Realtor and Principal Broker, Joe Fustolo, sits down with us to discuss important tips for individuals who are selling their home before, during or after a divorce. The following is covered in this podcast:
• When to Sell Your House (Pros and Cons)
• How Realtors are Selected in a Divorce Case
• Understanding the Role of Everyone Involved (Spouses/ Realtors / Attorneys)
• Beyond Divorce: Estates, Guardianships and Trusts
• Buying and Selling a House in Today's Market, and How to Make an Impression
If you would like to speak with one of our family law attorneys, please call our office at (503) 227-0200 or visit our website at https://www.landerholmlaw.com/
Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.
Steve Altishin 0:31
Hi, everyone. Welcome to our Facebook Live broadcast. I'm Steve Altishin, Director of Client Partnerships here at Landerholm Family Law. Today, I'm here with Joe Fustolo, to talk about selling or buying a home while in the process of a divorce. So Joe, before we get started, can you tell us a little bit about yourself?
Joe Fustolo 0:52
Sure. So I'm a native Oregonian. Been in real estate for 30 years. I currently own a mid sized real estate company called Soldera Properties, we have about 60 brokers and three offices in both Portland and Vancouver. And you know, this amount of time in the business, I've seen everything, probably 100 times each. So this is fun, Steve, I'm glad. Thank you for having me on, I hope to give some information to people thinking of making a move.
Steve Altishin 1:27
I love it. I love it. You know, like you said many years in the business, and I've known you for, I think, all of those years. And so I'm assuming that you've been involved with clients in every situation people can imagine. And we'll kind of talk about that a little bit. But, especially for today, you've been involved with clients trying to buy or sell a home, either while contemplating a divorce, coming off a divorce, or in the throes of a divorce. So let's talk a little bit about this. We're going to talk today, not from a legal standpoint as much as from as a broker. As the person who's out there with those people trying to help them buy or sell a house. So the first thing, just kind of a quick question is, is there a common denominator or a thread that you find kind of running through your clients who are in the middle of this kind of a process?
Joe Fustolo 2:30
Yeah, there is a common thread. So from a very macro level, life doesn't slow down for real estate, right? So if you look at the three big motivators, there's three positives and three negatives, and they're the exact opposite of each other. It's death, divorce, losing a job, or getting married, having babies and getting promoted. They're all catalysts for people moving. And you don't always get the choice to sell in the best highest market and purchase in the lowest market. You sell when your life requires it. So that is sort of a common theme. I have done many, many divorces. And what's interesting in the divorce situation, it's multifaceted, but if you haven't been in it yet, and you think you're going down that road, the realtor that you love isn't always the realtor who you end up with, especially if the spouses are sort of fighting. So if someone is getting a divorce, and they say, Hey, Joe sold every single house for me for the last four houses, I want Joe. And then the spouse says, Well, I don't agree with anything my spouse says right now, so I'm going to pick my own person. Then when it goes to the courts, it's like, well, your pick isn't approved, their pick isn't approved. So Steve, it's your experience that normally in those situations, the judge says, Well, why don't we have the two realtors decide on some independent, other realtor. So that's kind of what happens. And there's a lot of sort of pole position that happens in a divorce. And so when I meet with people, I have what I call "the talk", and it's brutal. I mean, it's a brutal talk, but if it isn't delivered and isn't delivered in this way, it will blow up. And I've done this hundreds of times. And the talk is, if the court appoints me as the broker, my job is to get the home sold for the most amount of money as quickly as possible. That's my job. And so what the people divorcing need to know is that I don't play favorites. I'm not on giving more correspondence to one side versus the other. And we all take a knee and I say, Okay, look, this isn't my divorce, it's your divorce. And that's the whole legal side, Steve, that's what you guys do. What I do is I get your home sold for the most amount of money in a reasonable amount of time. That's my job. And I'm going to put everybody on a blind carbon copy, I'm going to email everybody in real time, they're both going to get it exactly at the same time. And no one could even hint that you're playing favorites, or it unravels. And that's why I have the talk to keep me out of the divorce. I'm just here to sell your house, and that really works well.
