Going through a divorce is a very rough time for everyone involved. It is fraught with tension, frustration, stress, and a whole slew of negative emotions.
At this point, it's important to know that you are not alone.
In fact, according to the United States Census Bureau, up to 10% of marriages end in divorce for every thousand married individuals.
On top of child custody, figuring out what to do with the marital home and other real estate assets you may have acquired over the years can be challenging. You may need to sell everything and split the proceeds, or one spouse can buy out the other's equity. Whatever you decide, it is imperative that you first determine the actual value of the property.
And that is where a home appraisal comes in.
You may be wondering if there's someone you can turn to for help regarding a home valuation during divorce. So, here's everything you need to know regarding divorce appraisals and what the process entails, so you can get through this difficult time knowing what to expect.
Do You Need a Divorce Appraiser?
Yes, a divorce appraiser is necessary.
One goal of the divorce settlement process is to divide the marital assets reasonably and equitably. Your divorce attorney will advise you to hire a licensed appraiser to have an accurate assessment of your home's fair market value as a starting point.
It is in your best interest to have your home appraised so you know how to best move forward.
What is a Divorce Appraisal?
A divorce appraisal is a professional estimate of your home's value when going through a divorce.
Real property appraisals are a vital part of the home sale process because it guides homeowners in determining their listing price and helps the buyer avoid overpaying for a property.
In the case of a divorce, knowing the fair property value is the start of the divorce property settlement process--making an appraisal necessary. Property division will be based on the outcome of the appraisal.
It should be noted though, that appraisals are different from home inspections, and therefore an appraisal report wouldn't be able to tell you anything regarding the structural integrity of a home.
The appraiser to be chosen must be a neutral third party who can provide an objective, unbiased opinion regarding your home's value. They represent neither divorcing parties' interests and must not be related to either party.
Sometimes, choosing an appraiser can be a source of friction especially if the divorce isn't amicable. In this case, you can get your own appraiser while your spouse gets another, and reconcile their valuations later on.
Appraisals cost between $350-$400, depending on a property's size, location, and complexity. It typically takes 1-2 weeks to complete.
How Does a Property Appraisal Determine the Fair Market Value of a Home?
Determining the fair market value of real property is built upon the assumption that your home value has appreciated since the time you bought it together with your spouse.
During the valuation process, a home appraiser typically looks into three major factors:
Local Market Conditions
It is recommended that you hire an appraiser who is an expert in the local real estate market and familiar with the current trends. That way, they would be able to arrive at an accurate value for your home.
Actual Property Features
The appraiser will conduct a walkthrough of the house, taking photos of the exterior and interior, while taking notes of conditions that may impact a property's value.
The appraiser takes into consideration the size of the home (e.g. number of bedrooms, bathrooms, and total square footage), the property's location, the overall condition of the property, and the amenities available (e.g. swimming pools, barbecue patios).
Comparable Property Data
A comparative market analysis is one of the tools used by appraisers and real estate agents to determine a property's valuation. They look at similar properties (aka "comps"), that were recently sold in the same geographical area in order to estimate the fair market value.
Even though a CMA may already give you a figure for your house, it is just one facet of an appraisal, and thus, it is less accurate than a real estate appraisal which looks at the bigger picture.
Additionally, a CMA can be manipulated--for instance, one can remove the lower priced comps resulting in a higher appraisal value. Thus, it may not legally qualify as an estimate in the divorce proceedings.
Determination of Fair Market Value
Based on the current market conditions and real estate data obtained from the actual property and comparable properties, the appraiser then performs an analysis to arrive at a figure that reflects the actual value of the home.
What Happens to a Property After a Divorce?
When the dust has settled and the fair market value of the home is determined, there's a handful of options open to the divorcing couple regarding what to do with the family home.
It's important to think through each option and decide the best course of action for everyone:
Scenario #1: The Couple Continues Co-ownership of the House
If it happens that the real estate market conditions aren't favorable if you sell now, you and your ex spouse can decide to retain ownership of the house and sell at a later date.
Note that this requires continued involvement with each other, so it is only advisable in case your divorce is amicable.
