What is the Purpose of a Home Appraisal during Divorce?
- Home equity and divorce
- How to calculate home equity
- Divorce appraisal vs. traditional home appraisal
- Tips
- FAQ
- How to Get a Divorce Home Appraisal and Use It Wisely
Divorce is an emotionally and financially fragile time. And at a time when you and your spouse might not be at your most trusting place with each other, you will have to divide your marital assets and debts fairly so you can each go your own way.
If you’re like most couples, the largest asset you jointly own is your family home. While you can’t physically divide your home, what you will divide is the equity you have in it. To do that, you must first determine how much it’s worth.
Home equity: An important component of a homeowner’s divorce
Equity is the difference between the value of your home and the amount of money you still owe on it.
When you jointly own a home with a divorcing spouse, you have two options. Equity plays a role in each of these options:
- One of you will keep the home by refinancing and buying out the other spouse’s share of equity. The other spouse will move out and find other living quarters.
- You will sell the home and divide the equity and costs from the proceeds of the sale.
No matter which option you choose, the equity you have in your home is a key component in the division of your home as a marital asset.
How is home equity calculated in divorce?
The simple formula for calculating the equity you have in your home is taking your home’s value and deducting what you still owe on it. But how can you be sure of your home’s value? This figure is needed in order to divide the property fairly.
The first step in calculating equity is establishing what your home is worth. This is the property’s value in the area where you live under current real estate market conditions.
The most common way to get an idea of the value of the home is by having a Comparative Market Analysis (CMA) performed by a local real estate professional or an appraisal completed by a licensed appraiser. But a CMA is not always accepted in a divorce proceeding. Getting a professional appraisal completed on your home is the best way to establish its fair market value for your equity calculations.
View Hello Divorce’s Equity Split Calculator for Divorce
A qualified appraiser completes a thorough evaluation of your home and property and provides an opinion of its market value by comparing it to similar properties in your geographic area. Once your home’s market value is established, you will deduct any outstanding mortgage payments, home equity loans, or other liens where your home was used as collateral to get the equity you’ll work with when negotiating your property division.
Traditional home appraisal vs. divorce appraisal
Traditional home appraisals and divorce appraisals are similar in that they provide a qualified opinion of the value of a home. However, they’re different in their purpose and the format they use.
Traditional home appraisal
A traditional home appraisal is typically ordered for mortgage lending and other real estate purposes. These appraisals must appear in an industry-recognized format and comply with UAD (Uniform Appraisal Dataset) guidelines.
Divorce appraisal
Divorce appraisals don’t need to comply with this format. They can take a general-purpose format and even be written in narrative form. But while the format and use aren’t the same, a divorce appraisal must still support the appraiser’s opinion of the value of your home when it’s being considered in a divorce setting.
Tips
Can you boost your home’s value in an appraisal?
An appraisal is data-supported, but it’s still an appraiser’s opinion of your home’s value. Consequently, putting it in its best light may enhance their opinion.
Appearance and upkeep can have a significant effect on your appraisal. The better maintained your home looks, the more valuable it will appear to the appraiser.
Improving its curb appeal and repairing inside and outside imperfections can make a difference in your appraisal. Mowing the yard, picking up debris, touching up paint, and deep-cleaning your home puts its best face forward when an appraiser is making evaluations that can have an effect on your home’s value.
How do you find the best appraiser for your divorce appraisal?
Sometimes, an appraiser may be asked to testify in a high-conflict divorce proceeding. Consequently, some appraisers have created a niche and specialize in divorce appraisals. But you probably don’t need an appraiser who specializes in divorces unless you feel your appraisal will be very complicated or the division of your marital property will be contentious.
The best way to find an appraiser for your home’s evaluation during your divorce could be through your attorney, a local realtor or mortgage specialist, or a trusted friend who has used one in the past. Your state may also have resources to help you find licensed appraisers in your area.
Divorce doesn’t need to be a battle. If you and your soon-to-be ex-spouse have a cooperative relationship, you can make decisions together that make sense for both of you when dividing your property. You can choose an appraiser together, or even sell your home before the divorce to take advantage of available tax advantages.
At Hello Divorce, we offer flat-rate divorce mediation services to help you navigate your divorce more cost-effectively and with less animosity. Let us help. Schedule a free 15-minute phone meeting to learn about mediation and the other services we offer.
FAQ
Why is a home appraisal important in divorce?
It gives you an unbiased, current value of your home so you can fairly divide equity—whether you're selling the home or one spouse is buying the other out.
What happens if we disagree on the value of the home?
You can get a second appraisal, average the values, or bring in a neutral third party. If you're working with a mediator, they may help guide this decision.
Can we use Zillow or Redfin instead of getting an appraisal?
Those tools are fine for estimates, but they’re not considered reliable enough for legal or financial decisions. A professional appraisal or CMA is almost always required.
Who pays for the appraisal?
It depends. Some couples split the cost. If one person is refinancing to buy out the other, their lender may require an appraisal that they’ll need to pay for.
What if the appraisal comes in lower than expected?
This could affect your ability to refinance or change how much equity is available for a buyout. You might renegotiate the deal or seek another appraisal if you suspect an error.
How to Get a Divorce Home Appraisal and Use It Wisely
Agree on whether you need a full appraisal or CMA
A CMA may be fine for informal negotiations. But for legal settlements, a licensed appraiser is best. Talk to your mediator or lawyer about what’s appropriate.
Choose an appraiser and schedule the visit
Find a qualified appraiser who understands divorce cases. Make sure both spouses are informed and the home is accessible for inspection.
Gather documentation
Make the process smoother by preparing mortgage info, home improvement receipts, and notes about major features or repairs.
Review the results
Go over the appraiser’s report together or with your divorce professional. Compare it with online estimates or request a second opinion if needed.
Apply the value to your settlement or refinance
Use the appraised value to calculate a buyout or decide on a listing price. If refinancing, share the report with your lender and start the process.
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