Steve Altishin 5:56
That makes so much sense. Like you said, the attorneys have their job, the realtor, you have your job. The owners have a job, too. And that's kind of your interaction point, it seems like. I can see how things would come up, like, you know, even agreeing on scheduling a visit to the house. There's got to be issues, I know you said you blind copy, but just communicating with two people who, at that point, maybe fundamentally disagree.
Joe Fustolo 6:34
Right. Well, all divorces are amicable until they're not. So it's interesting. Some take a while to go down the rabbit hole, but they do, and it's usually when money and children are involved. And then the claws kind of come out. And in a perfect world, the house should be vacant. And if the spouses are already at the point where they can't make a decision, that's when we bring in a court appointed receiver. And that's where the attorneys come in. And his role, or her role, is an attorney acting as a representative for both sellers, who is the sole decision maker. So I give my recommendation on a listing price, I talk to the receiver, they look at the comps, they make sure it's logical and justified, and then the receiver makes a decision for both parties. And then when an offer comes in, I educate the receiver. And same thing, he or she is trying to make a decision for the people divorcing for their best interest. Sometimes without a receiver, one soon-to-be ex wants to take an offer to be done and get out, and the other one might not, simply because that's what they want, and 'I'm going to do everything against what you want'. So receivers have been very handy in very emotional cases. These are all emotionally charged and difficult, and you need someone with both feet on the ground. And that's why I'm like, I'm glad I don't have the responsibility of the things you have to do, Steve. You're like the manager of a baseball team, you got to set the batting order, you got to get the roster, say who's pitching, who's in, who's out. I've just got to go out there and hit a home run, right? You do all the work and then when it's like, 'here you go sell this house', it's like great, that's what I do. And to do that, without emotions involved and only the best interest of the people, my job is to sell the home. The receivers job is to accept something for the best interest of those parties.
Steve Altishin 9:04
So are there instances, I'm assuming there probably are, where it doesn't quite get to the point that a third party has to make the decisions, but they make them together? And I suppose that could be before the divorce even gets filed, or even during the divorce, and you're dealing with them both. Is that a situation that comes up? And then if that's the case, and you're working with both of them, what are some things you would discuss during your talk with them about mapping out selling the house?
Joe Fustolo 9:46
So in talking with both of them, it has worked again and again, many times. It really works best when both parties want to end that chapter, and start a new chapter as a single person, again. At least, with all their disagreements, the one thing they have in common is they want to get this divorce done, and be over with it. Buy a new place, get a condo, whatever it may be. But their objective is to sell it for the most money, split the proceeds, or however the court decides. And it has been effective. I never talk to them at the same time. So if I talked to one spouse, we have a conversation, and then I immediately call the other and have basically the same exact conversation. But where it gets tricky with the history they have together before my involvement is, say five years ago, he was on a camping trip, and she sold his rifle, and, you know, sold his, whatever it may be. And he remembers, and he feels, or she, or whomever, so they're bringing something into it that isn't real estate. And my job is the real estate. So I really try and keep it nuts and bolts. Here's what the market is doing. Here's my recommendation specifically. And how do you want to proceed? Did I answer your question?
Steve Altishin 11:21
It's almost like you try to treat it like a business contract. Taking the emotions out of it is always important in any divorce case. It's hard to do, but it makes life easier.
