The Key to an Equitable Divorce: Finding the Right Appraiser

Dividing marital assets is one of the top priorities in divorce.

Whether you decide to sell the marital home, or refinance and split the equity, you’ll first need to establish a fair property value.

In order to do this, you’ll need to engage the services of a licensed real estate appraiser.

Here’s everything you need to know about hiring an appraiser during divorce:

How is home value determined in divorce?

An appraiser is professionally trained and experienced in determining a home’s fair market value.  It’s impossible to negotiate a deal with a buyer or an ex-spouse unless you have accurate numbers to work with on the front end.

You’re going to be most interested in two dollar amounts as you go through the process.

The first is the fair market value/listing price of the home. This is what the house could reasonably sell for taking all factors into account.

The second is the net proceeds that you can expect to share.  To determine this, you’ll need to subtract what you still owe on the house to come up with a net number.  For example, if you own a home with a market value of $800,000, but you still owe $300,000, then the net amount would be $500,000.

This is the amount of value that you and your ex would split.  If you have an equal 50/50 interest in the home, then each owner could reasonably expect to receive $250,000 when the home is sold.

To come up with an accurate fair market value, an appraiser will assess a home’s value by inspecting the property, determining square footage, the lot size, number of rooms, and what other nearby similar homes have sold for in recent months.  The appraiser will also look at the overall condition of the property, housing trends, crime data, and other surrounding neighborhood amenities.

Most appraisers use a Uniform Residential Appraisal Report to record data.

Normally, when a home is sold, to determine the value and develop a strategy to come up with a good listing price, a realtor will perform a comparative market analysis (CMA).  A CMA compares home sales in your area to determine a value for your home.  It’s a standard procedure that is a trusted way to price a home.

However, in a divorce, especially where there isn’t a lot of trust, a CMA probably won’t do the trick by itself.  Instead, a full appraisal is the best protection.

It should be noted that when an appraisal is done through a bank as part of a divorce refinance, the value is often low.  This helps to limit the potential risk a bank will have in granting you a loan.

One other important thing to remember is that if you had an appraisal done more than six months ago, it may no longer be viable for divorce purposes.

Are there appraisers that specialize in divorce?

In an age dominated by niches, it should come as no surprise that there are appraisers who specialize in divorce situations.

While all appraisers will be empathetic in a home sale situation, an appraiser specializing in divorces will often be familiar with the heightened emotional issues that accompany a home sale process.

Key Point: The divorce appraisal may also be different because there may be a retrospective element involved when determining value. In other words, the valuation may be based on a date in the past – such as filing date or date of separation.

Although it doesn’t happen often, divorce appraisers may be asked to testify in court as part of the divorce proceeding.  That is why it’s critical for the appraiser to be a neutral third party who has been approved by both sides.  An appraisal can take on extra added legal importance, making it critical that it can be legally defended in a court of law.

Where to find appraisers that specialize in divorce?

A good place to start is by asking your attorney for a referral.  Chances are, they have already prescreened and used several different appraisers who can be trusted as neutral and honest in the efforts.

You can also ask friends and family members for a referral as well.  Unfortunately, divorce is common and there’s a chance somebody you know has already gone through what you’re currently facing.

Like it or not, you may not have a choice in some cases.

Important:  When you and your spouse can’t agree on who to hire, a judge may step in and appoint an appraiser for you.  

Do not just accept the first appraiser you come in contact with.  Like any other important decision, you need to do your due diligence.  Your appraiser must have strong attention to detail and he or she should be local so that they fully understand your neighborhood and market.

Be sure to hire an appraiser who is licensed.  Rules vary from state to state, but using California as an example, appraisers must:

  • Be at least 18 years old
  • Take 150 hours of classes
  • Apply for a license through the Office of Real Estate Appraisers (BREA)
  • Take and pass a live proctored exam
  • Pass a fingerprint and background check
  • Gain 2,000 hours of supervised experience with an established Certified Appraiser
  • Apply for and receive a Certified Residential Real Estate Appraiser license from the BREA

Although only one of you may do the digging to find the right appraiser, that person must be independent, objective and unbiased in their work.  Their credentials and experience must be above reproach.

The BREA is also a good place to search for an appraiser and to do some background research on whether or not an appraiser has a current license as well as finding out if a license has been restricted, suspended, surrendered, revoked, or an appraiser has had the right to renew their license revoked.

In addition to the state’s website, you can also call (916) 552-9000 with your questions.

How to prepare for a divorce home appraisal?

If a home is being sold outright, then it’s in both party’s best interests to make sure the home is appraised for the highest value possible.

But, if one spouse wants to buy the other spouse out, then they’ll be hoping for the lowest fair market value.  As you can see, things have the potential to get dicey with so much on the line.

Let’s assume you’re working toward a mutual goal of selling the home outright.  In this case, you might also consider a home inspection to identify repairs, unseen major issues, and concerns that a buyer’s home inspector would turn up.

By identifying these issues proactively, you can decide if you want to invest in having repairs made, or simply flagging them as something that can be used to negotiate a lower price by whoever buys the home.

A fresh coat of paint and a thorough decluttering effort can add value, as can a top to bottom home cleaning, generous applications of WD-40 on squeaky doors and cabinets, sprucing up your curb appeal and landscaping.

Make notes for things that you want to point out to your appraiser, such as upgraded insulation, double-pane windows, upgraded appliances and fixtures, and so forth.  Appraisers are pretty good at spotting these things, but it never hurts to help your cause.

If you’re already working with a realtor, they will also have a wealth of ideas on how to improve your home’s value as well.

Who pays for a home appraisal in divorce?

It’s negotiable.  In many cases, couples split the cost which can run $250 to $500 depending on the size and complexity of the appraisal.

However, if you’re buying out your spouse and intending to keep the home, it’s customary for the buyer to pay for the appraisal.

What happens if spouses don’t agree on an appraiser?

When trust no longer exists, it’s easy to understand why spouses may not agree on which appraiser to use.  That’s heightened in cases where one spouse pushes hard to use somebody they already know.  It’s okay to be suspicious and cautious when the stakes are this high.

In situations like this, it’s common for both parties to hire their own separate appraisers.  If the appraisers come up with different values, then a couple may choose to split the difference if they’re being reasonable.  It’s quite common for both appraisers to be in the same general value vicinity as each other since they are trained to look for the same things.

However, when appraised values vary widely, a judge may need to step in and reconcile the value to be used, settling on a compromised number.

More Reading:

Selling Your Home or Refinancing During Divorce? Use a Divorce Specialist

Home and Mortgage in Divorce: The Definitive Guide