Navigating Property Division in Divorce: The Crucial Role of Appraisals

Divorces are difficult and stressful processes that involve many legal and financial issues. One of the most important and complex aspects of divorce procedures is dividing the marital property, especially the family home. In order to ensure a fair and equitable distribution of assets, it is essential to obtain a professional, and accurate home appraisal in a divorce case.

Why Property Appraisals are Important in Divorce Cases

A real estate appraisal is an objective and unbiased estimate of the market value of a property, on a given date. A valuation of a home, or a home appraisal, can help both parties in a divorce case to:

• Determine the fair market value of the property and its equity,
• Negotiate a reasonable buyout or sale price,
• Avoid tax consequences and penalties,
• Plan for future financial needs and goals.

Real estate valuations can also empower CPAs and other financial advisors to provide sound advice and guidance to their clients who are going through a divorce. For more information on how CPAs utilize appraisals, you can read our article ‘How Real Estate Appraisals Empower CPAs’.

Advantages of Using Appraisals in Divorce Cases

While some might consider online estimates, tax assessments, or personal opinions for their home valuation, these sources can often be unreliable, and they can lead to disputes and litigation. Here are some advantages of using appraisals over other methods in divorce cases:

• Appraisals are accepted and recognized by courts, lenders, attorneys, and other parties involved in the divorce process.
• Appraisals are performed by qualified and licensed appraisers who follow professional standards and ethical codes.
• Appraisals are based on current market data and trends and are backed by data and evidence.
• Appraisals are customized and tailored to the specific property and its features.

What is Involved in a Divorce Property Appraisal?

An appraisal for a divorce is similar to regular property appraisals, but it has some unique characteristics and challenges. A home appraisal for a divorce may involve:

• Choosing an appraiser: Both parties should agree on hiring a single appraiser who is experienced and qualified in divorce appraisals.
• Selecting an appraisal date: The “effective date” of the appraisal can significantly impact the valuation, especially if the property’s value has fluctuated during the marriage or separation.
• Applying an appraisal approach: Appraisers may use a variety of methods, such as the Sales Comparison Approach, the Cost Approach, or the Income Approach, depending on the property type and the appraisal’s purpose. For more information, you can read our article ‘What an Appraisal Report is Really Telling You.’

How is The Value of a House Determined in A Divorce Settlement?

The value of a house in a divorce settlement is determined by the effective date of the appraisal, which is the date as of which the value opinion established. The effective date can be different from the date of inspection or the date of report, depending on the circumstances and requirements of the divorce.

In some divorce cases, the effective date of the appraisal may be a current date, which reflects the value of the property as of the date of inspection or the date of report. This may be appropriate when the spouses agree to sell or buy out the property soon after the appraisal.

In other divorce cases, the effective date of the appraisal may be a retrospective date, which reflects the value of the property as of a past date. This may be appropriate when the spouses need to establish the value of the property as of a specific event or point in time, such as:

• The date of marriage
• The date of separation
• The date of filing for divorce

In some divorce cases, the effective date of the appraisal may be more than one date, which reflects the value of the property as of different dates. This may be appropriate when the spouses need to compare or contrast the value of the property over time, such as:

• The change in value from the date of marriage to the date of separation
• The change in value from the date of separation to the date of filing for divorce
• The change in value from the date of filing for divorce to the current date

A divorce appraisal that involves more than one effective date is called a Date-to-Date appraisal. A Date-to-Date appraisal requires more research and analysis, as it involves tracking and adjusting for market changes and property changes over time.

A Date-To-Date appraisal is used to determine how the value of the house has changed during the marriage and how much each spouse is entitled to receive or pay as part of the divorce settlement. For example, if a couple bought a house for $500,000 on their wedding day and it was worth $800,000 on their separation date, then they have $300,000 of marital equity in the house. Depending on their state laws and separation agreement, they may split this equity equally or unequally.

A Date-To-Date appraisal can also be used to determine how much each spouse contributed to the appreciation or depreciation of the house during the marriage. For example, if one spouse made significant improvements or repairs to the house that increased its value, they may be entitled to a larger share of the equity. Conversely, if one spouse neglected or damaged the house that decreased its value, they may be entitled to a smaller share of the equity.

What Happens If Both Parties Cannot Agree on An Appraiser for Their Divorce?

If both parties cannot agree on an appraiser for the divorce settlement, they have several options to resolve their dispute, such as:

• Hiring two appraisers: Each party can hire their own appraiser and compare their results. If there is a significant difference between their value opinions, they can try to negotiate a compromise or hire a third appraiser to review and reconcile their reports.
• Hiring an arbitrator: An arbitrator is a neutral third party who can review and evaluate both appraisals and make a binding decision on the value of the property. An arbitrator can be an appraiser or another qualified professional who has experience and expertise in arbitration and divorce matters.
• Going to court: If all else fails, both parties can take their case to court and let a judge decide on the value of the property. A judge can consider both appraisals and other evidence and testimony presented by both parties and make a final ruling on the value of the property.

Are There Any Specialized Skills Required for a Home Appraisal in a Divorce Case?

The valuation of a home in a divorce case require specialized skills and knowledge that go beyond those required for other types of appraisals. Some of these skills are:

• Understanding and complying with USPAP and other applicable standards and guidelines for divorce appraisals
• Communicating effectively with clients, attorneys, CPAs, mediators, arbitrators, judges, and other parties involved in the divorce process
• Dealing with complex and challenging situations involving conflict, emotion, stress, uncertainty, and litigation
• Selecting and applying appropriate effective dates for different purposes and scenarios
• Preparing clear and concise reports that support and explain value opinions
• Defending and testifying on appraisal reports in mediation, arbitration, or in court

At Boston Appraisal Services, we have extensive experience and expertise in providing high-quality property appraisals for divorce cases. We have certified appraisers who are trained and qualified to handle any type of property appraisal in any type of divorce situation. We work with you and your legal team to ensure that your property appraisal is done professionally, ethically, and in a timely manner.