Joe Fustolo 11:37
Well, you know, another common thread, and this is-- so, for those that don't know me, I'm fairly sarcastic when I want to be, and I have a little bit of humor-- and I feel like it threads through everything I do. And in talking with sellers and buyers, we kind of get to a point where I'm trying my best to give advice, and they're really not listening. Well, I know what the comps say, and I know what you showed me and I know your recommendations, but I want to list way up here, and I want to do this, and I want to do this, and I want to do this. And there's a point where I just say, Well, hey, look, I said I've been doing this 30 years, at a high level, I have tons of experience. And I do have lots of great advice. And by all means, I don't know all the answers to everything, but I'm going to share my advice with you, and you don't have to take it. But if you would, just follow one piece of advice from me, and that is: take all my damn advice! I know what I'm doing. I'm the expert in this field, let's not reinvent the wheel. I am going to tell you everything you need to know, in your best interests. And sometimes you've got to get people out of their own way from sabotaging themselves because of what they think is is the way to do it, or what they saw on HGTV or what someone told them that isn't a licensed broker. And so I really try and set the standard. I do listen to everybody. And I do give advice. And it usually goes better when they listen to sound advice rather than kind of venture down their own paths.
Steve Altishin 13:25
So what about, going along that line, let's say I'm one of those parts of the couple, and I want to know, How are you going to do it? In terms of, what are you going to tell people? How are you going to approach us? You're not going tell them we're divorcing, are you? How do you prepare the buyers? How do you communicate to market when there's two people who are in a divorce, and it may not be something that they're real cooperative about? Even, like, doing the showing?
Joe Fustolo 14:01
Well, so that's a confidential piece of information, whether I disclose the reason why they're moving. Buyers ask that question because they want to know motivation. So if a buyer sees a vacant house, they might think, Hey, this person is paying the mortgage on this house, and they live somewhere else. So they have double payments. And that might be a show of weakness. Or if it's an estate, or if it's a divorce, they think maybe they can get away with a little bit more. With the divorce rate being 50%, and with that increasing for a year of COVID, it's not necessarily an uncommon thing that it is disclosed to the buyer. Hey, why are these people selling? Well, they're going their separate ways. And people just kind of say, Oh, I mean, it sounds reasonable. That's not unheard of. And so I don't look at that really as a positive or a negative if it's disclosed. I think everybody is just trying to figure out where the sellers coming from and why they're moving. This is something that's nice to know, it may not change any outcome whatsoever, but I mean, I would want to know.
Steve Altishin 15:12
So are there other disclosures that you're required to do? If they're, not necessarily just they're getting a divorce as a disclosure, but if anything else come up that you feel sometimes becomes important to either communicate to a buyer or communicate to the seller that it's going to affect something?
Joe Fustolo 15:34
Well, so there are for owner occupied homes or homes that were purchased as their primary and in some cases, rentals as well. If they are the actual owners, and they're not court appointed, and then they have material knowledge of the property, there are a whole host of disclosures and disclaimers for them to fill out. And that's more so regarding the condition of the home versus their exact situation on a divorce. Kind of the short version is, when given a disclosure error on the over disclosure side, there's sort of a phrase that goes around in real estate that no one's been sued for over disclosing. Where you get in trouble is if you maybe don't disclose enough. It's uncovered in an inspection after the fact, or there's a problem after it closes six months down the road, and they find out you had material knowledge of this. And that's where the problems occur. So our recommendation is disclose everything. We can't fill it out for you, but you can ask us questions regarding the questions and we can help you understand them. And so, yeah.
Steve Altishin 16:51
Okay, switching a little bit to the buyers. Let's say you're representing a buyer, and the buyers come to you, and they say, I'm in the process of or I'm thinking about getting a divorce, and we'll probably sell our home, so what should I do? Should I wait to get divorced? I mean, are there issues for actually sellers or buyers that are really specific to being able to buy a house?
Joe Fustolo 17:27
If you're going through a conventional means, not necessarily a conventional loan, but if you're going through a bank and a normal bank, and getting a conventional FHA or VA loan, you cannot get that when you have filed for divorce. That needs to be prior to or after. So, of course, the recommendation is, if you're contemplating a divorce, and that's the route you're going, maybe each of you can buy something first, and sell your home first, prior to filing for a divorce, or get completely divorced, and then buy and sell when there isn't this pending file that's hanging out there. Because most of the lenders can't do it. None of the conventional ones can. So it would have to be some non-traditional funds, which is very costly. So defer filing as long as you can.
