the one who has to manage that or go through that, you may end up taking that hit, which does come into play with, with equitable distribution.

You know, if both of you walked away with a particular sum, but now you’re having to pay $5,000 or $10,000 or or whatnot in order to resolve, um, you know, the after effects of the short sale, that’s, you know, that that may not necessarily be financially fair. But it’s something you unknowingly agreed to in going into that process.

Jaime Davis: Yeah. That is a really great point. And I’m sure something that, you know, some folks may not even think about. I mean that extra $5,000 we’re talking about, or $10,000 or whatever it is, that could be a marital debt that should be considered in your separation agreement.

Deon Bradford: That’s exactly what it is, is that, H=hey, you know, you’re seeing yourself go through the process and it being over. Well, you know, it’s not over. It’s not over until the IRS says it’s over,

Jaime Davis: Right.

Deon Bradford: And if you have a lot, you know, if you’ve got that divorce decree in place that says, this is your particular debt, there’s really no going back to the, you know, that’s what you agreed to. You may not be able to go back to the court. You know, you kind of have to think about it. If, if the agreement is in place, this is the, this is what comes after it. You’ve agreed to it. Everyone is signed off on it. The court may not be willing to, um, you know, to grant, you know, some sort of restitution for that. Um, the agreements in place.

Jaime Davis: Yeah, that’s a, that’s a really great point. Um, this has been some great information. Thank you for sharing. Do you have any other tips for our listeners who may be going through a divorce and are beginning the process of applying for a mortgage?

Deon Bradford: Um, get very familiar with Microsoft Excel. I want to get a shout out to them. You, we want to start taking account of what your real liabilities and income will be. You want to have an understanding of what all the debts are and where they are, um, so that you can, you can really take into account, you know, what’s going to be mine and what’s going to be theirs afterwards. And that you come up with a fair and honest, uh, and, and to a degree an unemotional distribution.

Um, you, you, you want to make sure that you have clear line of sight to what those finances are, so that in the end, the process is easy, at least as easy as it possibly can be. And so that you can go through it quickly.

And here’s why. If there is going to be some sort of problem, bills that start to become late past due, X, Y, and Z, that is going to have a dramatic effect on what you’re able to do after this process. So you want to be able to confront those things right away again, so that you can be as whole as possible when you finish the process.

So getting that stuff on paper, making sure everyone agrees to, um, work together. I would say that that’s always going to be the best, that’s the best advice. And that’s the best set of circumstances to walk into this with.

Julie Bell: So, Jaime, um, you can tell Deon is amazing. I forgot to mention probably the most important part on my side when it comes to finances and mortgages. Um, when you, if somebody decides to take the house to buy the other one out, you’re going to sign, you’re going to get your name off the deed, right, so that the other one owns it, and you don’t own it. If you forget to get your name off the mortgage, um, you’re going to be responsible for that. And possibly in 10 years, you may go to buy your own house and your credit’s ruined because your ex did not keep up with the mortgage payments or they went short sale, whatever things Deon deals with.

Deon Bradford: Yeah.

Julie Bell: So it’s crucial. If you get your name off the deed, you need to get the other one to refinance to get your name off of the mortgage. They’re two separate things. The deed is ownership. The mortgage is money. So Deon can probably fill you in a little bit more. That is probably the most important tip I could give divorcing people.

Deon Bradford: That’s a whole other segment of our time. Probably.

Julie Bell: Yeah. But a lot of people don’t do it. And a lot of lawyers don’t know to tell them to do it. So please, if you’re out there, make sure that you get your name off that mortgage.

Jaime Davis: Yeah, that’s a great point. And we try to build that into all of our separation agreements, that if one spouse wants to keep the home, they are given a certain amount of time to refinance the mortgage, to take the other person’s name off. And usually what we build in to the agreement is that if they are not able to do that in that period of time, that they are required to list the home for sale.

Deon Bradford: Taking an individual off the deed is really a matter of, you know, going to court and signing, uh, or not going to court, going to the county, uh, maybe a court house or whatnot and signing a couple documents.

Getting off of the mortgage is a far more complicated set of circumstances. So again, if, if that’s really the ultimate goal, um, then that’s something that should be hammered out as quickly as possible on the front end, as opposed to doing it on the back end, simply because again, financial circumstances are going to change for, are generally going to change for both of those individuals. And you, you may not be able to, if you know there, there’s also a scenario where, okay, we’ve gone through XYZ. I want to refinance. Well, if you can’t refinance because of your debt, you know, the bank, isn’t just going to let you sign a new note because you’re a divorce. Um, if you can’t, if your numbers don’t fit within new scenario, then you won’t be able to refinance then as well.

So we really, again, Just preparing for this doing as much of this work prior to going into the formal process, um, is key to, to coming out on the other side, happy or as happy as possible because, um, if you just rush into it, you don’t think it through, you both might be hurting yourselves for an extended period of time.

Jaime Davis: Yeah. That is a really great point. Um, thank you all for joining me today. Julie, if any of our listeners would like to contact you, what is the best way for them to reach you?

Julie Bell: Well, we have that website it’s www.re [for real estate], so redivorcespecialists.com, or they can call me directly. It’s (919) 412-0185. Again, (919) 412-0185.

Jaime Davis: Christina, what about you?

Christina Cataldo: Um, also under the same, um, website for, um, Julie Bell, redivorcespecialists.com. And my phone number is (347) 907-4606.

Jaime Davis: And Deon, what is the best contact information for you?

Deon Bradford: Um, they can reach me through this site as well. Or you can give me a call at (919) 438-9918. Again, that’s (919) 438-9918. Um, I believe all of us work close to 24 hours a day. So, uh, you know, feel free to call or text and we’ll, we’ll, we’ll hop on this as quickly as possible.

Jaime Davis: That’s great. I hope you all found this episode of “A Year and a Day” to be helpful. If you have any questions or comments, I would love to hear from you. You can email me at jdavis@divorceistough.com. As a reminder, while in my role as a lawyer, my job is to give folks legal advice. The purpose of this podcast is not to do that. This podcast is for general, informational purposes only, should not be used as legal advice, and is specific to the law in North Carolina. If you have questions before you take any action, you should consult with a lawyer who’s licensed in your state.