One of the biggest questions divorcing homeowners ask is: “How much will I actually get from the sale of our home?” And the truth is—it’s not as simple as looking at your home’s Zillow estimate and subtracting your mortgage balance.
In divorce, understanding equity is essential. Equity is what’s left after the home is sold, all the selling costs are paid, and the mortgage (and any other liens) are satisfied. In other words, it’s the amount you and your former partner may be splitting—and it’s usually a lot less straightforward than people think.
Here’s a breakdown of what goes into calculating real equity:
1. Start with the Market Value
This is the estimated price your home will sell for in today’s market. A real estate professional (hi, that’s me!) will provide a Comparative Market Analysis (CMA) to give you a realistic view—not just what you hope to get, but what’s likely based on nearby sales and current market conditions.
2. Subtract Outstanding Mortgage Balance(s)
This includes your primary mortgage and any second loans, HELOCs, or other liens. It’s important to get updated payoff amounts—not just the balance on your last statement. Additionally important is to find out if there are other liens on the home that one partner may not know about. You can obtain this information from a title company, or I can help.
3. Account for Selling Costs
These typically include:
- Real estate brokerage compensation
- Title and escrow fees
- Transfer taxes
- Staging or repair expenses
- Seller concessions (if any are negotiated in the offer)
These costs can add up quickly—sometimes 8–10% of the sale price. This is why it’s so important to work with someone who can help you maximize the value of your home and minimize unnecessary costs.
4. The Net Proceeds: What You Actually Walk Away With
After all the above is deducted, what’s left is your net equity. In divorce, this amount is often split based on your settlement agreement—sometimes 50/50, other times based on prior contributions or negotiated terms.
Bonus Tip: Don’t Forget About Taxes
Depending on how much profit there is and how long you’ve owned the home, capital gains tax might apply. This is especially important if the home sells well above what you paid for it and you’re no longer filing jointly. A CPA or financial advisor can help you navigate this.
The Bottom Line
Understanding equity helps divorcing homeowners make smart, empowered decisions. It’s not just about selling—it’s about protecting your financial future.
If you or your client is unsure what their equity situation looks like, let’s talk. I’m here to walk you through the numbers, the strategy, and the next steps—with clarity and compassion.