Steve Altishin 18:33
Right. So if they're coming to you, and they can't fall before, then you're saying just don't try to do it during the divorce process or it's much harder. But afterwards, when you're in a different kind of financial situation, then it might be better.
Joe Fustolo 18:52
Yeah, there's so many restrictions on house buying right now. We have a do's and don'ts sheet that we give buyers. Don't go buy a new truck, don't quit your job, don't file for divorce. You know, don't do all of these things that will sabotage your home purchase. I had a guy that bought a Ford F-150 three days before buying a house. Well, the lenders do a VOE, which is called verification of employment. They do that at the very beginning. But the underwriters always do it again at the 11th hour, right before they release the funds. And the guy basically sabotaged his purchase. I had somebody else that quit their job prior to closing. I had a couple that made an offer on a house, were down to the very end, nd in anticipation of the new house they went and put 10 grand worth of refrigerators and washers and dryers and appliances that also sabotaged the deal. So we need to keep as much out of the real estate process as possible, including filing for divorce. So realizing that, if the goal is to go your separate ways, and maybe sell a home and purchase a couple condos or townhomes, or a couple of different homes, either do it before you file or do it after the divorce is final.
Steve Altishin 20:26
And on the other side, it sounds like what you're saying is that selling during a divorce is a myth. That really, selling during divorce isn't the death knell of getting a good price.
Joe Fustolo 20:41
Yeah. Look, again, all the reasons--death, divorce, losing a job, you can't make the mortgage payment-- they're all reasons why people have to sell, and that's the negative side of real estate. But it doesn't necessarily affect you, especially in this market. I mean, this is kind of an aggressive seller's market at the moment. And it doesn't matter what the story is. The house goes on the market, and if it's reasonable, there is such little inventory, such incredibly low interest rates, and in such a demand, because COVID sort of shut down the listing world for a long time. If a house comes on the market, it's not uncommon, if you have five or 10, or 15 offers, sometimes even more. It's not uncommon that it goes above asking price. And there's other things a buyer can do to make their offer look better. So if there's a cap as, you can only go this high on your offer, there are other things you can do to sort of sweeten the pot, which we do on a daily basis.
Steve Altishin 21:53
I kind of want to get to that. Buying a home in today's market, selling a home in today's market, obviously is not in the sort of normal range of the housing market ups and downs. And so the idea if you're trying to buy today is daunting. And now--whether you've been divorced, whether you've got a new family, whether you've got an adoption, whether your kids have left or there's been a death and your moving to another home,any of those things-- buying is scary right now. What's scarier, getting divorced or buying a house? So can you maybe expand a little bit and any words of wisdom or kind of ideas, or how you kind of work with people from that buyers in?
