Divorce Appraisal
When getting a divorce, it can be challenging to divide assets. One of the most valuable possessions to split is a house, so how do you determine when you require a Divorce Appraisal? If both parties are amicable, then it might be possible to agree on an amount with the aid of a real estate agent or an online home value estimating tool like Zillow, Redfin, or Realtor. If this does not work out though, then you may need to consult with a professional appraiser in order to fairly divide the asset.
Items such as personal belongings, savings, credit card debt, and pensions are usually easier to divide due to their defined value. Typically in a suburban area, there is ample data which makes these estimations quite reliable. If the appraised figures of the home are near each other in cost we advise taking them as the fair market worth of the domicile. In cases when a loan is placed on the residence and there aren’t any joint assets that could be utilized for one spouse to purchase out another’s share, then refinancing can be done by the lender. This necessitates the bank carrying out an appraisal to calculate the amount that can be allocated among the assets.
It may be wise to enlist an independent real estate appraiser if any of the following conditions exist: your home is not in a standard suburban neighborhood with a considerable amount of comparable sales, you have done extensive renovations, there are many neglected repairs that need to be made, or if you and your spouse have different attorneys who are suggesting you acquire your own appraisal as you are unable to settle married assets and are headed for court.
A court-ordered sale of a family home in the divorce case may take place when attorneys are not involved in the division of assets. Therefore, a neutral third party is appointed by the judge to evaluate the exact value and possibly sell the house. If one of the spouses owned the house before marriage, vacated the place on a certain date, or the date of legal divorce was filed, a retroactive appraisal or multiple effective dates are needed to make an exact evaluation of the settlement. In case the time has passed since the filing date and the house has gone up significantly in residential real estate, you and your spouse can’t come to an agreement about the value. Is the difference between you $10,000 or hundreds of thousands of dollars? If so, you should look for a divorce appraiser. A few important things to keep in mind when searching for one are the appraiser’s courtroom experience.
An expert witness may be required if the parties cannot settle on a mutual estimation of the home’s worth. The appraiser must be capable of protecting the independent appraisal in front of a judge and the divorcing lawyer. It is critical to be able to elucidate complex appraisal concept and professional practice to non-experts in order to impart the appraisal findings. Expert witness testimony can be the deciding element in a court case, so it is essential to select an appraiser knowledgeable in both appraisal theory, real estate evaluation, and courtroom practices.
When it comes to divorce appraisals and fair market value, many appraisers mainly do bank or financing assignments as part of the house-selling process.
They are well-versed in filling out Fannie Mae forms, like the 1004 which you or your partner may have come across when the house was sold. The Fannie Mae definition of market value is to be solely used for figuring out how much a mortgage is worth when it is guaranteed in the secondary market. These appraisals for lending may involve minor repair costs. In a court of law, your lawyer may or may not employ this definition, but more often they will use the IRS definition of Fair Market Value. This is a “as is” definition with specific reporting requirements which are necessary for a fair property sale, as demanded by the IRS.
We will discuss the potential differences in fair market value further in a later post. If you find an appraiser utilizing a Fannie Mae 1004 form or URAR for a divorce appraisal, it’s likely that you are in the wrong place. I have been part of a property settlement in a divorce case where the other partner presented a previous appraisal obtained for a refinance or home equity loan. If the divorcing couple agree to this appraisal, then good luck to them, divide the other assets, make sure each party gets a fair share, close the divorce proceedings, and move on.
When selling a house, it is essential to understand that Fannie Mae’s definition of market value, conditions of assignment, purpose, and intended users of the mortgage transaction are not to be used for any other purpose. This is why you may need a retroactive property appraisal. Generally, a real estate agent is used to facilitate the sale of the home and an appraiser is hired by the lender via an appraisal management company. The appraiser will appraise the property after the sale price has been established, assessing its current value. While all appraisers should be proficient in determining current value, it is more challenging to find competent individuals to complete a retrospective appraisal.
An appraisal for a divorce case needs more than one effective date. When it comes to a retrospective appraisal, a different appraisal methodology is not necessarily needed, however, appraisers should be aware of the need to put themselves in the past. This means considering the value of the property in 2018, rather than its present value. Before the pandemic, there was a lack of supply yet a normal rate of appreciation. During the pandemic, however, the interest rates reached record lows, properties were quickly claimed on the MLS, buyers were willing to pay more than the asking price and often had to write personal letters to the seller in order to get a deal.
If your situation involves a spouse who purchased the property solo in 2002, cohabited with their fiancee since 2008, wed in 2019, and is now filing for divorce in 2023, it is important to locate an appraiser who has experience in retrospective appraisals and can back it up with data from the relevant time frame. These evaluations can be tricky and take more time than usual, but are necessary for a precise opinion of value. Seek out a certified appraiser specializing in divorce, probate, trust, and financial planning and they will be suitably qualified to perform retrospective appraisals in your area.
A divorce home appraisal typically takes one to two weeks to complete and typically costs two to three times the amount of a lending appraisal, which is $700-$1,500.
At GPS Home Appraisal, we understand the importance of expertise, discretion, and reliability when it comes to providing quality appraisal reports that clients can trust. Appraisal fees vary based on the complexity of the property and whether multiple effective dates are needed, with typical fees set at $1,200 for court appearances or in-person settlement negotiations, $250/hr for actual testimony time, and $125/hr for meetings, court preparation, extra research, and confidential conversations with the client or attorney. If you need assistance, don’t wait to contact us!
You can reach out to us via email or phone to get answers for any queries you have about determining the worth of your assets in the event of a divorce. We charge more than the average appraisal company, but depending on the circumstances, you may need an expert report. Nonetheless, we are eager to address any concerns you may have during this difficult period.