One of the most difficult issues to resolve in a divorce is the value of the family home. For many couples, the family home is their most valuable asset. Dividing, or even just valuing the home can stir emotional reactions that often prevent a couple from reaching an amicable decision about the fair value of the home.
One of the most effective ways to avoid a contentious impasse is the retention of a professional real estate appraiser. Reputable appraisers follow a standard procedure for determining the fair market value of a home; this procedure generally excludes emotion and focuses instead on objective factors that influence the fair market value of the home.
What does an appraiser do?
The appraiser’s first task after meeting with the client is to visit the property to be appraised (the property is generally referred to as the “subject”). The appraiser’s task is to provide a professional estimate of the fair market value of the property assuming that a willing seller is dealing with a willing buyer.
The appraiser will first visit the subject and conduct a thorough inspection. The appraiser will carefully measure the dimensions of all rooms and the exterior of the subject.
The appraiser also makes a careful photographic record of the subject, including photos of every room and any unattached structures, such as a garage.
The appraiser notes the condition of the kitchen and whether it has recently been remodeled. They also check the basement size and finishing.
When inspecting the interior, the appraiser notes any necessary maintenance, such as a new roof or exterior re-painting.
The appraiser will also check the subject’s proximity to schools and commercial establishments, such as grocery stores and pharmacies.
Estimating fair market value
While other valuation methods are used for different kinds of structures, residences are usually valued using the sales comparison approach.
Once the inspection is complete, the appraiser chooses at least three similar homes that have changed hands in the last year. They then compare these homes to the subject in terms of size, condition and sale prices. In this way they estimate a fair market value for the subject.
Using the appraisal
The completed appraisal can be used in several ways.
The couple can accept the appraiser’s estimate of value and add the net value of the home to the assets that will be divided between them. The couple can also use the appraisal to negotiate a sale price with a third party.
If one spouse wants to stay in the home (perhaps because the couple has young children) the net value of the house can be credited to the share of that spouse.
Evidence at trial
If the couple cannot agree on how to divide the value of the family home, the appraisal can be used as an exhibit at trial to guide the judge in setting a value for the home.