Penny is getting divorced and she wants to know the value of the marital home for purposes of dividing or equalizing assets. She wonders how to go about doing this and whether one method is better than another.
A licensed home appraiser is the most reliable method of valuing the marital home. However, home appraisal is not an exact science and different appraisers will likely have different results for the value of the home. An appraisal does provide a defensible and carefully documented written opinion of value and is performed by a licensed, certified professional whose business is to value properties. While a licensed appraiser will likely provide the most reliable home value, this type of appraisal can cost several hundred dollars.
Comparative Market Analysis (CMA):
An option that will cost less than an appraisal is to request a CMA from a real estate professional. A CMA involves comparing Penny’s home with other homes that have sold or have been listed for sale in the area and placing a value on her home based on this evaluation. While providing a reasonable basis for value, a CMA does not take into consideration condition or uniqueness of the property. While reliable, a CMA is not as solid as an actual appraisal.
Online Research Tools:
If Penny does not want to involve a third party, she can utilize online research tools, such as Zillow.com, to estimate the value of her home. While this method may be the easiest and least costly, it is also the least reliable. Penny may be reluctant to spend money on a licensed appraiser or on a CMA; however, having a sense of her home’s true value can be invaluable when negotiating a settlement or presenting evidence at trial, especially if her husband does not agree with her value.
If Penny’s case goes to trial, since she owns the home, she can testify to the value based on her knowledge gained from sources such as the CMA or online research she has done. However, the actual CMA or research documents are unlikely to be admitted as evidence and therefore won’t be viewed by the judge. If Penny has a formal appraisal, the appraisal report can come into evidence if stipulated to by both parties, and if her husband does not agree, the appraiser can testify in court. It is not unusual for parties in divorce to disagree regarding the value of the marital home. If the case is being negotiated or litigated and two different values are presented, a formal appraisal will carry more weight than a CMA or value determined by a party based on his/her research.