Scenario #2: One Spouse "Buys out" the Other Spouse
There are a myriad of reasons why buying out an ex spouse would be considered attractive to both parties. For instance:
- One spouse has developed an emotional attachment to the family home
- The spouse with custody buys out the other spouse so the children can have continuity and a stable environment
- The tax implications of selling the home outright
This buyout can be performed directly or indirectly.
In a direct buyout, the spouse who will be keeping the house will refinance the mortgage to assume liability over the property. The selling spouse will then be paid in cash for their share in the equity.
On the other hand, in an indirect buyout, instead of getting cash for their portion of the home, the selling spouse receives other marital assets of equivalent value (e.g. cash, jewelry, vehicles, stocks, or bonds).
This option is only available if the couple has a substantial amount of other assets. Otherwise, you'd be forced to do a direct buyout or you'd have to sell the house and split the proceeds accordingly.
Scenario #3: Sell the House and Equitably Split the Proceeds
Sometimes, neither spouse wants to keep the home for many reasons. Maybe it's associated with bitter memories and both of you want to move on with your lives elsewhere... and maybe you could use the cash.
In any case, selling the house sounds like the best course of action for everyone involved.
Once sold, the money from the real estate transaction becomes marital assets that will be split depending on state-specific property division rules. Consult your divorce attorney on how to go about this.
Frequently Asked Questions: Divorce Appraisals
At What Point in the Divorce Process Should You Get Your Home Appraised?
Property division happens once the divorce is finalized and the judge signs the order of dissolution. Since values in real estate are always fluctuating depending on market conditions, doing the appraisal too early may not be beneficial to either party.
You can check your court dates and schedule the appraisal once the judgment is finalized so the appraisal is as accurate and up to date as possible.
How Do You Prepare the Home for a Property Appraisal?
Prepare your home for a property appraisal by cleaning and decluttering. While it doesn't affect your home's value, it certainly won't hurt.
Doing minor repair work such as fixing leaking faucets, replacing busted lightbulbs, and replacing broken windowpanes will show a pattern of maintenance. However, it can be challenging to agree with your ex spouse on repairs making an as-is home sale a common option.
In addition, during the appraisal process, you or your representative must be ready to answer questions regarding the property's history, such as upgrades, renovations, and repairs you have done through the years. If you can present a comprehensive list to the appraiser, all the better.
Do You Need to Be Around During the Appraisal?
You don't necessarily need to be home during the appraisal. You can have your lawyer, real estate agent, or a representative present so that someone can be around to answer the appraiser's questions. Answers provided must be objective and unbiased so you get an accurate assessment.
What Happens if the Divorcing Parties Can't Agree on the Home Appraisal?
Sometimes, the divorcing couple each orders a separate appraisal, and they don't always arrive at the same valuation. This is quite normal as appraisers provide their professional opinion in a home's value, so they may assign different weights on the factors they're looking at.
Another reason is that in the case of a buyout, both parties will have competing interests: the party receiving a buyout would like to have the highest appraised value, whereas the party that is staying in the home would prefer a lower value.
A solution to this would be to take the average of the two values and base the payoffs from there. If the parties still cannot agree, the matter can be taken before a court and let the judge decide.
What is a Retrospective Appraisal?
Compared to a real estate appraisal, which is always up to date, a retrospective or historical appraisal is the determination of your home's value some time in the past.
This is sometimes necessary in a divorce when trying to account for the value added due to improvements done using marital funds. As such, this requires an experienced real estate appraiser with extensive local knowledge.
Final Thoughts: How to Find a Divorce Appraiser
Divorce is a devastating and life changing event.
This is especially true when it involves dividing all the assets you own together. It presents a quagmire that is full of legal, logistical, and financial challenges, and it can feel absolutely overwhelming.
It is therefore understandable if you'd like to close this chapter in your life as soon as possible. And for that to happen, you'd want to know how much your home is worth as quickly as you can.
Here at Sell My House Fast, it can be as simple as filling out the form below!
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Receiving a cash offer for your house can save you...
- Time and money looking for appraisers and their fees
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