Joe Fustolo 23:05
So in this market, it is very difficult to be a buyer. It's not uncommon that people have made 6, 7, 8, 9, 10 offers on homes and didn't get it because somebody made a better offer. With everybody, there's a certain amount you're qualified for. So let's just take some round numbers, homes listed for $500,000. And within the first three days, they have 36 showings, and they have a handful of offers, so that listing agent sets a deadline and says, I'm setting a deadline, all offers are due by such and such a time, and the seller will make their decision by such and such a time. So if the house is $500,000, and you're qualified to go not a penny more than 550K, and you think it's worth it, so you make an offer for 550. Well, there might be other offers on the table, that could be cash, or the terms could be a little bit different that might put them in a little bit better light. So with any real estate deal, there's two things: there's your price, and then there's the terms, which is how you pay for it and when, and all the things involving that. So what happens is, and this is a transitional period, so I don't know if this is something that will continue in the future, but just as the buyers kind of want to know, Hey, where are the sellers going? Why are they moving? The other thing is, it's been quite popular that the buyers write the seller a letter and tell them about themselves and how much they love the house and what they like about it specifically. And these are called, in the industry, they're called love letters. So the buyer will, you know, write a letter saying we love your house, and here's a little bit about us, and they probably include a couple photos. In some instances, the buyer makes a video that gets shown to the seller. The transitional period right now is, with treating everyone equally, and you can't base your decision on accepting an offer based on race, religion, sexual orientation, any of those things. So they're talking about not allowing videos or not allowing love letters, because we want the sellers to accept the offer in front of them, at hand, on the basis of what that offer is. The flip side of that is, the majority of the homes we go in today have some kind of video camera or audio device. And until those aren't allowed either-- ring doorbells or protection cameras inside, outside and audio devices-- the sellers are going to know who's in the house anyway. So just a tip, if you're a buyer, and you're in a house, save all your comments for when you're outside the house. But love letters and videos are one way to maybe get into the seller's good graces. Another thing that works is shortening the inspection period. Knowing the inspection period is from the time of mutual acceptance, the buyer can back out unconditionally within that timeframe. And I think the default on the agreement is 10 business days, which is 14 calendar days, unless there's holidays in there, and then it's even longer. So the buyer can back out unconditionally within that time period as long as they have a professional inspection. They can have a professional inspection and the inspector can say, This is the best house I've ever seen in my life. I love it, nothing wrong with it. But based on the unconditional thing, you can say, I had a professional inspection during my inspection period, I am backing out. So shortening that from 10 business days to seven business days or seven calendar days is a little bit more reassurance that these buyers are going to be more committed faster. So shortening inspection periods are a way. Another thing is guaranteeing appraisals. So a buyer is buying a home, and it goes on the market, they make an offer. They're the buyers. But if they're getting a loan through the bank, if they put 10% down, 90% of it's coming from the bank. The bank really is the professional buyer. It's mostly their money. They're going to send their appraiser out to make sure whatever you agreed to and accepted and paid for is a fair representation of the market. So the appraiser is going out to appraise that house, because that house is actually collateral to the bank for your loan. So in a hot market, when we're going like this, real estate gets all of its information from history, right? If you want to know what someone's house is going to sell for, you look back three months or six months and say, Well, you know, here's a bunch of houses exactly like yours, they sold for x, so yours should too. But if you're in the midst of a spike, you don't have that data behind you. And appraisers are having a tough time hitting the number. So whatever the asking price is for the home, and whatever it sells for above it, a lot of times buyers say, Hey, I'm going to guarantee a low appraisal. If you were asking 500,000, my offer to you is 550K, I will guarantee the first $50,000 of a low appraisal, if they have the means to do so. So how this all makes sense is the bank can loan money on the purchase price that you offered on the home or the appraisal price, whichever is lower. So if that home you offered 550K on only appraises for 500K, then you're only going to get a loan for 500K, And you're going to have to cough up 50 grand outside of the loan cash. Not everyone can do that. So guaranteeing appraisals, shortening inspection periods, it's all very important. And then finally, having professionals in the whole transaction, like through and through. The lender has to be very communicative with not only the buyers, but it's very important that they connect with that listing agent. We're always selling, right? That lender is selling to the listing agent that these buyers are super qualified, we're not going to nickel and dime, we're not going to do round two of negotiations during the inspection. Our objective is to close on the house. And that's our message to the listing agent, and the sellers through their listing agent. So the realtor involved has to be amazing. And the lender involved has to be amazing as well. And the buyers kind of have to be on point, too. So all of those things will help position you in a better light in today's market as a buyer,
Steve Altishin 30:31
Everyone has to be on their A-game. I like that. So before we go, I just kind of want to dig into your repertoire of history. There are a lot of people, during stressful times especially, who throw up their hands and say, We can't do this, you know? How can you sell a house while I'm getting divorced? Or maybe, you know, how can you sell a house while I've got a sick father, or just anything. The divorce process is hard, they think it's gonna cause them to either not get a household fast or not get it sold for what they want, or something's gonna go wrong. And I know you've been in this a long time and had a lot of things happen. So maybe you can let us know a couple of them. And in all of these cases, you sold the house. So I mean, there are a lot of things that can go wrong, but that doesn't mean that house isn't going to sell. And I just kind of want to dig into your past and let us know a couple of those.
