House Appraisal & Divorce

by Beverly Bird
An appraisal eliminates disputes over the value of your home.

An appraisal eliminates disputes over the value of your home.

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Other than child custody, one of the most hotly contested issues in a divorce is often disposition of the marital home. In addition to your emotional investment in the property, you and your spouse have probably spent years paying for it. You must make a choice between selling it, or deciding that one of you will keep it. A fluctuating real estate market can make the decision even more difficult.

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Necessity

Whether you and your spouse reach a marital settlement agreement, or if a judge decides property division at trial, you must know what your assets are legitimately worth. Your home's equity -- its value over and above any mortgage liens -- must be divided between you. When one spouse keeps the house, the other must typically buy out the other's share of the equity, or relinquish other marital assets equal in value to the other spouse's share. The value of the home is critical in determining the amount of the buyout.

Establishing Fair Market Value

Most state courts require a recent appraisal to determine a home's fair market value. If you had an appraisal done more than six months ago but didn't get around to immediately filing for divorce, it may no longer be viable. Appraisers typically begin by inspecting your home and making a comprehensive list of all its features -- or lack of them. They then compare your home to others like it that have sold in your area during the preceding six months. If your home has marketable features that the others don't share, the appraiser will add to your home's value. The same applies in reverse. If your home doesn't have features that the others offer, the appraiser will deduct from its value. Ultimately, the fair market value of your home is typically the average sales price of the others, plus or minus a dollar amount for its unique features and condition.

Who Pays?

In a contested divorce, spouses often want their own separate appraisals. If two appraisers reach different values, a judge might compromise between them and value the house at a point in between. In this case, spouses usually pay for their own appraisals. In more amicable divorces, you might decide to use one appraiser and split the cost between you.

Options

If you and your spouse are very sure you're going to sell your home, you probably don't need an appraisal. Even if your divorce goes to trial, you can stipulate to your agreement to sell. The judge won't rule on this issue and will abide by your wishes. The judge wouldn't need to know the home's value, because it would be whatever the market bears -- its ultimate sales price. The judge would only rule on how to divide the equity. Otherwise, you might be tempted to save money by having a realtor perform a comparative market analysis instead. However, realtors usually base comparative market analyses on what they think they can reasonably list the house for, so these numbers typically come in high. Bank appraisals for purposes of refinancing are notoriously low. Neither will hold up in court if you're contesting ownership, and they're usually not fair assessments for purposes of negotiating a marital settlement agreement.