A recent client asked “how do we determine the value of our home for purposes of the divorce if we are not actually selling it?” The answer is: “It depends.” It depends on the method you and your spouse select (or upon which the judge relies.) Here are some of the more common methods used in divorce proceedings:
- Hiring a Certified Real Estate Appraiser to produce a real estate appraisal. Appraisers use a variety of methods to calculate the value of property, however they generally consider the actual value of the lot upon which the house sits, the replacement cost of the structure(s) on the lot and the sales prices of comparable homes recently sold within close proximity to the property in question. Banks use Real Estate Appraisers to determine the value of property before they extend credit to the property purchaser or owner.
- Hiring a Real Estate Broker licensed and experienced in the sale of property in the neighborhood. The property value, as provided by a broker, may be greater or less than the value established by an appraiser for the same property. The valuation may differ because it is common for real estate to sell above and below appraised values when the market is in a boom or slump.
- Referring to and relying upon property tax records. City and state property tax offices calculate property taxes based upon the value of the real property and any structures located thereon. The tax man’s methods for determining appraised values are often a mystery and in some cities and states, have historically generated values far below those set by certified real estate appraisers or brokers. Thus, this method for valuing property is rarely used.
Couples can also choose to establish the value of their real estate themselves. Some use the purchase price while others use the outstanding mortgage balance. The method used to determine the value of your home may be the one you and your estranged spouse accept, or the court requires. Because property values may differ based on the method used, be sure to ask your family law attorney which strategy she recommends, which may ultimately depend upon your position as seller or purchaser or the property in question.
Adapted from The Modern Woman’s Divorce Guide.
Comments on this entry are closed.