Joe Fustolo 31:44
So we talked about death, divorce or losing a job as reasons. We didn't really talk about estates, but estates are interesting. You have a sick father, he passes away, and now the siblings need to sell dad's house. First and foremost, it's amazing if we can assign one point person, like the oldest sibling or whoever is in control. It's always nice to really only deal with one signer. Most people get the brothers and sisters around, and they educate them on what's going on. But instead of trying to get all five people on the same page, it's good to have one. The other thing is, when you sell an estate, whether the person's living and moving to assisted living, or it's a home, or the person passed on. Either scenario, everybody wants the absolute most money, because it either goes towards assisted living and care or inheritance, right? And if there's five kids, every $10,000 only equals $2,000 to you. So people think about all the things they want to do. And they think, Well, if I really want to realize another 20 grand out of this, we've got to add 100 grand to the price. And my advice to that is, if you have an amazing realtor, please listen to that person's advice. And I mean, the crazy stories are, we do these all the time. I had one, there's an amazing location in Portland, called Alameda. Gorgeous, gorgeous homes, and my client was buying it for herself. And she went in and signed papers and then died later that afternoon. This is a house that the sellers have completely moved out of. They got the moving trucks, it was 10 grand, got all their stuff, they were out of it. She signed, but then she passed later that day. And they won't fund on it if the person who signed passed away. Thankfully, the daughter stepped up and said, This is the right thing to do, and bought it anyway. So we followed through with it. But these things happen, these stories that you think are too crazy to to happen. If I ever get around to writing a book, I have so many crazy stories that I'd love to share with what we see on a daily basis.
Steve Altishin 34:18
I like it. Well, if you had to, before we wrap up, offer just one piece of advice. Say someone walks you and says, We're going to get a divorce, what do I do? What would you tell them?
Joe Fustolo 34:34
Tell them to get great representation on everything they do. From the attorney side, get an amazing attorney. From the real estate side, get an amazing realtor whose seen that, time and time again. Try as best you can to look at it as a separation of a business deal, right? If you can, keep the emotions out of it. And then listen to this good advice. Sometimes we give people great advice, and they get really emotional, and so just to "show them", they file for divorce and they're serving papers, and it just sabotages everything. And sometimes in that emotional state, someone's willing to kind of take a hit if they also get a hit, you know? I'll take my lumps, but they're getting their lumps too. And I know it screws them up. So leaving emotions out of it, and having sound advice, and following that advice. I can't stress that enough. And then sort of forecast a little plan of what your goals are. Because you have a decision to make. You are either getting your real estate done, and then doing your divorce, or you're getting your divorce and then doing your real estate. There's no in between.
Steve Altishin 35:51
Well, thanks, Joe. This was really interesting. I think it really can help the people realize that they can do it, but they've got to do it by doing it the right way. So really, thank you for joining us today. It was just great insight.
Joe Fustolo 36:12
Good. Well, it was fun. It was fun to do. I hope I shared some little key points that someone can take away with, have a takeaway.
Steve Altishin 36:23
Oh you did! It was great. And so we'll wrap it up. I always wrap it up by saying thank you to everyone who's tuned in today to our Facebook Live broadcast. We welcome you. We're glad you're tuning in. And you know, if you have any questions at all on today's topic, you can post them here, or you can shoot me an email at [email protected] and we can help you get in touch with Joe if you want. Absolutely, in a second. And for everyone, stay healthy. Stay well. Goodbye. See you next time.
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at landerholmlaw.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.