Divorce is never an easy subject no matter what the circumstances, but when it come to real estate, that’s when things can get complicated. The one main question, who gets the house? In most states, to determine the value on how property is valued, a home appraisal is required to settle the division of property be it your personal home or investment property. To determine an equitable distribution of the property between the couple, the courts rely on appraisal valuations of all real estate assets that are considered martial property.
When placing a value on a home there are typically three valuations, the sales comparison which is based on the homes recently sold in the area with respective adjustments made up or down based features that may be different from home be appraised. The cost approach is when the buyer would not purchase the home for a price that is higher than what it would cost to buy the home new and is identical to yours. The last one is the income approach which measures what net income the property can produce and merges that feature in to the appraisal value. This is used mainly on rental property.
The divorce settlement may require the home to be refinanced by one of the spouses, therefore, buying out the other spouses’ interest. Because of this method, it may be asked to value the home upward or downward in favor of either spouse.
Since divorce appraisals are not related to financing or lending it need not comply with Fannie Mae guidelines. The appraisals are completed on non-Fannie Mae forms or written on a narrative.
Each spouse should obtain their own appraisal of the property to make sure that true valuation is determined. If the appraised value on the home from the independent appraisals varies greatly between the properties, the courts can reconcile the value and the determination of the courts findings will be used for the division of property.