The House Has Sold and There’s Nowhere To Go

August 10, 2021

Guest post by Laurel Starks, CEO & Founder, The Ilumni Institute

In today’s climate of housing shortages, this has become the problem of property sellers. Add on the layers of the financial and credit side effects of divorce, and the issue is compounded.

There is no great solution or magic pill, but there are some steps that clients can take to find adequate housing in their future.

Credit score, income, debt, and down payment are the major factors that mortgage lenders and landlords consider when approving a home loan or lease. In the best of circumstances, home buyers and renters have stellar credit, a healthy history of income, little or no debt, and a substantial down payment or deposit.

When we look at many divorces, those factors are impacted by the divorce process itself, resulting in tarnished credit, lower income, higher debt, and reduced net proceeds.


The shortage of housing in the United States has reached critical levels and is a national crisis lying in wait. Rosen Consulting Group put out an ominous report for the National Association of Realtors that shed a light on just how starved our nation is for housing. A few statistics to illustrate the point:

  • From 1968–2000, the annual stock of housing grew by 1.7%. In the last decade, it grew by only 0.7%.
  • The underbuilding gap in the U.S. totaled more than 5.5 million in the last 20 years.
  • Every major region in the nation is short in housing development.
  • Building will need to increase 60% to 2 million units per year during the next 10 years to fill the underbuilding gap.
  • The number of adults ages 25–34 living at home with parents surged by 2.5 million in the last decade and more than doubled from 2000–2020, increasing to 4 million.
  • COVID-19 exacerbated this problem. In January 2021, the availability of housing plunged to 1 million available homes, which is a third of the historical average.

“Perhaps most critically, the extreme shortage of for-sale inventory contributed to an untenable scenario in which robust demand is competing for a limited supply, driving housing prices higher, reducing affordability, and making homeownership less accessible for low-and-moderate income households. In addition to the for-sale housing market, renter households faced severe negative consequences from the past two decades of underbuilding. Even before the large financial burdens placed on renters by the COVID-19 pandemic, more than 40% of renter households were cost burdened, while nearly one quarter were ‘severely burdened,’ or spending more than 50% of their income on housing,” the report cited.

When we combine the extreme competition of home buying that we’ve never seen before and the handicap that divorcees face when re-entering the housing market, we, as a collective professional team, must take whatever measures we can to reduce the negative impact that a case can have on credit, debt, and equity. This includes educating our clients on simple and doable steps that they can take in order to get themselves in a position to have a place to call home again.


When there is such a housing crisis, any potential buyer needs to maximize their opportunity to get offers accepted. Following are some preventative actions our clients can take during the divorce to help the family’s financial recovery:


An Experian survey revealed that 54% of divorcees reported a decline in their credit score. In half of the cases, they cited that an ex-spouse intentionally damaged their credit.


  • Do not max out credit cards—keep balances at 50% or less (even if this means raising credit limits in order to keep the 50% ratio).
  • Do not miss payments on revolving debt (house, car, credit cards, loans, etc.).


  • 40% of married households have one wage earner, and 60% of them have to take time off to deal with divorce. (2015 Pew Research Study)
  • For those who change jobs, they must “season” their new employment to satisfy mortgage underwriting guidelines.
  • Without enough income, qualifying for a mortgage or a rental becomes impossible.


  • Obtain employment, work extra hours or even two jobs to pay down debt and save up.
  • This can be counterintuitive to a support strategy in which higher wages can mean higher support payments for the payor or lower support for the recipient. This should be weighed against the client’s goals and ability to obtain adequate housing.


Divorce is expensive. Not only are the costs of attorneys and experts more than most people are prepared for, the ancillary costs of things like moving and establishing two households can be exorbitant.


  • Develop a budget and track it on a spreadsheet or app that makes tracking expenses easy and accountable.
  • Identify the down payment needed to get into a property and make it a budget item.

Survival Mode

The length of the client’s road to recovery will be in direct proportion to how accountable they are to their finances. It may feel uncomfortable, but if they play their cards right, survival mode won’t last forever.


  • Plan on 2 years.
  • Cut any luxury expenses such as Starbucks, nail appointments, designer fashion, etc. and opt for fuel efficient transportation.
  • Live in an affordable place that may not be ideal.
  • Know that this is the short-term price for a bright, long-term future.

While there is no simple answer to this dilemma, we [CDREs], as [divorce attorneys'] trusted advisors and advocates, mustn’t have a myopic view that includes only the present. We must also consider the impact on their future of the advice we give and the decisions they make.


If you’d like help managing the real estate portion of your client’s divorce, call me, Shannon Rose. I’m a 17-year real estate agent and a Certified Divorce Real Estate Expert who can help you protect the equity in your client’s home.


Shannon Rose
DRE# 01422955
Los Gatos, CA


DRE #01422955

DRE #01526679

16780 LARK AVE.

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