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Homeowners will generally get a real estate appraisal of their property when they are ready to sell in order to determine an appropriate asking price. When selling a home during a divorce, an accurate appraisal of the current value is particularly important in order to negotiate the division of marital property.
How a Real Estate Appraisal Works
An appraiser considers multiple factors when determining the fair market value of your property. Reputable appraisers follow the Uniform Standards of Professional Appraisal Practice (USPAP) and the Professional Code of Ethics adopted by the Appraisal Institute. These standards require appraisers to follow guidelines that establish fair, impartial, accurate, and non-biased practices to determine the value of your property.
To determine fair market value, appraisers look at comparable properties in your area that have recently sold, throwing out any outliers that sold for a much higher or much lower price than other comparable houses. Some of the qualities considered when determining if a house is comparable include square footage, number of bedrooms and bathrooms, lot size, age, design style, and location.
The appraiser should understand the market in your area and should have an understanding of the value of any special features in your home. This is where appraisers can differ considerably, and experience helps a lot in determining the value of these special features. For instance, an experienced appraiser may have a better idea of how much an in-ground pool may add to the value of your home than a less experienced appraiser or one who is new to your area.
Appraisers also consider the value added by improvements you have made to your home over the years. Improvements made some time ago may depreciate in value, or they simply may have cost more than the value they add to the home. You may love the track lighting in your sunroom, for example, but it might not affect the market value.
All these factors added together help the appraiser determine the fair market value of your home.
Specific Needs of Divorce Appraisals
If one spouse owned the home prior to getting married, then a historical appraisal, also called a retrospective appraisal, might be necessary to determine how much the house was worth at the time of marriage.
At times, individual spouses (or their attorneys) may hire separate appraisers. If there is a significant discrepancy between the market values of each appraiser, a judge may decide to hire a third appraiser or may choose an average of the two appraisals to determine the value to be used in negotiating the division of marital property.
In the case of appraising a vacation home, it’s best to hire an appraiser who is familiar with the unique values associated with second homes or communities that are primarily resort or vacation home properties.
Additional Considerations When Choosing an Appraiser
At times, appraisers are called upon to testify in court. The appraiser may only testify regarding the real estate appraisal and the data/analysis that supports it; the appraiser may not advocate for either party in the proceedings.
While USPAP and other professional ethical organizations forbid appraisers from divulging information to anyone but their clients, an appraiser who is used to working with married couples – as opposed to divorcing ones – may make a few mistakes in communication that could be quite serious.
If the appraiser is hired by both spouses, the appraiser may be under the assumption that, as with most married couples, if you tell one spouse something, he or she will communicate the information to the other spouse. This, however, is not always true when couples are divorcing. Therefore, your appraiser should have a system in place to ensure that all communication gets shared with both spouses in an equal and unbiased manner. At the same time, if only one spouse has hired the appraiser, there must be vigilance to not accidentally divulge information to the other spouse.
How We Can Help
Next Act Properties, Inc. specializes in helping divorcing couples determine the best option for them: buying out your spouse and refinancing the mortgage, selling your house to a third party, or our unique sell-and-lease-back option that will allow the spouse who wants to remain in the house to do so. Our nationwide network of real estate agents and mortgage specialists are experts in divorce real estate sales and divorce mortgage refinancings. We can help you navigate these challenging waters and get you the best outcome for you and your home. Contact us today.